General Description

OBBBA Summary

Effective Date

Individual Income Tax Rates

• Retained existing seven brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%
• Income thresholds indexed for inflation
• Brackets under 24% receive additional year inflation adjustment

Taxable Years Beginning After Dec. 31, 2025

Alternative Minimum Tax

• Permanently allowed 2018 individual AMT exemption amounts indexed for inflation
• Increased phaseout percentage from 25% to 50%
• Modified phaseout thresholds to $500,000 (single) or $1,000,000 (joint) with an index for inflation

Taxable Years Beginning After Dec. 31, 2025

Standard Deduction

• Permanently allowed $31,500 (married filing jointly), $23,625 (head of household), and $15,750 (single) plus future inflation adjustments

Taxable Years Beginning After Dec. 31, 2024

Temporary Senior Deduction

• Added new $6,000 above-the-line deduction for individuals at least 65
• Phases out for married taxpayers with incomes of $150,000 (joint return) or $75,000 (others)

Taxable Years Beginning After Dec. 31, 2024 through tax years beginning before Jan. 1, 2029

Itemized Deduction Limitation

• Caps benefit of each dollar at $0.35 for taxpayers in the top tax bracket (37%)

Taxable Years Beginning After Dec. 31, 2025

Miscellaneous Itemized Expense Deductions

• No longer allowed (other than certain educator expenses which has been removed from the list of miscellaneous itemized deductions)

Taxable Years Beginning After Dec. 31, 2025

Mortgage Interest Deduction

• Permanently retained principal limit of $750,000 and disallowance of deduction for home equity interest

Taxable Years Beginning After Dec. 31, 2025

Car Loan Interest

• Temporarily allowed a deduction of up to $10,000 per taxable year for certain car loan interest for Taxable Years Beginning After Dec. 31, 2024 and before Dec. 31, 2029
• Phase-out of deduction for incomes over $100,000 (non-joint return) and $200,000 (joint return)

Indebtedness incurred after Dec. 31, 2024

SALT Cap

• Temporarily raised SALT deduction cap from $10,000 to $40,000 per taxable year through 2029, with phased out deduction amount for individuals earning more than $500,000 per year ($250,000 per year for married filing separately)
• The change did not eliminate the availability of state-level pass-through entity (PTE) tax regimes

Taxable Years Beginning After Dec. 31, 2024

Wagering Losses

• Permanent modification to limit wagering loss deductions to 90% of the amount of wagering losses for the taxable year with an overall limitation equal to the amount of wagering gains during the same taxable year

Taxable Years Beginning After Dec. 31, 2025

Casualty Losses

• Permanently allowed personal casualty losses from both federal and state declared disaster areas and offset with personal casualty gains

Taxable Years Beginning After Dec. 31, 2025

Individual Charitable Deductions

• Created permanent deduction for individuals that do not itemize to claim up to $1,000 (single) or $2,000 (married filing jointly)
• For itemized deductions, a charitable contribution deduction is allowed only in excess of 0.5% of the taxpayer’s contribution base for the taxable year, with some possibility of a carry forward of unutilized deductions

Taxable Years Beginning After Dec. 31, 2025

Qualified Business Income Deduction

• Permanently allowed deduction for qualified business income from a pass-through entity at 20%
• Expanded deduction limit phase-in by increasing the $50,000 (non-joint returns) and $100,000 (joint returns) amounts to $75,000 and $150,000, respectively
• Added minimum $400 deduction for taxpayers having at least $1,000 of qualified business income from one or more active qualifying trades or businesses

Taxable Years Beginning After Dec. 31, 2025

Moving Expense Deduction

• Permanently eliminated moving expense deduction for all taxpayers expect for active duty members of the armed forces and intelligence community

Taxable Years Beginning After Dec. 31, 2025

Tip Taxation

• Temporarily provided a deduction of up to $25,000 per taxable year for qualified tips
• Phases out for incomes over $150,000 (non-joint return) and $300,000 (joint return)
• Deduction disallowed for any taxable years beginning after Dec. 31, 2028

Taxable Years Beginning After Dec. 31, 2024

Overtime Taxation

• Temporarily provided a deduction of up to $12,500 (non-joint return) and $25,000 (joint return) per taxable year for qualified overtime compensation
• Phases out for incomes over $150,000 (non-joint return) and $300,000 (joint return)
• Deduction disallowed for any taxable years beginning after Dec. 31, 2028

Taxable Years Beginning After Dec. 31, 2024

529 Accounts

• Expanded types of qualifying expenses to include certain elementary or secondary public, private or religious school expenses
• Permanently allowed money in 529 accounts to be rolled over to an ABLE account without penalty

Taxable Years Beginning After Dec. 31, 2025

Trump Accounts

• Created tax-exempt savings accounts for certain minors allowing up to $5,000, subject to an annual cost of living adjustment increase, may be contributed each calendar year
• Employers may contribute without an employee income inclusion up to $2,500 per employee into a Trump Account for the employee or any dependent of the employee
• A one-time $1,000 credit will be available for each qualifying child born after Dec. 31, 2024 and before Jan 1, 2029

Contributions not accepted before July 4, 2026

Qualified Small Business Stock

• Permanently increased corporation maximum aggregate gross asset limitation from $50,000,000 to $75,000,000, and increased the applicable dollar limit amount for gain exclusion from $10,000,000 to $15,000,000, and added an inflation adjustment to each
• Added phase-in of the applicable percentage of gain exclusion depending upon holding period of stock: (1) at least 3 years – 50%, (2) at least 4 years – 75%, and (3) at least 5 years – 100%

Changes generally apply to qualified small business stock acquired after July 4, 2025

Remittance Transfers

• Added a 1% excise tax on certain remittance transfers from the United States to an international jurisdiction
• If the excise tax is not paid by the sender, the provider may have secondary liability for the tax amount
• There are some exceptions to the transactions subject to this excise tax

Transfers made after Dec. 31, 2025

General Description

OBBBA Summary

Effective Date

Estate and Gift Tax Exclusion

• Modified the federal estate and gift tax exemption from an inflation adjusted amount of $13,990,000 to an inflation adjusted $15,000,000 per individual

Estates of decedents dying and gifts made after Dec. 31, 2025

General Description

OBBBA Summary

Effective Date

Excessive Employee Remuneration

• Added a controlled group/entity aggregation rule applicable for determining applicable individuals for the Section 162(m) limitation

Taxable Years Beginning After Dec. 31, 2025

Business Interest Expense Limitation

• (1) Permanently reinstated EBITDA for calculating Adjusted Taxable Income
• (2) Modified floor plan financing coverage to include trailers and campers
• (3) Modified coordination rules with interest capitalization provisions

Generally, Taxable Years Beginning After Dec. 31, 2024, except (3) is effective for Taxable Years Beginning After Dec. 31, 2025

Full Expensing of Qualified Production Property

• Temporarily allowed an elective 100% depreciation deduction for newly built qualified production property the construction of which began after Jan. 19, 2025 and before Jan. 1, 2029, and which is placed in service before Jan 1, 2031

Property placed in service after July 4, 2025

Full Expensing of Certain Business Property

• Permanently allowed 100% bonus expense deduction for certain business property

Varies, but can apply to some property acquired after Jan. 19, 2025

Corporate Charitable Deductions

• Allowed deduction for aggregate charitable contributions in excess of 1% of taxable income up to a maximum of 10% of taxable income
• Carry forwards of some unutilized deduction amounts in excess of this 10% threshold may be available for up to 5 years

Taxable Years Beginning After Dec. 31, 2025

R&D Expenditures

• Permanently allowed immediate deduction of domestic R&D expenditures paid or incurred in taxable years beginning after Dec. 31, 2024
• Certain small taxpayers can elect to apply change to taxable years beginning after Dec. 31, 2021
• Foreign R&D expenditures must continue 15 year capitalization
• Taxpayers that made domestic R&D expenditures after Dec. 31, 2021 and before Jan. 1, 2025 are permitted to elect to accelerate these R&D deductions over a 1- or 2-year period

July 4, 2025, but see timing rules in preceding summary

Expensing Certain Depreciable Assets

• Permanently allowed immediate expensing of the cost of qualifying property up to $2,500,000, with a phaseout threshold that begins to reduce deduction amount when costs exceed $4,000,000

Property placed in service in Taxable Years Beginning After Dec. 31, 2024

Energy Efficient Commercial Buildings Deduction

• Permanently terminated provision

Construction of property which begins after June 30, 2026

Expensing of Certain Qualified Sound Recording Productions

• Expands expensing rules to allow a deduction of up to $150,000 per taxable year for sound recordings produced and recorded in the US and also qualifies certain sound recordings for bonus depreciation

Taxable Years Beginning After July 4, 2025

Business Meal Deductions

• Permanently disallowed deductions for employer-provided meals with limited exceptions

Amounts paid or incurred after Dec. 31, 2025

Excess Business Losses

• (1) Permanent modification and extension of the limitation on excess business losses for noncorporate taxpayers
• (2) Allowed continued inflation adjustments

(1) Taxable Years Beginning After Dec. 31, 2026

(2) Taxable Years Beginning After Dec. 31, 2025

Partnership Disguised Sales

• Modified disguised sale rule to confirm that the proper tax treatment with respect to payments from a partnership to a partner for services performed or property transferred is not dependent upon the issuance of Treasury Regulations
• Provision indicated that the law change shall not be construed as creating any inference for periods prior to July 4, 2025

July 4, 2025

Taxable REIT Subsidiaries

• Permanently modified the 75% asset value test to increase permitted ownership of taxable REIT subsidiary stock from 20% to 25%

Taxable Years Beginning After Dec. 31, 2025

Opportunity Zones

• Permanently includes the opportunity zone program in the Internal Revenue Code
• Established rolling 10-year periods to determine qualified opportunity zones and narrowed the eligibility requirements
• Modified taxpayer basis adjustment benefit for investments held at least 10 years to cap basis step-up to fair market value on the 30-year anniversary date
• Additional program adjustments made

July 4, 2025

Information Reporting

• Replaced $600 minimum for certain information reporting with $2,000 minimum and included an inflation adjustment provision

Payments made after Dec. 31, 2025

Information Reporting – Form 1099-K

• (1) Reverted to previous de minimis reporting exception for third party settlement organizations so no reporting required with respect to a payee unless the gross amount of the payee’s transactions exceeds $20,000 and the aggregate number of such transactions exceeds 200
• (2) Added new backup withholding provision applicable to reportable payments meeting certain thresholds

(1) Retroactively as if included in Section 99674 of American Rescue Plan Act (i.e., for returns for calendar years beginning after Dec. 31, 2021)

(2) Calendar years beginning after Dec. 31, 2024

General Description

OBBBA Summary

Effective Date

Educational Assistance

• Permanently extended expansion of “educational assistance” to include assistance related to an employee’s student loans
• An inflation adjustment provision also added with respect to the maximum tax exclusion (currently, $5,250) per calendar year

Payments made after Dec. 31, 2025

Qualified Transportation Fringe Benefits

• Terminated tax-free bicycle commuter reimbursement

Taxable Years Beginning After Dec. 31, 2025

Health Savings Accounts

• Reinstated COVID-era exemption to allow individuals to receive telehealth services without applying a deductible and maintain eligibility to make HSA contributions

Plan years beginning after Dec. 31, 2024

Direct Primary Care Service Arrangements

• Modified law to allow an individual to remain eligible to make HSA contributions if the individual participates in a “direct primary care service arrangement”
• The eligibility rule does not apply if the fixed fee exceeds $150 per month (or $300 per month if the arrangement applies to multiple individuals), with annual adjustments to these amounts
• Direct primary care service arrangement fees also are treated as medical expenses that can be paid using an HSA

Months beginning after Dec. 31, 2025

General Description

OBBBA Summary

Effective Date

Tax-Exempt Organization Excessive Compensation

• Expanded excess tax on excess compensation over $1,000,000 and certain severance payments to include former employees and also not just the “high five” compensated individuals

Taxable Years Beginning After Dec. 31, 2025

University Endowment Tax

• Increased the tax rate on net investment income from 1.4% to 8% for institutions with a “student adjustment endowment” above $2,000,000
• Schools with such endowments between $750,000 and $2,000,000 will have their tax rate increase from 1.4% to 4%
• Scope of schools subject to the tax also increased

Taxable Years Beginning After Dec. 31, 2025

General Description

OBBBA Summary

Effective Date

Low-Income Housing Credits (LIHTC)

• (1) Permanent 12% increase to state allocation ceiling
• (2) Expanded tax-exempt bond financing provision from 50% to 25% of the aggregate basis being financed with tax-exempt bonds

(1) Taxable Years Beginning After Dec. 31, 2025

(2) Buildings place in service in Taxable Years Beginning After Dec. 31, 2025

Employer-Provided Child Care Credit

• Increased credit to 40% (50% for eligible small businesses) and annual credit limit increased to $500,000 ($600,000 for eligible small businesses)

Amounts paid or incurred after Dec. 31, 2025

New Markets Tax Credit

• Permanent extension of new markets tax credit with $5,000,000,000 of allocations to be awarded on an annual basis

Calendar years beginning Jan 1, 2026

Paid Family and Medical Leave Credit

• Credit made permanent and expanded scope of credit

Taxable Years Beginning After Dec. 31, 2025

General Description

OBBBA Summary

Effective Date

Energy Efficient Home Improvement Credit

• Terminated for property placed in service after Dec. 31, 2025

July 4, 2025

Residential Clean Energy Credit

• Terminated for expenditures made after Dec. 31, 2025

July 4, 2025

Clean Vehicle Credits

• Terminated for vehicles acquired after Sept. 30, 2025

July 4, 2025

Alternative Fuel Vehicle Refueling Property Credit

• Terminated for any property placed in service after June 30, 2026

July 4, 2025

Carbon Sequestration Credits

• (1) Added specified/prohibited foreign entity restrictions
• (2) Added parity provisions for different uses of qualified carbon oxide

(1) Taxable Years Beginning After July 4, 2025

(2) Facilities or equipment placed in service after July 4, 2025

Zero-Emission Nuclear Power Credit

• Added specified/prohibited foreign entity restrictions

Taxable Years Beginning After July 4, 2025

Clean Hydrogen Production Credit

• Terminated for facilities with a beginning of construction date after Dec. 31, 2027

July 4, 2025

Advanced Manufacturing Production Credit

• Phases out credit for critical minerals other than metallurgical coal by Jan 1, 2034, terminates credit for metallurgical coal produced after Dec. 31, 2029, and terminates credit for wind energy components produced and sold after Dec. 31, 2027
• Added specified/prohibited foreign entity restrictions
• Modified integrated components provision

Generally Taxable Years Beginning After July 4, 2025, except integrated components change applies to components sold during tax years beginning after Dec. 31, 2026

Clean Energy Production Credit

• Terminated for wind and solar facilities placed in service after Dec. 31, 2027 (a one-year safe harbor was added for facilities whose construction began before July 4, 2026)
• Added specified/prohibited foreign entity restrictions

Generally Taxable Years Beginning After July 4, 2025, except prohibited foreign entity assistance rules apply to facilities whose construction began after Dec. 31, 2025

Clean Fuel PTC

• Extended credit through Dec. 31, 2029
• Limited use to fuels produced from feedstocks in the US, Canada and Mexico
• Modified sustainable aviation fuel and small agri-biodiesel producer credits
• Added specified/prohibited foreign entity restrictions

Various depending upon provision

Advanced Energy PTC

• Disallowed any returned credit allocation from being reissued

Taxable Years Beginning After July 4, 2025

Advanced Manufacturing Credit

• Increased credit amount from 25% to 35% for property placed in service after Dec. 31, 2025

July 4, 2025

Clean Energy Investment Credit

• Terminated for wind and solar facilities placed in service after Dec. 31, 2027
• Added specified/prohibited foreign entity restrictions
• Modified domestic content rules

Various including on or after June 16, 2025 for domestic content changes

General Description

OBBBA Summary

Effective Date

Base Erosion Minimum Tax Amount

• Several changes including adopting a 10.5% rate

Taxable Years Beginning After Dec. 31, 2025

GILTI/FDII

• Decreased the deduction percentage to 40% for GILTI and 33.34% for FDII, resulting in an effective tax rate of 14% for each

Taxable Years Beginning After Dec. 31, 2025

Foreign Tax Credits

• Up to 50% of the income from inventory produced in US and sold through a foreign branch for use outside of the US is treated as foreign source

Taxable Years Beginning After Dec. 31, 2025

Controlled Foreign Corporations

• Permanent extension of CFC look-through rule

Taxable Years Beginning After Dec. 31, 2025

Downward Attribution of Stock Ownership

• Restored the limitation on downward attribution of stock ownership in applying constructive ownership rules

Taxable Years Beginning After Dec. 31, 2025