The One Big Beautiful Bill Act Back to House for Approval – Detailed Analysis

Note: This Article has been updated with the latest changes released by the Senate.

On July 1, the Senate approved its version of the multi-trillion dollar reconciliation bill (“Senate bill”) known as the One Big Beautiful Bill Act (OBBBA). OBBBA is a reconciliation bill that includes budgetary provisions relating to the border, defense, energy policy, spending cuts, the debt ceiling, and taxes that were approved. The Senate bill passed by a vote of 51-50, with Vice President JD Vance breaking the tie. The bill will now be reconsidered by the House before final passage. It extends or makes permanent many of the provisions contained in the Tax Cuts and Jobs Act (TCJA), meets many of the tax campaign promises made by President Trump, and adds additional tax provisions, which are summarized more fully below. The bill passed using the current policy as a baseline, which means it will cost $3.8 trillion over 10 years.

Provisions Affecting Businesses

Research and Experimentation (R&E) Deductions: The TCJA required taxpayers to capitalize and amortize domestic R&E over five years, using a midyear convention. Foreign R&E is required to be amortized over 15 years.

OBBBA permanently allows immediate deductibility of R&E expenses rather than five-year amortization for R&E beginning after Dec. 31, 2024. Businesses with annual gross receipts of $31 million or less are allowed to apply this change retroactively for tax years beginning after Dec. 31, 2021. This means businesses could amend returns and potentially get refunds. Taxpayers with domestic R&E expenses incurred after Dec. 31, 2021, and Jan. 21, 2025, can elect to accelerate the remaining deductions over a one- or two-year period. Foreign R&E remains subject to 15-year amortization.

The Senate bill creates new IRC Section 174A, which would permanently allow taxpayers to either deduct domestic research or experimental expenditures or elect to capitalize and recover domestic research or experimental expenditures ratably over at least 60 months, beginning with the month in which the taxpayer first realizes benefits from those expenditures.

Amounts incurred for the development of software are included in the definition of R&E expenses.

Taxpayers should review their specific tax situations to determine which option may produce the best result. For example, deducting the expenses in the year incurred may not generate the best tax result if it generates excess business losses under IRC section 461(l).

OBBBA also includes rules to coordinate the immediate deductibility of R&E with the research credit.

Bonus Depreciation: OBBBA makes the first-year bonus depreciation provisions of section 168(k) permanent. The allowance is increased to 100% for property acquired and placed in service after Jan. 19, 2025. These provisions allow businesses a continued favorable expense deduction timing for property types that qualify under section 168. The Senate bill allows immediate deductions for domestic R&E expenses, maintains 15-year amortization of foreign expenses starting in 2025, and provides the possibility of amended returns to claim refunds for two prior years. Special transition rules for small business taxpayers (gross receipts $31 million or less) apply, including election to make or revoke the reduced Section 41 research credit under section 280C(c)(2) on an amended return.

Qualified Production Property: Manufacturers can claim 100% deduction for the cost of new “qualified production property,” including real property, defined as any property used in a “qualified production activity” (“the manufacturing, production, or refining of a qualified product” which “result[s] in a substantial transformation of the property comprising the product.”). A “qualified product” means any tangible personal property if such property is not a food or beverage prepared in the same building as a retail establishment in which such property is sold. It applies to non-residential real property other than “real property which is used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to the manufacturing, production, or refining of tangible personal property.” The change applies to qualified property placed in service after the date of enactment and before Jan. 1, 2031.

Business Interest Limitation: OBBBA reinstates the section 163(j) interest deduction limitation using a calculation of income that excludes the deduction for depreciation, amortization, or depletion. The provision is for taxable years beginning after Dec. 31, 2024. The Senate bill permanently modifies the definition of “motor vehicle” for purposes of the floor plan financing interest and floor plan financing indebtedness definitions. The Senate bill contains a new ordering rule to calculate 163(j) limit prior to other interest capitalization. In addition, interest capitalized under sections 263(g) or 263A(f) is not deemed interest for the limitation. Subpart F, GILTI, and section 78 gross-ups are excluded from taxable income for purposes of the calculation.

Similar to bonus depreciation, there is bipartisan support for the extension of changes to the section 163(j) interest limitation, as it was previously included in the H.R. 7024 bipartisan legislation in 2024.

Excess Business Losses Limitation: The Excess Business Loss (EBL) rule applies to non-corporate taxpayers and is defined as the amount by which deductions (excluding net operating losses and IRC section 199A Qualified Business Income deductions) related to trades or businesses exceed income from such trade or business. Such net business losses are currently allowed only up to certain thresholds (which for 2025 are $626,000 for joint filers and $313,000 for other filers). Any business losses above these thresholds are EBLs. Any disallowed EBL is carried forward and is treated as a net operating loss in future years, subject to an 80% of taxable income limitation.

Under current law, the EBL rules are scheduled to expire after 2029. The OBBBA makes the EBL rule permanent for years after 2029.

Limit on Executive Compensation: OBBBA provides an aggregation rule to section 163(m) and provides a deduction limit of $1 million for total payments of a controlled group of corporations.

Employee Retention Tax Credit: OBBBA retroactively bars the IRS from issuing refunds for Employee Retention Tax Credit (ERTC) claims for Q3 2021 (and in some instances Q4 2021 (collectively, “affected quarters”) filed after Jan. 31, 2024. The bill also would require ERTC promoters to comply with due diligence requirements with respect to a taxpayer’s eligibility and the amount of an ERTC for affected quarters. In addition, the bill provides a $1,000 penalty for each failure to comply, and it would also extend the penalty for excessive refund claims to employment tax refund claims.

Some commentators have raised doubts about whether such retroactive legislation satisfies constitutional standards. Meanwhile, employers with legitimate ERTC claims for any eligible quarter were already severely disadvantaged by the IRS processing moratorium simply because their claims were submitted on or after Jan. 31, 2024. These employers rightfully feel short-changed, as they submitted legitimate ERTC claims well within the statute of limitations for filing claims. Under current law, taxpayers had until April 15, 2025, to submit claims for 2021 ERTC refunds. Adding insult to injury, many employers have already paid additional income tax by amending their income tax returns, as required, to account for the effects of the ERTC claim while still waiting for their ERTC refunds.

Employers may wish to speak with their legal counsel to evaluate other options that could compel the U.S. government to finally process and pay their refund claim. In October 2024, the IRS extended the time to appeal denial letters beyond the typical 30-day period to the entire two years after the date of the denial letter. However, an appeal will not extend the time to file a refund suit, so taxpayers must be vigilant not to let that deadline pass. Employers may also want to consider filing “protective claims for refund” that would allow them to recoup the additional income tax they paid in anticipation of their ERTC refund in the event the IRS denies some part or all of the ERTC refund after the statute of limitations expires on claiming the associated income tax refund expires. OBBBA extends the amount of time that the IRS has to examine and deny or claw back erroneous or excessive ERTC claims for affected quarters from five years to six years. Also, for employers who claimed the ERTC in 2020 or 2021for affected quarters, but have not amended their tax returns for those years, the IRS will have six years to assess additional tax related to the wage deductions related to the ERTC claims.

Because the Senate bill only changes section 3134, which only applies to the affected quarters, taxpayers may still be able to claim refunds and assert statute of limitations defenses to ERTC claims filed for other quarters.

Payments from Partnerships to Partners: OBBBA makes section 707(a)(2), which addresses payments from partnerships to partners acting other than in the capacity of a partner with respect to services or contributions, self-enacting. Under current law, this type of transaction requires IRS regulations to implement its provisions. This provision is not retroactive, but it is not intended to change the substance of the current law.

Clean Energy: OBBBA makes significant changes that mostly eliminate clean energy credits, with modifications generally based on timing and reduced amounts.

The clean vehicle credit under section 30D is repealed for vehicles acquired more than 180 days after date of enactment. The credit for qualified commercial clean vehicles under section 45W is generally repealed for vehicles acquired more than 180 days after enactment, with vehicles under 14,000 pounds subject to critical mineral and battery component restrictions in section 30D after June 16, 2025. The alternative fuel refueling property credit in section 30C is repealed for property placed in service after date of enactment. The Senate bill also terminates section 179D deduction for energy efficient commercial buildings that begin construction more than 12 months after enactment date.

OBBBA repeals the special five-year cost recovery period in section 168(e)(3)(B) for energy property in sections 45Y(b)(1)(A), 48E(b)(2), and 48E(c)(2) that are placed in service after the enactment date. A last-minute amendment removed a new excise tax and eased some restrictions on the placed-in-service dates.

Under OBBBA, the credit for wind and solar facilities is reduced to 60% of the otherwise available credit for construction beginning in 2026, 20% for construction beginning in 2027, and 0% beginning for 2028. Eliminated the “later of” rule to start phase down and termination of the credit after 2032 and also denies credit for facilities that received material assistance from a prohibited foreign entity. The Senate bill also disallows credit for wind and solar leasing arrangements.

With respect to carbon sequestration under section 45Q the Senate bill prohibits certain foreign entities from claiming credit beginning the year of enactment. For facilities placed in service after 2022, it enacts a parity credit value of $17 regardless of end use and indexes for inflation. In addition, the Senate bill retains the $36 credit for direct air capture and retains transferability.

OBBBA denies credits for zero-emission nuclear power production under section 45U for taxpayers that are specified foreign entities beginning on the date of enactment. It also denies credit for foreign-influenced taxpayers two years after enactment. It further denies credit for facilities that use nuclear fuel provided by a covered nation or entity (after Jan. 31, 2027) unless a binding written contract was in effect before Jan. 1, 2023.

The section 45V credit for production of clean hydrogen is repealed for facilities that begin construction after Jan. 31, 2025.
The credit in section 45X for advanced manufacturing production adds a new phaseout for critical minerals at 75% for 2031, 50% in 2032, and 25% in 2033. No credit is allowed after 2033. Wind energy components produced and sold after Jan. 31, 2027, are denied. Foreign entity and material assistance restrictions also apply, and transferability is retained.

OBBBA extends the clean fuel production credit under section 45Z through 2031. However, it restricts the credit for certain foreign entities, precludes the credit for entities claiming the sustainable aviation fuel credit, and eliminates section 6426(k) credits after Sept. 30, 2025. Under the Senate bill, fuel producers can utilize feedstock produced anywhere, but the value of the 45Z credit is reduced by 20% for fuel produced from feedstocks produced or grown outside the U.S., effective Jan. 1, 2026. The Senate bill also eliminates the “special rate” of the credit currently available for SAF. The change would essentially cap the value of the credit at $1 per gallon for all eligible fuels, including SAF. Currently, SAF is eligible for a credit of up to $1.75 per gallon.

Qualified Opportunity Zones (OZ): OBBBA includes a permanent rolling 10-year designation beginning Jan. 1, 2027, maintains the current OZ designation process, and provides strengthened eligibility requirements.

New Market Tax Credits: OBBBA makes these credits permanent.

Employer-provided Child Care: OBBBA permanently increases the credit to help all businesses cover more of the costs of providing child care or supporting employee access to child care services. Additionally, the bill creates a boost for small businesses specifically to help offset a greater portion of the cost. Businesses are provided an increased percentage of qualified expenses of 40%, with a $500,000 cap. Small businesses (gross receipts under $31 million) are given a 50% rate for qualifying expenses with $600,000 maximum credit.

Provisions Affecting Individuals

Tax Rates: OBBBA makes the regular income tax rate schedules under section 1 permanent for individuals as enacted by the TCJA, which generally modifies the indexing for inflation for bracket thresholds by providing one additional year of inflation in the cost-of-living adjustment (COLA). The COLA for regular income tax brackets for 2026 is generally the percentage by which the chained CPI for 2025 exceeds the chained CPI for 2016. The result is that the bracket thresholds are larger than they would otherwise be without the additional year of inflation. These changes both cement current tax rate brackets and provide a more favorable COLA for future years. The Senate bill also provides inflation adjustments for the 10% and 12% brackets.

Standard Deduction: OBBBA makes the temporary increases to the standard deduction permanent as enacted under section 63 of the TCJA and modifies the inflation indexing of the standard deduction by adding one additional year of inflation in the COLA starting in taxable years beginning after Dec. 31, 2025. OBBBA also increases the amount of the standard deduction in taxable years beginning after 2025. Starting in 2025, the standard deduction will increase to $15,750 for individual filers and $31,500 for joint filers, which are adjusted for inflation.

Personal Exemption: OBBBA makes permanent the personal exemption in section 151 that was temporarily reduced to zero under the TCJA.

SALT Cap: Under prior TCJA provisions, individuals who itemize deductions may only deduct up to $10,000 in state, local, and foreign income, property, or sales and use taxes (the SALT cap). In the past several years, most states with an individual income tax have enacted laws that allow owners of pass-through entities to legitimately work around this limit by imposing an entity-level tax on the business.

OBBBA increases the limit to $40,000 with phase outs beginning at $500,000 of income. The increase is only temporary for five years. In 2026, the thresholds would increase by 1% or to $40,400 for households with income under $505,000. The thresholds would continue to increase by 1% each year through 2029, after which the SALT limit would be permanently reduced to $10,000.

Pass-Through Entity Tax (PTET) Deduction: Unlike the House-passed version of H.R. 1, the Senate bill essentially maintains the status quo with respect to PTET deductions. The House version repealed the PTET deduction for specified service trades or businesses and placed restrictions which could limit the deduction by one-half or even more in certain circumstances.

Section 1202 Small Business Stock: OBBBA provides tiered gain exclusion for qualified small business stock (QSBS) of 50% for QSBS held for at least three years, 75% for QSBS held for at least four years, and 100% for QSBS held for at least five years. The change only applies to stock originally issued after the date of enactment. The gain excluded under the three- and four-year rules would not be treated as a preference item for purposes of the AMT if the stock were to be acquired after Sept. 27, 2010.

The per-issuer cumulative exclusion limitation increases from $10 million to $15 million, with an annual inflation adjustment increase. Taxpayers that fully use the limitation as inflation adjusted in any tax year are not eligible for additional inflation adjustments. The conforming amendments ensure married filing separate taxpayers benefit from the adjusted inflation limitations on a per-issuer basis. In addition, OBBBA would increase the “aggregate gross asset” calculation under IRC Section 1202(d) to $75 million from $50 million, that is also subject to an annual inflation adjustment.

Sec 199A Qualified Business Income (QBI) Deduction: OBBBA makes the QBI deduction, which was scheduled to expire after 2025, permanent. It also makes a number of other structural changes to the law for tax years beginning after Dec. 31, 2025. While the House version raised the deduction to 23%, the Senate version returns it to 20% while expanding the limit phase-in range.

Charitable Contributions: The Senate bill creates a permanent deduction for taxpayers who do not itemize their deductions. For tax years beginning after Dec. 31, 2025, non-itemizing taxpayers can claim a deduction of up to $1,000 if a single filer ($2,000, married filing jointly) for certain charitable contributions.

For taxpayers who itemize their deductions, the Senate bill would limit otherwise allowable charitable contribution deductions to amounts in excess of a 0.5% floor over the contribution base (generally, adjusted gross income without regard to net operating losses) for tax years beginning after Dec. 31, 2025. New carryover rules apply to amounts not entitled to be deducted. The Senate Bill also permanently extends the increased 60% contribution limit for cash gifts to qualified charities.

Child Tax Credit: OBBBA increases and extends the child tax credit under section 24(h). A maximum child tax credit of $2,200 is allowed for taxable years beginning after Dec. 31, 2024.

AMT Exemption: The Senate Bill follows H.R. 1 with some language variations on the inflation adjustment. The sunsetting provisions of the individual AMT exemption amounts and phase-out thresholds under section 55A are repealed in the Senate bill, and the TCJA exemptions amounts are made permanent. This means that taxpayers who would have been subject to an increased additional alternative minimum tax will now continue to have the higher exemption levels previously provided by TCJA.

Limitation of Tax Benefit of Itemized Deductions: OBBBA permanently repeals the “Pease” limitation on itemized deductions and creates a new formula to apply to taxpayers only in the highest tax bracket, generally capping the benefit of otherwise allowable itemized deductions at 35%.

Repeal of Certain Miscellaneous Itemized Deductions: OBBBA permanently suspends certain miscellaneous itemized deductions that were scheduled to expire under TCJA. These include unreimbursed employee expenses, investment advisory fees, tax preparation fees, certain legal fees, hobby expenses, and safe deposit box rentals. However, OBBBA removes unreimbursed expenses for eligible educators from the list.

Loan Limit on Interest Deduction on Principal Residence: The Senate bill follows H.R. 1 but the $750,000 ($375,000 married individual filing separately) limit on principal residence acquisition indebtedness under section 163(h), scheduled to expire under TCJA, is made permanent, as is the exclusion of interest on home equity indebtedness from the definition of qualified residence interest. This provision may limit tax benefits for taxpayers facing rising housing prices and interest rates. OBBBA allows certain mortgage insurance premiums to qualify as deductible interest.

Personal Casualty Losses: The temporary limitation on personal casualty losses in section 165(h)(5) under TCJA is made permanent and includes state declared disasters. TCJA allowed an individual taxpayer to claim an itemized deduction for a personal casualty loss if the loss is attributable to a declared federal disaster area. A loss is deductible only to the extent of the sum of the individual’s personal casualty gains plus the amount by which aggregate net disaster-related losses exceed 10% of the individual taxpayer’s adjusted gross income. For individual taxpayers, personal casualty losses are losses of property not connected with a trade or business, or a transaction entered into for profit, if such losses arise from fire, storm, shipwreck, other casualty, or theft. Personal casualty losses are deductible to the extent they exceed $100 per casualty.

Wagering Losses: OBBBA allows deductible expenses incurred in gambling activity beyond 2025 but limits the losses to 90% of the amount in excess of gains from the taxable year.

Moving Expenses: The Senate bill would permanently repeal the deduction for moving expenses under section 217(k), except in the case of a member of the Armed Forces (or their spouse or child) to whom section 217(g) applies. The bill would also permanently repeal the qualified moving expense reimbursement exclusion under 132(g)(2), except in the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station.

Tip Income: OBBBA allows an above-the-line deduction for tip income with phaseout amounts beginning at $150,000 ($300,000 married filing jointly) for tax years 2025 through 2028. This applies to both employees and independent contractors in industries that customarily receive this income. A list of eligible industries will be provided by the Treasury.

New Deduction for Seniors: OBBBA increases the House temporary bonus deduction to $6,000 under section 63(f) for all individuals who have attained age 65 (and for each spouse meeting the applicable criteria in the case of a joint return). The bill allows a deduction for taxable years 2025 through 2028 beginning after Dec. 31, 2024, and before Jan. 1, 2029. This additional amount is $6,000 per individual and phases out for taxpayers with income over a threshold amount of $150,000 for taxpayers filing jointly and $75,000 for all other taxpayers.

Overtime Pay: For taxable years 2025 through 2028, OBBBA provides a deduction for qualified overtime pay of $12,500 ($25,000 for married filing joint filers). Qualified overtime compensation is overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act (FLSA) in excess of the regular rate at which such individual is employed. The deduction phases out for AGI over $150,000 ($300,000 for married filing joint filers).

Interest on Domestic Auto Purchases: For taxable years 2025 through 2028, a deduction is allowed for qualified passenger vehicle loan interest. Individuals are allowed an above-the-line deduction for interest on loans used to purchase American-made cars. The deduction is capped at $10,000, with income phase-outs starting at $100,000 (single filers) and $200,000 (married filing joint filers). OBBBA requires a VIN number and excludes campers and RVs.

Clean Energy: The Senate bill terminates several individual credits, including the clean vehicle credits for new and previously owned motor vehicles, the energy efficient home improvement credit, the residential clean energy credit, and the new energy efficient home credit. The repeal is effective 180 days from the date of enactment, except for the new energy efficient home credit, which is effective 12 months from the date of enactment.

Family Medical Leave and Adoption Credit: OBBBA makes the family medical leave credit available to business under section 45S permanent, makes the cost of family leave insurance eligible for the credit, and lowers the eligible employee tenure from 12 to 6 months. OBBBA makes the adoption tax credit partially refundable up to $5,000 and indexed for inflation beginning in tax years starting after Dec. 31, 2024. The refundable portion of the credit cannot be carried forward.

Section 529 Accounts: OBBBA would allow tax-exempt distributions from Sec. 529 savings plans to be used for additional educational expenses in connection with enrollment or attendance at an elementary or secondary school. The bill would also allow tax-exempt distributions from 529 savings plans to be used for additional qualified higher education expenses, including “qualified postsecondary credentialing expenses.”

Trump Accounts: OBBBA creates Trump accounts that allow parents to open accounts for children under 8. Parents and others can contribute up to $5,000 annually (adjusted for inflation) until the beneficiary turns 18. The accounts enjoy preferential tax treatment when amounts are spent on certain qualifying expenses. The trustee can access the account after reaching age 18 and has until age 31 to use the funds in a tax-advantaged manner. OBBBA also provides a pilot federal government complementary contribution of a one-time transfer of $1,000 into Trump accounts for children born between 2025 and 2028. To be eligible, the child needs to be a U.S. citizen at birth with an SSN which must be provided. There are no income limits or phaseouts.

Provisions Affecting Colleges and Universities

Excise Tax on Colleges and Universities: The TCJA required certain colleges and universities with at least 500 students paying tuition and endowments exceeding $500,000 per student to pay an excise tax of 1.4% of their net investment income for the year. This is a flat rate for these institutions. In determining the per student amount, assets which are used directly for educational purposes are excluded.

OBBBA creates a tiered system that ranges from 1.4% to 8%. The rate depends on the ratio of the institution’s assets to students.

• Student-Endowment Ratio of up to $500,000 – no excise tax applies
• Student-Endowment Ratio of $500,001 to $750,000 – 1.4%
• Student-Endowment Ratio of $750,001 to $2,000,000 – 4%
• Student-Endowment Ratio of over $2,000,000 – 8%

An applicable education institution must have at least 3,000 tuition-paying students in a prior year, have more that 50% tuition-paying students located in the U.S., not be a state college or university, not be a qualified religious institution, and the student-adjusted endowment is at least $500,000.

Provisions Affecting Trusts, Estates, and Gifts

Tax Rates: The income tax rates and brackets for estates and trusts enacted in the TCJA are made permanent with modifications for inflation. To the extent possible, taxpayers may wish to revisit their estate and trust planning for this change, along with the increased exemption.

Exemption: The unified estate and gift tax exemption is made permanent to an inflation-indexed $15 million per individual for taxable years beginning after Dec. 31, 2025. The generation-skipping transfer tax exemption is also permanently increased to an inflation-indexed $15 million. The $15 million exemption amount is indexed for inflation with a base year of 2025. Accordingly, the exemption amount is $15 million for decedents dying and gifts made in calendar year 2026 and increases with inflation thereafter. Taxpayers may want to revisit their estate and gift planning in light of these changes.

Provisions Affecting Businesses with International Operations

Global Intangible Low-taxed Income (GILTI): OBBBA modifies the section 250 deduction for GILTI to 40%. The foreign tax credit reduction is 10%. This results in an effective tax rate on GILTI to 14%, higher than the 10.668% effective rate proposed by the House version of H.R. 1. The deduction for QBAI in determining a U.S. shareholder’s GILTI inclusion is eliminated. In addition, the allocation of expenses is limited (before foreign tax credits) for taxable years beginning after Dec. 31, 2025.

Foreign-derived Intangible Income (FDII): Similarly, for domestic corporations, OBBBA reduces to 33.34% the currently applicable 37.5% deduction for FDII, which was scheduled to decline to 21.875% after 2025. Therefore, the effective tax rate on FDII is slightly increased to 14%, consistent with GILTI. As under GILTI, Qualified Business Asset Investment (QBAI) is eliminated in determining the FDII deduction. In addition, the allocation and apportionment of expenses is limited to directly related expenses. Furthermore, deduction eligible income (DEI) would not include gains from the sale or other disposition of property that gives rise to rents or royalties.

Base Erosion and Anti-abuse Tax (BEAT): OBBBA permanently increases the BEAT rate from 10% to 10.5%. These changes to the BEAT provisions apply to taxable years beginning after Dec. 31, 2025.

Controlled Foreign Corporation (CFC) Provisions: OBBBA adds a number of CFC provisions not contained in H.R. 1, including making the CFC look through rule permanent, repealing the 1 month deferral in section 898(c), reinstating section 958(b)(4) to prevent downward attribution from a foreign person to a U.S. person in determining CFC status, adding section 951B to cause certain foreign corporations to be treated as CFCs, and amending the pro rata share rules under section 951A.

Foreign Tax Credits: For section 904 calculation purposes, income from the sale of U.S. produced inventory attributable to an office or other fixed place of business outside the U.S. is foreign source income up to 50% of the total taxable income from the sale.

Provisions that did not make it into OBBBA

There are a number of provisions that were not included in the One Big Beautiful Bill Act. Those provisions include lower corporate tax rates (including the 15% rate for domestic manufacturers, increased tax rates for high-income individuals making over $2.5 million annually, the taxation of partnership carried interests, and a corporate SALT cap. In addition, the Senate bill did not include language on some provisions in H.R. 1. Those include the section 899 “Revenge Tax,” legacy section 48 credit, adjustments to section 197 asset basis for sports teams, modification of the section 856 REIT subsidiary, an increased excise tax on private foundations, changes to UBIT, health reimbursement arrangements, cafeteria plans, and employer credit for CHOICE arrangements.

Conclusion

The changes made by the One Big Beautiful Act are significant and will require ongoing examination and planning opportunities. Clients should meet with their CBIZ advisors to go over provisions that may be applicable to their personal and business situations. Please reach out to your CBIZ contacts to set up a meeting to discuss.