On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) into law, enacting one of the most significant tax packages in recent memory. While some provisions extend elements of the 2017 Tax Cuts and Jobs Act (TCJA), others introduce entirely new planning opportunities—and potential pitfalls—for business owners and high-income individuals.
At Revonary, we’re reviewing every aspect of this legislation to understand how it affects our clients. This article provides a high-level summary of the most relevant provisions, what they mean in practical terms, and what you should be thinking about as we head into tax planning season.
Previously, the ability to deduct the full cost of qualifying equipment, vehicles, and improvements had been phasing out since 2023. As of June 2025, bonus depreciation for 2025 stood at 60%. Today, 100% bonus depreciation is permanent for eligible property placed in service.
Why It Matters:
This gives business owners long-term certainty when investing in capital assets. Whether you’re buying computers, vehicles, or manufacturing equipment, you can continue to write off the entire cost up front, creating significant tax savings in the year of purchase. For cash-flow–conscious businesses, this allows more flexibility to reinvest without waiting years for depreciation to phase in.
The bill increases the Section 179 expensing limit to $2.5 million, with a phase-out beginning at $4 million. This deduction is especially useful for smaller businesses that want to immediately expense capital expenditures like equipment, software, or leasehold improvements.
Why It Matters:
Unlike bonus depreciation, Section 179 can apply to both new and used assets and allows for more flexibility in how deductions are applied. For many of our clients, this increase will create additional opportunities to manage taxable income, particularly when combined with bonus depreciation strategies.
The 20% Qualified Business Income (QBI) deduction for pass-through entities (originally scheduled to sunset in 2026) has now been made permanent. In addition, the income thresholds that limit access to the deduction for “specified service trades or businesses” (SSTBs) like physicians, attorneys, consultants, and financial advisors have been increased:
Why It Matters:
This is a major opportunity for service-based business owners who were previously excluded from this deduction due to income, including physicians, attorneys, consultants, and other professionals. With the new thresholds and permanent status, many clients may now qualify. It also underscores the importance of entity planning, compensation structuring, and income timing.
The cap on state and local tax (SALT) deductions increases from $10,000 to $40,000 through 2029, after which it reverts unless extended. The expanded deduction is phased out for taxpayers earning more than $500,000 and applies immediately for the 2025 tax year.
Why It Matters:
This is particularly relevant for Revonary clients in New York and other high-tax states. While the phase-out will limit its usefulness for some high earners, clients with income under the $500K threshold may see real benefits from this change. It also makes entity-level tax elections like the Pass-Through Entity Tax (PTET) more important to evaluate in light of broader SALT relief.
Under TCJA, businesses were required to amortize domestic research and development (R&D) expenses over five years. The OBBB reverses this rule, allowing immediate expensing of domestic R&D investments.
Why It Matters:
This change is particularly valuable for startups and growth-stage companies investing in software, product development, or process improvements. It reduces taxable income and improves cash flow, especially when paired with expanded R&D tax credits.
Two new deductions were added under the OBBB that may benefit owners and their household members:
Starting in 2025 and running through the end of 2028, employees can deduct certain tip and overtime income from their federal taxable income, but these deductions are separate and subject to caps and income thresholds:
Both deductions begin to phase out at $150,000 of adjusted gross income ($300,000 for joint filers). These deductions do not reduce payroll taxes like Social Security or Medicare and apply only to federal income tax.
While the benefit is meaningful for service and hourly workers, reporting requirements remain unclear. It’s likely employers will need to track and report these amounts, but IRS guidance is still pending.
Taxpayers age 65 or older can claim a $6,000 deduction ($12,000 for couples) through 2028. The deduction phases out for individuals with Modified AGI above $75,000 and joint filers above $150,000, and it fully disappears at $175,000 for individuals and $250,000 for couples. This deduction is effective from the 2025 tax year and runs through the 2028 tax year, after which it is set to expire.
This has been discussed in the media as the “no tax on social security” benefit. It’s important to note that’s not exactly what this is: social security income remains taxable, but in some cases, this deduction will reduce income below the threshold where these benefits are taxed.
Starting in 2026, the One Big Beautiful Bill introduces a permanent tax break allowing taxpayers who take the standard deduction to claim an above-the-line charitable deduction: $1,000 for single filers and $2,000 for married couples filing jointly. This deduction reduces your adjusted gross income (AGI), giving non‑itemizers a tax incentive to give.
Why It Matters:
This change encourages charitable giving among the majority of taxpayers who don’t itemize deductions by providing a direct tax benefit for modest donations. It simplifies both donation and tax-planning decisions: anyone eligible for the standard deduction can now claim this benefit automatically each year.
Beginning in 2026, the federal estate, gift, and generation-skipping transfer (GST) tax exemption increases to $15 million per individual, or $30 million for married couples, indexed for inflation. This replaces the roughly $14 million exemption in effect for 2025 and avoids the previously scheduled reversion to approximately $7 million.
Why It Matters:
This provides high-net-worth individuals and families with expanded, long-term opportunities for wealth transfer planning. For Revonary clients, it creates a more stable environment for strategies like lifetime gifting, trust funding, and generational transfers, without the looming uncertainty of a future drop in the exemption. While the higher exemption doesn’t take effect until 2026, planning ahead now allows clients to align their estate strategies with the new rules and potentially avoid costly tax exposure later.
|
Provision |
Pre-OBBB |
Post-OBBB |
|
Bonus Depreciation |
Phasing out (60% in 2024) |
100% permanent |
|
Section 179 Expensing |
$1.22M limit |
$2.5M limit (phase-out at $4M) |
|
QBI Deduction (§199A) |
Expiring in 2026 |
Made permanent; higher SSTB limits |
|
SALT Deduction Cap |
$10K |
$40K through 2029 |
|
R&D Expensing |
5-year amortization |
Immediate for domestic R&D |
|
Senior Deduction |
N/A |
$6K ($12K MFJ) through 2028 |
|
Tip & OT Exclusion |
N/A |
Up to $25K/year for eligible workers |
The OBBB introduces meaningful opportunities, but taking advantage of them requires proactive planning. At Revonary, we’re already reviewing each client’s situation to assess the impact and identify strategies that align with the new law. That includes:
Whether it’s permanent deductions, changes to state tax deductibility, or newly introduced credits, our goal is to help you benefit; not just comply.
If you’re already engaged with Revonary for tax planning, we’ll cover all of this in your scheduled fall meetings. Many of these strategies must be implemented before year-end to impact your 2025 tax return. If you’re not engaged for our tax planning services or aren’t yet a client, contact us now to get the ball rolling on your 2025 tax strategy.