Resources

Signed into Law: July 4, 2025
Effective Date: Most changes start January 1, 2026
President Trump signed the OBBBA into law on July 4, 2025. The Act introduces comprehensive tax reforms, extending and making permanent key provisions from the 2017 Tax Cuts and Jobs Act (TCJA), along with several new rules—primarily impacting high-income individuals. Note: “Permanent” laws have no set expiration date, but may be changed by Congress in the future.
Key Provisions
Individual Tax Changes

Estate, Gift & Generation-Skipping Transfer Taxes

Lifetime exemption increases to $15 million per individual (up from ~$14 million), adjusted annually for inflation.The exemption is permanent (no automatic expiration).

Income Tax Rates & AMT

Top individual tax rate remains at 37% (permanently avoids reverting to 39.6%).

Alternative Minimum Tax (AMT) exemption amounts and phase-out  extended with minor adjustments, keeping AMT uncommon.

Itemized Deductions & Miscellaneous

Mortgage interest deduction permanently limited to $750,000 of new debt.

Home equity loan interest continues to not be deductible, with limited exceptions, consistent with the rules initially set by the TCJA.

Miscellaneous itemized deductions (e.g., investment management, tax prep fees) are permanently disallowed.

The 60% AGI limit for cash charitable contributions is permanent. However, only contributions exceeding 0.5% of income are deductible—high-income donors should plan ahead.

State and Local Tax (SALT) Deduction

SALT deduction cap increases to $40,000 for joint filers ($20,000 for separate filers) for 2025–2029. This is an increase from the current deduction cap of

$10,000 for all filers.

Cap phases out for joint filers with income over $500,000; eliminated above $600,000 (amounts halved for separate filers). The deduction never falls below $10,000.

Both cap and phase-out thresholds increase by 1% per year.

After 2029, the cap reverts to $10,000.

Business Tax Changes

Pass-Through Entity Tax (PTET)

OBBBA does not restrict PTETs. Owners in high-tax states should consider this election for

relief from the SALT cap.

Qualified Business Income (QBI) Deduction

The 20% QBI deduction for pass-throughs (partnerships, S-corps, LLCs) is made permanent,

resulting in a top effective tax rate of 29.6% on such income.

Qualified Small Business Stock (QSBS)

New three-tiered capital gains exclusion:

• 50% exclusion for stock held 3+ years
• 75% for 4+ years
• 100% for 5+ years (unchanged)

Maximum capital gain exclusion increases from $10 million to $15 million per issuer (potentially

higher if gain exceeds 10x basis).

QSBS eligibility gross asset test rises from $50 million to $75 million.

Other Business Provisions

100% first-year bonus depreciation reinstated for certain property.

Section 179 deduction cap increased to $2.5 million in 2025 (up from $1.22M in 2024), reduced by

expenditures for Section 179 property that exceeds $4 million; 100% depreciation for some

commercial real estate.

Full expensing for domestic R&D expenditures.

Qualified Opportunity Zone (QOZ) program renewed permanently with updated

requirements.

Business interest deduction expanded; excess business loss calculation modified.

International Tax Provisions

Adjustments to foreign tax credits, FDII, GILTI, and BEAT.

Tax rates: FDII at 33.34% (down from 37.5% but with new structure), GILTI at 40%(down from 50%, but with new formula for calcuation), and BEAT at 10.5% (up from 10%).

Deemed paid credit for taxes on “tested income” under subpart F increases from 80% to 90%.

Looking Ahead

The OBBBA introduces significant and generally favorable changes for high-income individuals and business owners. Changes such as expanded QSBS rules and a higher estate/gift exemption simplify planning, but revisions to charitable deductions may require extra consideration.

We will continue to monitor further legislative updates. For questions, contact:

info@millermusmar.cpa