By Amy L. Sandlin, CPA, Tax Quality at Blue & Co.
On July 4, 2025, President Trump signed into law a sweeping budget reconciliation bill, informally titled the “One Big Beautiful Bill” (“OBBB”), which includes significant tax changes. Today’s article will introduce select income tax provisions affecting individuals, businesses, and nonprofits, and will be followed by our insights and a detailed analysis of how they will impact you in the coming weeks.
Individuals
Many of the individual tax changes from the 2017 Tax Cuts and Jobs Act, set to expire at the end of 2025, are made permanent. These include modified income tax brackets and rates, increased child tax credit, increased standard deduction, and termination of personal exemptions. The base estate and gift tax exemption is permanently adjusted to $15,000,000.
Additionally, numerous existing tax provisions are modified or expanded, including:
- deductions for state and local taxes, mortgage insurance premiums, charitable contributions by itemizers and non-itemizers, and unreimbursed educator expenses;
- additional income-based deduction for seniors;
- itemized deduction limitation for taxpayers in the top income tax bracket; and
- alternative minimum tax exemption phase-out.
Finally, the legislation provides new benefits for certain taxpayers and terminates benefits for others, such as:
- income-based deductions for certain tip income and mandated overtime pay (capped at $25,000 and $12,500, respectively);
- income-based deduction for interest on qualified vehicle purchases, capped at $10,000;
- tax-favored accounts for newborns (“Trump Accounts”), with $1,000 funded by the U.S. government;
- early termination of energy credits, including the clean vehicle credits and energy efficient home improvement credit;
- additional limitation on wagering losses; and
- termination of the IRS free Direct File program.
Businesses
The OBBB modifies multiple business provisions from the TCJA, including deductions for domestic research and development, 100% bonus depreciation, qualified business income, and business interest; and calculations underlying the taxation of foreign income and the foreign tax credit.
It expands the application of existing tax benefits, such as the employer-provided childcare credit, the tip credit for the beauty service industry, and investments in opportunity zones.
And, the OBBB terminates existing tax benefits, perhaps most notably, the many tax incentives from the 2022 Green New Deal.
Nonprofits
The legislation includes nonprofit-specific provisions, modifying the excise tax on investment income of certain private colleges and universities, and expanding the application of the excise tax on excess compensation. Other OBBB provisions, such as changes to employer-related provisions and the charitable contribution deduction, may also have a direct or indirect impact on nonprofits.
What’s Next?
Hidden in the OBBB is one tax benefit for all U.S. taxpayers – time.
The tax changes are generally effective for tax years after 2025. In an era where retroactive tax law has become the norm, this provides taxpayers and their trusted tax advisors time to analyze the bill’s impact and implement changes to their tax planning strategies.
About This Series: Where Expertise Meets Clarity in Tax Policy
This article kicks off a multi-part series that will unpack the tax implications of the “One Big Beautiful Bill” as further guidance and details emerge. In the coming weeks, we’ll explore specific provisions in greater depth—covering their real-world impact on individuals, businesses, and various industries—so you can stay ahead of what’s next. Keep an eye on this space for timely updates, practical insights, and strategic planning considerations tailored to your needs.
For an overview of the legislation’s structure and themes, see our article on the OBBB version passed by the House on May 22, 2025, here, and for nonprofits, here.
Questions? We’re Here to Help. If you’re wondering how the One Big Beautiful Bill may impact you, don’t navigate the changes alone. Reach out to your local Blue & Co. advisor to explore how these provisions could affect your financial strategy—and how we can help you prepare.
