On July 4, 2025, President Trump signed H.R. 1—commonly referred to as the “One Big Beautiful Bill”—into law. This legislation introduces sweeping tax provisions designed to stimulate the U.S. economy, with a strong emphasis on business incentives. Below is a breakdown of the most impactful provisions.

Child Tax Credit (CTC)

• Permanently boosts the credit by $2,200 per child.
• For 2025, the credit amount is $1,700 per child, indexed for inflation.
• The permanent increase takes effect in 2026.

Tip Income Deduction

• Creates a new deduction of up to $25,000 per taxpayer for tips received in qualified occupations.
• Begins phasing out once income exceeds $150,000 (Single) / $300,000 (MFJ).
• Scheduled to expire after 2028.

Overtime Deduction

• Allows up to $12,500 per taxpayer for qualifying overtime pay.
• Does not cover tips or highly compensated employees.
• Phases out above $150,000 (Single) / $300,000 (MFJ).
• Ends after 2028.

Senior Bonus Deduction

• Adds a $6,000 extra deduction for individuals 65 and older.
• Applies from 2025 through 2028.
• Gradually phases out starting at $75,000 (Single) / $150,000 (MFJ).

Car Loan Interest Deduction

• Permits deduction of up to $10,000 in interest on new car loans.
• Cars must be U.S.-assembled passenger vehicles with the vehicle itself securing the loan.
• Available from 2025 to 2028.
• Phase-out starts at $100,000 (Single) / $200,000 (MFJ).

Qualified Business Income Deduction (QBI – §199A)

• The 20% QBI deduction is made permanent.
• Increases the phase-out thresholds to $150,000 (Single) / $300,000 (MFJ).
• Guarantees a minimum $400 deduction for anyone with at least $1,000 in QBI.

Form 1099 Reporting

• Raises the reporting threshold for business/service payments from $600 to $2,000.
• Starting 2026, the threshold will be indexed for inflation.

Research & Experimental (R&E) Costs

• Full expensing allowed for domestic R&E beginning Jan. 1, 2025.
• Foreign R&E remains on a 15-year amortization.
• Small businesses can apply the change retroactively to 2022 via amended returns.

Bonus Depreciation

• Permanently restores 100% first-year depreciation for eligible property acquired and placed in service on or after Jan. 19, 2025.

Section 179 Expensing

• Increases the maximum expensing limit to $2.5 million, with a phase-out threshold of $4 million.

Clean Vehicle Credit (§30D)

• The existing credit of up to $7,500 per vehicle ends for purchases made after Sept. 30, 2025.

Estate and Gift Tax Exemption

• Raises the exemption to $15 million per person (indexed for inflation).
• Effective Dec. 31, 2025, and made permanent.
• Replaces the TCJA’s temporary exemption.

Charitable Deduction Expansion

• Non-itemizers can claim up to $1,000 (Single) / $2,000 (MFJ).
• For itemizers, deductions apply once contributions exceed 0.5% of AGI.
• Excess amounts can be carried forward if not fully deductible in the same year.

Individual Trust Accounts (“Trump Accounts”)

• New tax-favored accounts for children under 18.
• Funds may be used for education, first-time home purchases, or small business investments.
• Annual contributions capped at $5,000, with a one-time $1,000 government match.
• Eligible for children born between Jan. 1, 2025, and Jan. 1, 2029.
• Employers may also make tax-free contributions.
• Effective immediately.