The One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, enacts significant changes to the tax landscape for businesses and individuals alike.
Learn more: President Trump Signs One Big Beautiful Bill Act Into Law
With provisions affecting the funding of the Consumer Financial Protection Bureau (CFPB), Tax Cuts and Jobs Act (TCJA) provisions, and various tax incentives, financial services companies may face uncertainty but also opportunity.
The Good
TCJA Provisions Extended
OBBBA extends many TCJA provisions that were set to expire at the end of 2025. In addition to the direct benefits of a reduced corporate tax rate, these extensions could also indirectly benefit financial services firms, at least in the short term, by increasing individuals’ and businesses’ capacity for lending and their use of banking services.
New Trump Savings Accounts
OBBA creates “Trump Accounts,” which are available for eligible individuals under the age of 18 who have a Social Security number. For U.S. citizens born between Jan. 1, 2025, and Dec. 31, 2028, the federal government would contribute $1,000 per child to every eligible account. Taxable entities may contribute up to $500 of after-tax dollars annually, indexed for inflation. Certain contributions from tax-exempt sources are not subject to the $5,000 annual limit. This new type of investment account may create a new product offering for financial institutions.
Research and Experimentation (R&E) Credit Expensing Restored
OBBBA permanently restores immediate deductions for domestic research and experimentation (R&E) activities, encouraging businesses to invest in innovation. Previously, domestic R&E expenses were required to be capitalized and amortized over a period of five years. Foreign R&E expenses remain subject to capitalization and amortization over 15 years.
Since various activities in the banking sector qualify for R&E credits, including developments related to software and cybersecurity, this could have a positive impact on the industry. This provision encourages banks to develop new technology to help them stay ahead of the competition, and the reduced tax liabilities frees up capital that can be allocated to R&E.
The (Potentially) Bad
Clean Energy Incentives Eliminated
OBBBA phases out or terminates several clean energy tax credits, which is expected to lead to a decline in business in the renewable energy sector. When these companies struggle financially, it affects their ability to repay their loans, thereby impacting their lenders and insurers.
Medicaid and ACA Changes
OBBBA significantly reforms both Medicaid and the Affordable Care Act (ACA), impacting coverage, costs, and eligibility. For Medicaid, it introduces work requirements for some beneficiaries, limits eligibility for certain non-citizens, and restricts state funding flexibility. For the ACA, it reduces premium tax credits, making coverage more expensive and potentially leading to coverage losses. When individuals struggle to pay medical bills, it affects their ability to repay their loans, which in turn impacts their lenders.
The Watch List
CFPB Funding Cut
OBBBA cuts the budget of the Consumer Financial Protection Bureau (CFPB) by nearly half, from 12% of the Federal Reserve’s total operating expenses to 6.5%. While the House of Representatives originally voted to reduce the CFPB’s budget to 5%, and the Senate to 0%, the latter was ruled ineligible for inclusion in a budget reconciliation package by the Senate parliamentarian, forcing the Senate to reduce but not eliminate the funding cap.
This provision is consistent with the Trump administration’s deregulatory efforts thus far, which have sought to limit the CFPB’s impact through staffing cuts and executive orders.
While this could lead to less regulatory oversight, and therefore financial services organizations may initially benefit from reduced compliance costs, the long-term economic effects and their impact on the financial services industry remain uncertain. Less federal oversight could also lead to more oversight at the state level, which can be complex for financial institutions to navigate. Furthermore, this change in regulatory oversight may inadvertently create a lesser focus on prudent self-governance and oversight activities.
Excise Tax
OBBBA imposes a new 1% excise tax on certain foreign remittance transfers. A “remittance transfer” typically involves sending money from a sender in the United States to a recipient in a different country. The remittance transfer provider is required to remit the excise tax on behalf of the sender. The provision will apply to transfers made after Dec. 31, 2025. The withheld taxes must be remitted quarterly. Additional guidance is expected regarding how to report the amounts withheld.
Items Not Included in the Final Bill
A provision in the original House-proposed bill would have extended section 199A qualified business income deduction to dividends paid by a Business Development Company (BDC). This would have allowed BDCs to treated dividends paid in a manner similar to REITs when receiving the deduction.
A provision in the original House-proposed bill created new IRC Section 899, the so-called “Revenge Tax,” targeting countries with unfair foreign taxes. This could have had a direct impact on Foreign Bank Organizations (FBOs).
Economic Impact
While the impact of the Congressional Budget Office’s projected $3.4 trillion increase to the federal deficit on the overall economy remains uncertain, it is clear that a negative economic impact would be disruptive to the financial services industry.
What’s Next
OBBBA stands to influence everything from regulatory compliance to investments in innovation. While some provisions may temporarily ease compliance burdens and stimulate development, the long-term effects — particularly in the face of higher federal deficits and economic uncertainty — create a climate of both opportunity and potential instability for financial institutions.
The changes made by OBBBA will require financial institutions to be vigilant in order to stay compliant and take advantage of emerging opportunities. For more information about OBBBA, visit our OBBBA Resource Center.
CBIZ continually monitors new regulatory and governmental revisions and proposed changes in the regulatory landscape. We are uniquely positioned to help guide our clients and industry peers through this challenging and ever-changing environment. Our leading industry consulting services are instrumental in helping navigate these new legislative actions that affect the financial services community.
Reach out to an industry professional to learn more about how CBIZ can help you ensure financial stability and drive growth.
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