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Let’s face it, keeping up with US tax laws can feel like a full-time job. Just when you think you’ve finally wrapped your head around one set of rules, something new rolls out. Well, get ready, because “The One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025, is definitely one of those “big somethings.”
This isn’t just a minor tweak here and there; it’s a pretty sweeping piece of legislation. It essentially takes a lot of those temporary tax cuts from 2017 – many of which were set to expire soon – and makes them permanent. Plus, it introduces some brand-new ideas to the tax code. If you’re an individual taxpayer, a business owner eyeing the US, or an American living overseas, these changes are going to impact you. We know tax talk can be daunting, so our goal here is to cut through the jargon and explain exactly what OBBBA means for your specific situation, in plain language.
Imagine the US government saying, “Okay, let’s put some solid foundations under our tax system.” That’s essentially what “The One Big Beautiful Bill Act” does. Many of the individual and business tax benefits from the 2017 Tax Cuts and Jobs Act (TCJA) had an expiration date at the end of 2025, creating a lot of uncertainty for planning. OBBBA swoops in to provide clarity, cementing those provisions into permanent law. It also brings in a few new deductions and modifies existing rules, with some changes kicking in for the 2025 tax year (meaning when you file in 2026), and others a bit later.
Ultimately, the bill aims to give the economy a boost, support families, and encourage more domestic business and manufacturing. It’s a broad stroke, but we’re here to help you understand the details that matter most to you.
For most individual taxpayers, including our American friends living abroad, OBBBA brings some genuinely good news in terms of benefits and new, albeit temporary, deductions.
This is fantastic news for most people! The increased standard deduction amounts that came with the TCJA are now permanent. This means a larger portion of your income is automatically protected from taxes, which could significantly lower your overall taxable income. For 2025, these amounts are:
What’s more, these numbers will continue to adjust with inflation every year, so their real value won’t get eaten away. And don’t worry, those familiar seven individual income tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are also here to stay, with their income thresholds adjusting for inflation annually.
Here’s some more good news for families! The Child Tax Credit (CTC) has received a permanent boost to $2,200 per qualifying child. This could mean a noticeable difference in your tax refund or how much you owe. There’s also an improved refundable portion, making this credit even more helpful for lower-income families.
If you live in a state with higher property or income taxes, you’ve probably felt the squeeze of the $10,000 State and Local Tax (SALT) deduction cap. Well, OBBBA offers some temporary breathing room, temporarily raising this cap to $40,000 ($20,000 for married filing separately) for tax years 2026 through 2029. While it won’t last forever, this is a significant increase that will be very welcome for many, especially those in high-tax states. Just remember, it’s indexed for inflation and will go back to $10,000 after 2029.
This is a specific, thoughtful provision aimed at supporting working Americans. OBBBA introduces new, temporary “above-the-line” deductions for certain tip income and qualified overtime pay.
For businesses, especially those planning to invest in growth or innovation, OBBBA brings some genuinely exciting and impactful changes designed to spur activity right here in the USA.
This is huge for businesses looking to expand! The OBBBA permanently brings back 100% bonus depreciation for eligible property purchased and put into service after January 19, 2025. What does this mean for you? Instead of gradually writing off the cost of new equipment or machinery over several years, you can now deduct the entire cost in the very year you buy it. This significantly improves your cash flow and makes investing in your business much more appealing.
If your company is dedicated to research and development, this is a real game-changer. OBBBA now allows you to immediately expense 100% of qualified domestic R&E expenditures. This reverses the previous rule that required you to spread these costs over five years. It’s a powerful incentive to keep your innovation engines running strong within the U.S. Just a heads-up: if your research is happening offshore, those expenses still need to be amortized over 15 years.
The new law makes it easier to deduct your business interest expenses. Starting in 2025, the calculation for your deduction limit reverts to a more favorable EBITDA-based approach (Earnings Before Interest, Taxes, Depreciation, and Amortization). This means businesses, especially those using debt to finance growth, can generally deduct more of their interest expenses.
The popular 20% Qualified Business Income (QBI) deduction, which benefits many pass-through entities like LLCs, S-Corps, partnerships, and sole proprietorships, is now a permanent part of the tax code. This means ongoing tax relief for countless small and medium-sized businesses. Plus, the bill introduces a new minimum $400 deduction for those with at least $1,000 of QBI and adjusts the income phase-out ranges to benefit even more taxpayers.
To really encourage domestic manufacturing, OBBBA includes a special provision for immediate 100% expensing of “qualified production property.” This includes specific types of nonresidential real estate used directly in manufacturing activities within the U.S. It’s a temporary but powerful boost for building new factories and production facilities, applicable for construction beginning after January 19, 2025, and before January 1, 2029, and placed in service before January 1, 2031.
For our international audience especially US citizens living abroad and businesses with operations spanning multiple countries OBBBA also brings some important updates you’ll want to be aware of.
If you’re a US citizen working overseas, the Foreign Earned Income Exclusion (FEIE) is likely a critical tool in your tax planning. For tax year 2025, the FEIE limit has increased to a robust $130,000 (up from $126,500 in 2024). This means you can exclude even more of your foreign-earned income from US taxation. The Foreign Housing Exclusion (FHE), which typically works alongside the FEIE, will also see a proportional increase. These are welcome adjustments that should mean more tax relief for many expats.
For larger multinational corporations, there are some technical but important adjustments to how Global Intangible Low-Taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) are treated. OBBBA permanently reduces the deduction rates for both, and GILTI even gets a new, more technical name: “net CFC tested income” (NCTI). The Base Erosion and Anti-Abuse Tax (BEAT) rate is also permanently set at 10.5%, with broader implications for large multinational groups. These changes definitely require a close look to ensure your global tax strategy is optimized.
Remember all that discussion about a controversial “Section 899” that threatened retaliatory taxes on non-U.S. entities from countries deemed to have “unfair foreign taxes”? For many, that raised serious concerns about potential double taxation or trade issues. We’re very happy to report that this specific, worrying provision was removed from the final bill. This means less uncertainty and a more predictable environment for international businesses and expats.
To learn more about how you can reduce your taxes and save money, check out the helpful resources on our blog or contact us today to schedule a consultation.
