Tax Byte

OBBBA Tax Changes – Critical Updates, Client Actions & Insights from Our Upcoming Webcast

Karen Brosi, CFP, EA & Mark Seid, EA, CPA, USTCP

One Big Beautiful Bill Act making sweeping permanent and temporary changes to tax law. With over 250 pages of tax provisions in the OBBBA, clients will need to rely on your expertise to guide them through these changes. Here’s some highlights for what will matter most for you and your clients:

Individual Tax Changes

Rates & Brackets:

Seven tax brackets (10%/12%/22%/24%/32%/35%/37%) from the 2017 Tax Cuts and Jobs Act were made permanent with enhanced inflation adjustment for 10%/12%/22% brackets.
Client Outlook: Long-term tax planning strategies are now available for some middle-income clients.

Standard Deduction:

The standard deductions for 2025 have been increased to $15,750 (single), head of household $23,625, and married filing jointly to $31,500, then inflation-adjusted.
Client Outlook: Clients can now expect to see higher baseline deductions.

New Senior Deduction:

A temporary $6,000 deduction per taxpayer for ages 65+ will be available from 2025-2028. This deduction will phase out when modified gross income exceeds $75,000 (single) or $150,000 (married filing jointly).
Client Outlook: The temporary deduction threshold may create new retroactive planning opportunities for retirees in 2025.

Child Tax Credit:

The expiring child tax credit is now permanent and increases to a $2,200 maximum in 2026. The credit will be adjusted for inflation thereafter.
The addition of “Trump Accounts” will give parents a $1,000 tax-free credit for each child born between 2025-2028.
Client Outlook: SSN requirements should be verified. Clients may require explanations on eligibility rules.

SALT Cap:

The SALT cap for itemized deductions is being raised from $10,000 to $40,000 in 2025. This new cap will be adjusted for by 1% inflation each year through 2029, ending at the beginning of 2030.
The phaseout for the increase in itemized deductions starts at $500,000 MAGI.
Client Outlook: High-tax state clients should consider front-loading their state and local tax payments in order to take advantage of these increased deductions.

Workforce Deductions (2025-2028):

Tips: From 2025-2028, qualifying individuals will be able to deduct $25,000 annually from the federal taxable income. Qualifying individuals will typically work in occupations which rely on tips including, waiters, bartenders, and more. This deduction phases out at $150,000 (single) and $300,000 (married filing jointly).
Overtime: Qualified overtime compensation can be deducted up to $12,500 (single) and $25,000 (married filing jointly).
Client Outlook: Service industry/blue-collar clients will see their total taxable income reduced, however Social Security and Medicare taxes will be withheld and paid on tips and overtime.

Business Tax Changes

R&D Expensing:

Permanent immediate expensing has been made available for domestic research and development expenses.
Small businesses can amend their 2022-2024 returns of up to $31 million in gross receipts.
Client Outlook: Filing amended returns for cash refunds, may be possible for small businesses seeking to amend returns for 2022-2024.

Bonus Depreciation:

The 100% depreciation is now permanent. This replaces the phase-down of 40% for property after January 19, 2025.
A temporary 100% expensing for qualifying structures that start construction in 2025-2028 will be granted.
Client Outlook: Clients may have the ability to accelerate their 2025 purchase plans, especially manufacturing clients.

Pass-Through Deduction:

The 20% deduction rate for qualified business income (QBI) is now permanent. The phase-out threshold on deductions for business entities like SSTBs have been increased from $50,000 to $75,000 (single) and $100,000 to $175,000 (married filing jointly).
A new $400 minimum deduction for active participants that is adjusted for inflation is in effect.
Client Outlook: More small business owners may qualify for QBI deductions after a review of client entity structures.

Estate & International

Estate Tax Exemption:

The lifetime gift tax exemption has been increase to $15 million (single) and $30M (married filing jointly) permanently, while being adjusted for inflation.
Client Outlook: Ultra-HNW clients may gain planning flexibility with the permanent increase to lifetime gift tax exemptions.

International:

GILTI (Global Intangible Low-Taxed Income) is renamed to Net CFC Tested Income (NCTI) with a new tax rate structure of 12.6% to 14% applied after foreign tax credits
The BEAT rate increases to 10.5% while maintaining current rules that allow US tax credits to offset BEAT liability.
Client Outlook: Your multinational clients may be facing higher effective rates as a result of these changes. New tax planning is now essential to their success.

Bottom Line for Tax Professionals

This is your moment. The OBBBA changes demand proactive leadership—exactly what top tax pros like you deliver. You’ll unlock client savings through R&D amendments, bonus depreciation, and senior deductions while navigating new complexities with confidence. Western CPE stands with you, providing timely updates and clear guidance every step of the way. Together, we’ll turn these changes into opportunities to demonstrate your indispensable value. Plunge headfirst into the changes and challenges the OBBBA has to offer with our OBBBA Webcast Course.