The One Big, Beautiful Bill’s Key Provisions

President Trump signed into law major tax legislation on July 4, 2025. While the bill itself is almost a thousand pages long, below is a bite-size summary of what you need to know about key provisions:

Individual Income and Estate Tax Items

• The Tax Cuts and Jobs Act of 2017 (TCJA) temporarily reduced individual income tax rates, decreasing, for example, the top individual rate from 39% to 37%. These rate reductions, originally set to expire at the end of this year, are now permanent.
• There are also new temporary deductions and exemptions for overtime and pay, tips, and auto loan interest (all subject to certain limitations).
• 529 accounts now have an expanded list of qualified education expenses for elementary and secondary schools, and a higher annual distribution limit of $20,000.
• The estate and lifetime gift tax exemption is raised to $15 million per individual ($30 million for married couples) beginning in 2026, indexed for inflation. The tax rates and brackets for trusts and estates are also permanently extended.

Business Income Tax Provisions

• Qualified assets are again eligible for 100% bonus depreciation (since 2022, bonus depreciation has been subject to a phase-down, with 60% allowed for the 2024 tax year).
• A brand-new provision provides taxpayers with elective 100% bonus depreciation for “Qualified Production Property” (QPP). QPP is depreciable real property that meets certain criteria for use in manufacturing and production sectors that is acquired or repurposed between 2025 and 2028.
• Research and development expenditures previously required to be amortized over five years since 2022 can now be fully expensed.
• Business interest expense limitation rules now allow a business to deduct business interest without accounting for depreciation and amortization, meaning, for example, businesses with heavy amounts of depreciation and amortization may now be able to fully deduct their business interest (subject to certain limitations).
• The 20% deduction for Qualified Business Income (QBI), introduced by the TCJA, lowers the effective tax rate paid by owners of certain pass-through businesses (partnerships, S corporations, and sole proprietors) from 37% to 29.6%. This 20% QBI deduction, originally set to expire at the end of this year, is now made permanent.

Qualified Small Business Stock (QSBS) Expansion

• QSBS stock acquired after July 4, 2025, is eligible for enhanced new treatment. The requirement to hold QSBS stock for five years before gains are eligible for exclusion has been expanded with a tiered system that allows owners to receive partial benefits once stock has been held for at least three years. The provision also increases the exclusion cap from $10 million to $15 million and the aggregate gross asset limit for a corporation to qualify from $50 million to $75 million, indexed for inflation beginning in 2027.

State and Local Tax (SALT) Deduction Cap Increase

• The $10,000 SALT deduction cap was introduced by the TCJA and has been a major point of contention since, particularly with House members from states with higher income taxes. Now a higher $40,000 SALT deduction cap applies, subject to certain taxable income phaseouts. This new higher limit is not permanent, though, and expires after the 2029 tax year. Additionally, despite proposals from both the House and the Senate to limit existing pass-through entity tax (PTET) structures (i.e., a state-sanctioned “workaround” allowing for a full entity-level deduction and corresponding credit to its owners) the final bill did not contain any such limitations.

Phase Out of Energy Credits

• Many of the energy credits introduced as part of the Inflation Reduction Act of 2022 will be phased out and eliminated. The transferability of energy credits, though, is retained until these credits are phased out.

Community Development Opportunity Zones

• The TCJA incentivized investments into economically distressed areas (known as Opportunity Zones) by allowing for certain gain deferrals and gain exclusions for qualifying investments. Originally proposed to expire in 2026, the Opportunity Zone investment program is now permanent, with new incentives.

As typical with most tax legislation, the devil is often in the details. LP’s tax attorneys are available to discuss all aspects of this complex new legislation and how it may impact your business. If you have any questions, please reach out to a member of our Tax Planning Group.