The One Big Beautiful Bill Act: Navigating New Tax Landscapes for Individuals and Small Businesses

As the Tax Cuts and Jobs Act (TCJA) enters its final years, the landscape of American taxation is poised for significant shifts. With many TCJA provisions set to sunset in 2025, the introduction of the One Big Beautiful Bill Act (OBBBA) brings fresh perspectives, renewing critical measures and introducing strategic changes that affect both individuals and small businesses.

Signed into law on July 4th, the OBBBA introduces numerous updates to the tax code, effective across 2025 and beyond. This article focuses on the provisions most relevant to individual taxpayers and small business owners, delivering insights specifically tailored to this audience to enhance their tax planning and financial management strategies effectively.

Our firm, Tax Time 365, specializes in providing comprehensive tax services for small businesses. We understand the unique challenges faced by small business owners navigating the complexities of tax compliance, and we are here to guide you through these transformative times.

Individual Tax Rates: The OBBBA extends the reduced individual tax rates initially established by the TCJA beyond January 1, 2026, which benefits middle-income families. Additionally, inflation adjustments will apply to tax brackets starting from taxable years after December 31, 2025.

Standard Deductions: Enhanced standard deductions are sustained by the OBBBA, with significant increases expected for the 2025 tax year pending IRS calculations. These adjustments promise substantial tax savings for many.

Senior Tax Deduction: A new, temporary deduction offers $6,000 per qualifying individual aged 65 and older, effective in 2025. The phaseout of this deduction begins before January 1, 2029, targeting taxpayers with MAGIs under specific thresholds.

Child Tax Credit: The Act raises the Child Tax Credit to $2,200 per qualifying child starting in 2025, with future inflation adjustments. Stringent Social Security number requirements will also apply.

Qualified Business Income (QBI) Deduction: The QBI deduction sees increased phase-in amounts, benefiting individuals and joint filers after December 31, 2025. Additionally, a new minimum QBI deduction enhances baseline tax savings for qualifying small business owners.

Estate and Gift Tax Exemption: The estate and lifetime gift tax exemption climbs to $15 million for single filers and $30 million for joint filers in 2026, benefiting family wealth preservation efforts.

Alternative Minimum Tax (AMT): Enhancements to AMT exemptions and thresholds help prevent unexpected tax burdens on middle-income households from 2026 onward.

Additional Provisions: The OBBBA introduces several other important changes, including permanent extensions to bonus depreciation, modifications to the SALT deduction caps, and new opportunities for claiming tax credits and deductions, such as Trump Accounts and enhanced dependent care assistance limits.

Understanding the OBBBA's far-reaching impacts is vital for optimizing your tax strategy and ensuring compliance. As tax professionals, we at Tax Time 365 are ready to assist you with these changes. Contact us to schedule a consultation and stay informed on how these legislative updates might affect your financial landscape.

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