Overview of the One Big Beautiful Bill Act (OBBBA)

On July 4, 2025, the One Big Beautiful Bill Act, commonly known as the Big Beautiful Bill, was enacted and signed into law by President Donald Trump. The impact of this bill spans several sectors of the economy, including infrastructure, energy, education and healthcare. It’s the most significant tax overhaul since the Tax Cuts and Jobs Act (TCJA).

Estate and Gift Tax System

The OBBBA has several provisions that permanently adjust federal estate tax exemptions. Before the bill’s enactment, the TCJA provisions that doubled these tax exemptions were set to sunset on December 31, 2025. The OBBBA eliminated this deadline.

The One Big Beautiful Bill Act estate tax exemption is permanently set at $15 million per individual, or $30 million per married couple. This amount will be adjusted annually for inflation beginning in 2027.

The act has several implications for legacy planning, some of which include: 

• Enhanced certainty: With the previously proposed TCJA sunset deadline, families and individuals were faced with pressure and indecision. Since the Big Beautiful Bill has canceled the sunset, you can plan with greater certainty and less urgency. However, you should be careful not to become complacent and defer estate planning for longer than necessary. The better approach is smart asset allocation with proper planning. 
• Increased opportunities for strategic gifting: The bill allows you to transfer significant assets out of your estate without paying gift tax. This strategy is also effective for reducing future estate tax exposure, while enabling beneficiaries to benefit sooner. 

It’s worth noting a critical caveat: the permanent changes made by the OBBBA don’t erase or take priority over state-level estate taxes. Depending on the state where you reside, own property or have beneficiaries, you could still be subject to state-imposed liabilities.

Impacts for Business Owners and Contractors

Through the OBBBA, business owners and contractors will experience a more predictable and potentially more profitable field.

100% Bonus Depreciation Returns

The TCJA introduced a 100% bonus depreciation provision. It commenced a 20% annual reduction in 2023 and was set to be phased out by 2026. 

Under the OBBBA, this provision returns. Business owners can access 100% bonus depreciation for most qualified equipment, provided it was acquired and placed in service after January 19, 2025. Additionally, the bill introduces a new, but temporary, 100% deduction provision for qualified production property.

Aside from incentivizing U.S.-based manufacturing and production, these two provisions have several other benefits for business owners and contractors, including:

• Immediate 100% deduction: Instead of spreading your deductions over the course of several years, you can deduct the entire cost of qualified assets in the first year. 
• Enhanced tax savings: By deducting 100% of the cost of qualified equipment or production property, you significantly reduce your tax liability for the current year. 
• Improved cash flow: The 100% bonus depreciation provision means reduced tax liability, which translates to more cash for your business. You can invest in other critical business needs, such as hiring employees and managing financial commitments.

SALT Cap Relief

Business owners can experience temporary tax relief as a result of the increased state and local tax (SALT) deduction cap. This cap is especially beneficial for business owners operating as pass-through entities and those in high-tax states. Previously set at $10,000, the OBBBA increases the deduction cap to $40,000 for the 2025 through 2029 tax years — it phases out for higher-income earners with modified adjusted gross income up to $600,000. By 2030, this cap is set to revert to $10,000.

A key benefit of this temporal SALT cap deduction is that it allows you to deduct a larger chunk of your business-related state and local taxes. Consequently, you’ll have lower federal income tax burdens and improved business profitability.

QBI Deduction Permanence

The OBBBA extends the qualified business income (QBI) deduction, also known as the section 199A deduction. Under the TCJA, this provision was scheduled to expire at the end of the 2025 tax year. Now, owners of sole proprietorships, partnerships, S corporations, and certain trusts and estates can continue to deduct up to 20% of their qualified business income indefinitely. You can enjoy long-term tax planning certainty. 

In addition to permanently extending the QBI deductions, the OBBBA expanded the phase-in thresholds. The new income threshold has been increased to $75,000 for single filers and $150,000 for joint filers. It also introduces a minimum $400 deduction for eligible taxpayers with qualified active business income. 

Expanded QSBS

Section 1202 of the Internal Revenue Code of 1986 undergoes notable changes as a result of the OBBBA.

• Increased exclusion cap: Pre-OBBBA, the maximum amount of capital gains that could be excluded from federal income tax was $10 million. The new rules increase this amount to $15 million per issuer, or 10 times the adjusted basis, if greater. This larger tax-free return on successful investment in small businesses makes it easier to attract capital from investors. 
• Higher gross asset limit: The OBBBA increases the gross asset limit from $50 million to $75 million, allowing more business stocks to qualify as qualified small business stock (QSBS). 
• New tiered holding period system: The Internal Revenue Code previously required investors to hold their stock for at least five years to be eligible for the QSBS benefit. The OBBBA swaps this holding rule for tiered exclusion rates based on the length of time the stock is held — 50% for three years, 75% for four years, and 100% for five years and above. 

The One Big Beautiful Bill Act and Higher Education

Beyond traditional tax and estate planning, the OBBBA introduces significant changes targeted at supporting higher education.

• 529 plan expansion: 529 plans are no longer limited to traditional degree programs. Under the OBBBA, they can now also support career-focused training and continuing education at post-secondary levels.
• New caps on federal student loans: The OBBBA tightens annual and lifetime federal student loan limits, with the most significant impact on graduate and professional students. Starting in July 2026, new graduate students are limited to $20,500 per year, while new professional students are limited to $50,000 per year. The term “professional student” is meant to distinguish programs that would be eligible for higher loan limits.

Actionable Steps: How to Plan and Adapt

Given the notable changes the OBBBA introduces, proactive planning and adaptation can make a difference. Here are some steps you can take to stay ahead of the curve:

1. Revisit your trust documents: If you drafted estate plans prior to the OBBBA being enacted, it’s wise to consult with your estate planning professional to review them.
2. Develop a QSBS strategy: If you own a C-corporation, actively manage QSBS eligibility to ensure your stock meets the criteria.
3. Maximize state deductions: Partner with a tax professional to ensure you’re claiming the full $40,000 SALT deduction if eligible.

Take Full Advantage of Relevant OBBBA Tax Provisions With Professional Guidance

The OBBBA presents numerous opportunities to achieve tax savings and improve profitability. Given the complexities of these new provisions, it’s more critical than ever to work with the right team. 

At Polston Tax, we’re committed to helping you take full advantage of government regulations to your benefit. Our team of tax attorneys, case managers, accountants and tax preparers is available to help you navigate the complexities of the OBBBA. Schedule a free consultation today to get started.