Some significant new tax legislation (the Act) signed into law on July 4, 2025 (informally known as One Big Beautiful Bill or OBBB). The Act is comprehensive and includes key changes to individual and business-related provisions and incentives. Navigating these changes will be complex but understanding them is essential for effective tax planning and optimizing your position.
The Act made some current tax provisions that were scheduled to sunset permanent while terminating others such as energy incentives. Here’s a summary of a handful of some of the provisions.
- Qualified Business Income (QBI) deduction: The Act makes this deduction permanent.
- Bonus depreciation: The Act makes additional first-year (bonus) depreciation for certain qualified property permanent at 100% (under prior law, it was to phase out to zero). This provision is effective for property acquired after Jan. 19, 2025. There is also a new 100% bonus depreciation provision for “qualified production property” (QPP, which is certain non-residential real property used in the manufacturing, production or refining of certain tangible personal property). This QPP provision is effective for property placed in service after July 4, 2025.
- 179 Expensing limits: For property placed in service after 2024, the Code Sec. 179 expensing limits are increased to $2,500,000 and the phasedown threshold is increased to $4,000,000 (both subject to inflation adjustments).
- Information reporting, Forms 1099-NEC, 1099-MISC: For payments made after 2025, the reporting thresholds for Forms 1099-NEC and 1099-MISC are increased from $600 to $2,000 (adjusted for inflation after 2026).
- Estate and Gift-Basic Exclusion Amount: The basic exclusion amount for federal estate and gift tax will increase to $15 million (indexed for inflation) for estates of decedents dying and gifts made after Dec. 31, 2025.
For more details, here’s a list of business and individual changes highlighting some of the provisions in the Act.
Additionally, the Act includes provisions temporarily allowing employees to deduct up to $25,000 annually in qualified tip income from their taxable wages (subject to limitations) and temporarily allows employees to deduct up to $12,500 in qualified overtime pay from taxable income (subject to limitations). We will provide more information on this as the IRS issues guidance.
If you have any questions about how the Act applies to you, please contact your Moorman, Harting & Company representative.
