Navigating the 'One Big Beautiful Bill Act': Key Insights for Taxpayers and Small Businesses

As the Tax Cuts and Jobs Act (TCJA) nears its sunset in 2025, taxpayers are poised on the brink of significant policy change. Enter the One Big Beautiful Bill Act (OBBBA), a comprehensive piece of legislation designed to extend and enhance the most impactful elements of the TCJA. Enacted on July 4th by President Trump, the OBBBA aims to carry forward and refine past policies, addressing today’s fiscal challenges while promoting a more inclusive economic framework.

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The OBBBA introduces a myriad of changes to tax landscapes beginning in 2025, affecting individual taxpayers, small businesses, and family-focused tax benefits. This analysis will exclude alterations specific to large corporations, ensuring the focus remains on small business and individual impacts, which are central to our client base.

Individual Tax Rates: The OBBBA extends the reduced individual tax rates past January 1, 2026, perpetuating lower rates first established under previous legislation. By including inflation-linked bracket adjustments effective from 2026, the Act seeks to alleviate tax pressures on middle-income families while continuing to benefit high-income brackets with the removal of the 39.6% tax bracket.

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Enhanced Standard Deductions: Moving beyond 2025, the OBBBA cements elevated TCJA standard deductions with further inflation adjustments. Anticipated increases will be confirmed by IRS calculations for 2025, providing substantial relief for taxpayers.

Senior Tax Benefits: A unique $6,000 additional deduction for seniors 65 and older will begin prior to 2029, contingent on Modified Adjusted Gross Income (MAGI) thresholds below $75,000 ($150,000 for joint filers). This measure replaces the unfulfilled promise of tax elimination on Social Security income.

Child Tax Credit Expansion: Supporting family finances, the OBBBA elevates the Child Tax Credit to $2,200 per child, applicable from 2025, with inflation adjustments poised to increase subsequent benefits. Stricter Social Security number requisites accompany these adjustments.

QBI Deduction Enhancements: The Qualified Business Income deduction sees its phase-in limits rise significantly, providing extended support to small business owners beginning in 2026.

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The OBBBA introduces a refreshed fiscal landscape requiring adept navigation. Our team at Thomas Hawbaker CPA PLLC is prepared to guide you through these changes, ensuring optimal tax strategy and financial compliance. Please contact us for personalized consultation as you adapt to these evolving tax structures.

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