On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law—a sweeping piece of legislation packed with tax changes that will impact business and individuals across the country for years to come.
Whether you’re a business owner, a high-income individual, or both, this new law likely affects you. Here’s what you need to know—and how you can start planning ahead.
For BUSINESSES
Business‑Tax Provisions & Impacts
1. Permanent Restoration of Tax Cuts and Jobs Act (TCJA) Business Benefits
- 100 % bonus depreciation is reinstated permanently, allowing businesses to immediately expense eligible capital investments.
- Section 179 deduction cap is raised to $2.5 million, extended to include certain commercial real property.
- Small-business pass‑through deduction—Sec‑199A /Qualified Business Income (QBI)—is permanent at 20%.
Impact: Business owners—from small enterprises to major pass‑through entities—gain long-term certainty for investment decisions and significant tax relief on business income.
2. R&D and Related Incentives
- Domestic R&D expenses can now be fully expensed immediately or amortized over at least 60 months—with no change to foreign R&D timing.
- Expanded scope of eligible R&D costs, including software and engineering, increases credit accessibility.
Impact: Particularly beneficial for tech, biotech, and engineering firms—fueling innovation investment with improved cash‑flow flexibility.
3. International Provisions & Interest Expense Changes
The bill eliminates the deemed10% return rule previously used to compute Global Intangible Low-Taxed Income (GILTI); it also limits deduction apportionment (e.g., interest and Research or Experimental Expenditures (R&E)) tied to foreign‑source income and reclassifies GILTI as Net CFC Tested Income (NCTI) from 2026 and beyond.
Impact: Multinational corporations and global business owners will face refined, less punitive rules—simplifying compliance while maintaining anti‑abuse safeguards.
4. Opportunity Zone & Small‑Business Stock Enhancements
- Qualified Opportunity Zones (QOZs) are made permanent, with revised eligibility and reporting requirements.
- Section 1202 Qualified Small Business Stock (QSBS) benefits are extended and expanded in three major ways: Expanded Eligibility, Extended Holding Period Flexibility, and Increased Exclusion Limit.
Impact: Promotes greater venture activity and capital flow toward designated zones and eligible small businesses—benefiting startups and investors.
5. Affordable Housing & Community Development Credits
- New Markets Tax Credit, Low Income Housing Credit, and rural/agricultural investment incentives are expanded and made permanent.
- Impact: Encourages socially responsive business investments in underserved areas—raising potential tax offsets for developers and investors.
6. SALT Deduction Implications for Pass Through Owners
While primarily affecting individual filers, a temporary increase of the SALT deduction cap to $40,000 may benefit business owners taxed at individual rates via pass‑through entities.
Impact: Raises the value of business related state and local tax deductions for high income passthrough owners—though capped at $40K.
7. Carbon & Energy Credit Rollbacks
The bill phases out or eliminates inflation era clean energy tax credits (e.g. solar, wind, EV, domestic battery manufacturing).
Impact: Adversely affects businesses in renewable energy and cleantech sectors, making long term project economics less favorable.
SUMMARY TABLE of IMPACTS for BUSINESSES
| Provision Category | Core Benefits | Business Owner Impact |
| Capital & Investment Expensing | 100% depreciation, $2.5M Section 179 cap | Boosts immediate write‑offs; better liquidity. |
| Pass Through Deduction | Sec 199A / QBI made permanent at 20% | Significant tax savings for S‑Corp, LLC owners. |
| Domestic R&D Treatment | Full or extended amortization options | Encourages innovation & software development. |
| International Tax Adjustments | GILTI replaced by NCTI with interest/R&E limits | Simplifies global tax operations for multinationals. |
| Opportunity Zone / QSBS Upgrades | Permanent QOZ, expanded QSBS exclusion | Great incentives for impact investors. |
| Housing & Community Credits | Low-income, rural investment incentives | Tax advantaged capital deployment opportunity. |
| SALT Cap Increase (affecting owners) | Up to $40K deductible for individuals | Marginal benefit for passthrough taxpayers. |
| Clean Energy Credit Rollback | IRA-era credits phased out | Negative for renewable/energy tech sectors. |
Additional Considerations for Business Owners
Short-term Stimulus vs. Long-term Risk: While the bill may boost GDP modestly in the near term (0.2–1.2 % by 2027), long-run models forecast slower GDP growth and wage decline due to mounting deficits crowding out private investment.
Regressive nature: Business-related tax benefits disproportionately benefit large businesses and passthrough owners in the top 5 % of income—for example, in Texas approximately 45 % of tax savings went to the top 5 % earners, including major corporations and business owners (e.g. Exxon, Uber, HEB).
Fiscal status: CBO estimates the bill adds roughly $3.4 trillion to the deficit over 10 years, with some think tanks projecting up to $5.5 trillion in combined revenue loss and additional nontax spending.
Additional Business Owner Benefits
Beyond the major wins like bonus depreciation and expanded QBI deductions, the One Big Beautiful Bill includes a few more changes that business owners should know about—some beneficial, others more limiting.
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EBITDA Limitation on Business Interest Deductions Reinstated
The interest deduction limitation is now once again based on 30% of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), rather than EBIT.
Why it matters: This provides more generous deductions for capital-intensive businesses, especially those financing equipment or real estate. You can deduct more interest than under the previous EBIT rule.
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Excess Business Loss Limitation Made Permanent
The temporary cap on how much loss from a pass-through business an individual can deduct against other income is now permanent.
What this means: For 2025, the cap is $500,000 (married filing jointly) or $250,000 (single). Any excess becomes a Net Operating Loss (NOL) that carries forward.
Why it matters: Real estate professionals, startup investors, and business owners with big swings in income/loss need to plan carefully—losses may not offset income right away.
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Qualified Small Business Stock (QSBS) Exclusion Increased
The gain exclusion for Qualified Small Business Stock under Section 1202 has been increased from 50% to 75% for newly issued stock that meets the criteria.
Why it matters: Founders, investors, and early-stage business owners can now potentially exclude even more gain from federal tax when they sell qualified stock after a five-year holding period.
What This Means for You (Business Owners)
The One Big Beautiful Bill is designed to give businesses—especially closely held and growing companies—more flexibility, certainty, and tax savings. Here’s how you can start putting it to work:
1. Accelerate Capital Investments
With 100% bonus depreciation and expanded Section 179 expensing now permanent, business owners can invest in equipment, vehicles, software, and leasehold improvements knowing they’ll get an immediate tax deduction.
Action Step: Consider accelerating your capital improvement plans. Run cost-benefit analyses with your LSL advisor to determine how much you can afford to invest and what the tax impact would be.
2. Revisit Your Entity Structure
The enhanced Qualified Business Income (QBI) deduction—now 20% and permanent— makes pass-through entities like S-Corps and partnerships even more attractive.
Action Step: If you’re a C-Corp or sole proprietor, evaluate whether switching to an S-Corp or partnership could maximize your after-tax income. Conversely, large businesses may still prefer the flat 21% C-Corp rate.
3. Boost Innovation with New R&D Options
Immediate expensing of domestic research and development costs gives you more incentive to invest in product development, proprietary processes, and even software creation.
Action Step: Review what qualifies as R&D expenses. Many businesses underclaim this credit. Your LSL advisor can help you track and document eligible costs.
4. Clean Energy Planning Reversal
If your business was relying on clean energy credits (e.g., for EVs, solar installations, or green buildings), those are now scaled back.
Action Step: Recalculate ROI on green investments. Consider state-level or utility-sponsored incentives that still exist, or redesign future sustainability plans based on the reduced federal support.
5. International Business Owners: Simplify or Strategize
If you operate across borders, changes to GILTI (now Net CFC Tested Income), sourcing rules, and foreign tax credits could lower your compliance burden—or shift your effective tax rate.
Action Step: Go over your global income streams and tax credit positions. You may want to restructure your foreign subsidiaries or repatriation strategy.
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FOR HIGH-NET WORTH INDIVIDUALS
Major Tax Provisions
1. Estate, Gift & Generation Skipping Tax Exemptions Raised & Made Permanent
The federal estate and gift tax exemption increases to $15 million for individuals and $30 million for married couples filing jointly. Rather than expiring at end of 2025 – this is adjusted for inflation and now permanent.
Generation-skipping transfer (GST) exemptions rise accordingly, shielding multigenerational wealth transfers from taxation.
2. Expanded SALT Deduction for Eligible Filers
The state and local tax (SALT) deduction cap is raised from $10K to $40K, phased out for individuals with MAGI over $500K, temporarily in effect for five years (2025–2029).
Allows high-income individuals who itemize to deduct more property and state income taxes, though benefits diminish at very high AGI levels.
3. Personal Deductions for Years 65+ & Overtime/Tip Income
Taxpayers aged 65 and older receive a $6,000 deduction (per person; $12K married), phased out above $75K / $150K MAGI, through 2028. It helps reduce tax on Social Security and other income—even though it does not directly exclude Social Security itself.
New deductions let eligible taxpayers deduct up to $12,500 in overtime (or $25,000 for married couples) and tipped income, through 2028—phased out at higher incomes.
4. “Trump Accounts” & Other Child Focused Benefits
OBBBA adds tax-exempt “Trump Accounts” for children: up to $5,000/year parental contributions, plus a onetime $1,000 credit per eligible child, within a restricted trust model.
Child Tax Credit increases to $2,200 (indexed to inflation), slightly up from $2,000, but the refundable portion isn’t expanded—providing limited benefit to low-income households.
Planning & Wealth Transfer Strategies of HNWIs
State Level Estate Tax Strategies
High-net worth individuals in high tax states (e.g. NY, CA) should review trusts and gifting strategies given the new federal exemption—but be mindful of state exemptions like New York’s ~$7.16M cap, which may “cliff out” above ~105% of that threshold.
Tools like Spousal Lifetime Access Trusts (SLATs), Irrevocable Life Insurance Trusts (ILITs), and bypass trusts remain crucial to mitigate state-level estate taxes .
Lifetime Gifting & Trust Utilization
With exemption confidence increased, many high wealth individuals may accelerate lifetime gifting of appreciating assets to heirs to avoid future state and federal estate tax exposure .
Reevaluate existing trust structures and establish new vehicles that align with permanent exemptions and state-specific rules.
SUMMARY TABLE of IMPACTS for HIGH NET WORTH INDIVIDUALS
| Provision | Description | Planning Impact |
| Estate & Gift Tax Increase | Exemption raised to $15M/$30M permanently | Enables sizeable federal-free transfers; reevaluate legacy plans. |
| SALT Deduction Increase | Up to $40K cap with phaseout above MAGI $500K | Reduces tax on high-state-tax properties for eligible filers. |
| Senior & Earned Income Deductions | $6K senior deduction; using tip/overtime deductions | Marginal relief for high earners—mostly phaseouts above thresholds. |
| Trump Accounts & Child Credit | $5K/year contribution + $1K per child credit; $2,200 CTC | Benefit for wealthier families, though limited impact overall. |
| State-specific Strategies | Bypass trusts, SLATs, lifetime gifting in high-tax states | Critical to preserve estate wealth under mixed federal-state contexts. |
Additional High-Net-Worth Individual Benefits
The bill also contains a few targeted changes for families and charitable taxpayers that offer meaningful opportunities to reduce taxes, even for those who don’t itemize.
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Child Tax Credit (CTC) Increased
The Child Tax Credit rises from $2,000 to $2,200 per qualifying child, with inflation indexing going forward.
Why it matters: While income phaseouts still apply, many high-earning families with children will see modest extra tax savings. Coordinating this with your filing status and income levels can help preserve eligibility.
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Child & Dependent Care Credit Expanded
The OBBA permanently increases the amount of the Child & Dependent Care Tax Credit from 35% to 50% of qualifying expenses. The credit rate phases down for tax payers with adjusted gross income over $15,000.
Why it matters: If you’re part of a two-income household or a working parent with dependents, you could now qualify for a bigger, more attainable credit to help with the costs of child care—whether it’s daycare, after-school care, or care at home.
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Charitable Deduction for Non-Itemizers Restored
Taxpayers who take the standard deduction can now deduct up to $2,000 in charitable contributions ($1,000 if single).
Why it matters: This gives even non-itemizers a small incentive to donate to qualified charities—especially useful for retirees or high-income filers who no longer itemize under the current deduction thresholds.
Bottom Line for HNWIs
For high-net-worth individuals and families, the One Big Beautiful Bill Act delivers significant planning opportunities: higher permanent exemptions, strategic deductions, and predictable tax structure. However, maximizing benefits—especially across state boundaries—requires proactive legal and tax advice. Meanwhile, critics highlight the upside for affluent filers comes at a steep cost to debt levels and broader equity in the tax system.
What This Means for You (High-Net-Worth Individuals)
For individuals with significant income, real estate, investment portfolios, or estate planning needs, this bill delivers long-term opportunities—but with some nuances worth exploring.
1. Revise Your Estate Plan Immediately
The estate tax exemption has been permanently increased to $15 million per person ($30 million per couple). That’s a huge planning window to transfer assets tax-free.
Action Step: If you haven’t updated your estate plan in the last two years, now’s the time. Take advantage of today’s low interest rates by funding trusts, gifting highly appreciated assets, or arranging family loans.
2. SALT Deduction Expansion: A Limited-Time Opportunity
Raising the SALT cap to $40,000 through 2029 benefits those who pay high state income and property taxes—but it phases out at MAGI over $500K.
Action Step: If you fall under the phaseout threshold, work with your advisor to maximize deductions. Consider making advance payments on property taxes or charitable giving in strategic years.
3. Take Advantage of “Senior” and Income-Based Deductions
If you’re 65 or older, the new $6,000 deduction could help reduce tax on retirement income and Social Security (especially if you’re under MAGI limits).
Action Step: Evaluate your income streams. In some cases, it may make sense to delay IRA withdrawals or manage capital gains to stay under the deduction threshold.
4. Explore “Trump Accounts” for Wealth Transfer
The new child-focused investment accounts allow for $5,000/year per child, with a one-time $1,000 tax credit. These are positioned similarly to 529s or Roth IRAs but with unique restrictions and growth potential.
Action Step: Ask your advisor if this fits into your family’s wealth transfer or education savings strategy—especially if you’ve already maxed out other options.
5. Income Phaseouts and Sunset Traps
While many provisions benefit high-net-worth individuals, they include income thresholds and expirations (like the SALT cap or senior deduction).
Action Step: Look at the full picture. Coordinate your investment, retirement, and estate planning to take full advantage of phase-in/phase-out rules.
Final Takeaway
The One Big Beautiful Bill offers more than just tax cuts—it creates long-term planning opportunities and potential pitfalls. The key is to act now while the window is open and adjust your strategy to maximize the benefits.
Please contact LSL for the best way to strategize your future in light of this bill.
