Inside the One Big, Beautiful Bill: What OBBBA Means for You and Your Business

This week’s insight digs into the One Big, Beautiful Bill Act (OBBBA) that was signed into law on the 4th of July.

After much debate on Capitol Hill and uncertainty over whether Congress would meet President Trump’s Independence Day goal, the tax cuts that began after the passage of the 2017 Tax Cuts and Jobs Act (TCJA) were made permanent earlier this month. In May, we detailed the tax and spending bill’s significant impacts on small business owners, and many of those call-outs made it to the final version of the legislation. Let’s dig into the key parts of the fiscal package.

Individual income tax rates and brackets will remain unchanged in the years ahead, avoiding a scheduled 1-4% increase for most taxpayers had the TCJA expired at the end of the year. Another win? The lifetime gift and estate tax exemption more than doubles to $15 million from $7 million, and future exclusion amounts will be indexed to inflation.

For families, the Enhanced Child Tax Credit ticks up to $2,200 per child in 2025, also increased by the rate of inflation going forward. Small business owners will be pleased, but maybe not ecstatic, by a continuation of the Qualified Business Income (QBI) deduction for pass-through earnings; initial OBBBA drafts increased the deduction rate from 20% to 23%, but the Senate did not take up that provision.

Entrepreneurs should be absolutely thrilled with full and immediate expensing for many categories of property and R&D costs going forward. We believe this provision could really spark economic growth, particularly among small and medium-sized firms. Small businesses are the lifeblood of free enterprise and are responsible for 55% of total job creation in this country—granting them (us) this incentive to invest supports a stronger economy this year and beyond.

Another topic impacting some Clear Harbor clients is the Opportunity Zone section of the tax code. Under the OBBBA, the program is made permanent, with new 10-year cycles, revised eligibility, enhanced rural incentives, though reporting rules will be a bit more onerous. This creates new financial planning opportunities for real estate investors.

Finally, if you routinely procure healthcare coverage from the exchange, bronze-level and catastrophic insurance plans may now be HSA-eligible. Maybe that will save you a few bucks.

Overall, it was good to see lawmakers pass the bill. Of course, Congress needs to get serious about the fiscal mess at the federal level. National debt is set to increase further, perhaps hitting $40 trillion later this year. Is it an immediate worry? No, but the path is clearly not sustainable.