On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (the “Act”). This sweeping legislation permanently restructures the Internal Revenue Code across virtually every category of taxpayer: individuals, businesses, charitable organizations, and multinational corporations. Attorneys in Gunster’s Tax and Private Wealth Services practice groups have reviewed the Act and provide the following summary of its key provisions.
WHAT YOU NEED TO KNOW:
I. INDIVIDUAL TAXPAYER PROVISIONS
Gift & Estate Tax Exemption
The Act makes the estate and gift tax exemption permanent at $15 million ($30 million per married couple) for 2026 with annual inflation adjustments going forward.
Income Tax Rates
The Act permanently extends the current income tax brackets and rates for individuals for tax years beginning after 2024, and indexes the brackets to inflation going forward.
Standard Deduction
The standard deduction for 2026 has been raised to the following:
- Single or Married Filing Separately: $15,750
- Heads of Household: $23,625
- Married Filing Jointly: $31,500
These amounts are indexed to inflation for tax years after 2026.
New Senior Deduction
For tax years 2025 through 2028, individuals aged 65 or older will be allowed a $6,000 deduction when computing their taxable income. The deduction phases out for married taxpayers with modified adjusted gross income exceeding $150,000 ($75,000 for all other taxpayers).
Personal Exemption and Miscellaneous Itemized Deductions
The Act permanently eliminates the personal exemption and suspends all miscellaneous itemized deductions.
Itemized Deductions
Although taxpayers in the top income tax bracket pay a top marginal tax rate of 37% for every dollar of taxable income, those who elect to itemize their deductions after 2025 will be limited to claiming a deduction of 35% of every dollar of itemized deduction claimed (other than miscellaneous itemized deductions, which are permanently suspended).
State and Local Tax (“SALT”) Deduction
The SALT deduction cap is temporarily increased to $40,000 for tax years 2025 through 2029. The deduction phases down for taxpayers with modified adjusted gross income exceeding $500,000 ($250,000 for a married individual filing taxes separately). However, regardless of a taxpayer’s income, the credit cannot be reduced below $10,000.
Qualified Business Income (“QBI”) Deduction
The QBI deduction is made permanent at 20% for tax years beginning after 2025, and certain limitation phase-in ranges are expanded in a taxpayer-friendly manner.
Alternative Minimum Tax
The Act permanently extends the increased individual alternative minimum tax exemption for tax years beginning after 2025. It also reverts the phase-out thresholds to 2018 levels of $500,000 ($1 million for joint filers) and indexes them to inflation.
Personal Residence Interest Deduction
The mortgage interest deduction for loans originated after December 15, 2017 is permanently limited to interest paid on the first $750,000 of mortgage debt. Mortgage insurance premiums remain deductible, though the deduction phases out for taxpayers with adjusted gross income exceeding $100,000 ($50,000 for married individuals filing separately).
Child-Related Benefits
Child tax credit: For tax years beginning in 2025, the child tax credit is permanently increased to $2,200 per child, and the current increased income phase-out thresholds are maintained.
Trump accounts: The Act also creates “Trump accounts,” which are tax-advantaged savings vehicles for children under the age of 18. These accounts will track a stock index and allow additional private contributions (from parents, employers, etc.) of up to $5,000 per year. Accounts established for children born between 2025 and 2028 will receive a one-time seed contribution of $1,000 from the government. Contributions to Trump accounts are generally nondeductible. Distributions from the accounts are restricted based on the child’s age.
II. BUSINESS TAX INCENTIVES AND DEDUCTIONS
Qualified Small Business Stock (“QSBS”)
Effective for tax years beginning after July 4, 2025, the Act makes the following taxpayer-friendly changes to the tax exclusion for gains on the sale of QSBS:
- The percentage of eligible gain that can be excluded is now tiered based on how long the taxpayer held the QSBS before selling it: 50% exclusion after 3 years; 75% after 4 years; and 100% after 5 years.
- The cap on how much gain can be excluded has been increased to the greater of: (i) $15 million or (ii) 10 times the adjusted basis of QSBS sold by the taxpayer during the year.
- The first limitation was previously $10 million.
- The corporation issuing the QSBS is now limited to aggregate gross assets of no more than $75 million, both before and immediately after the issuance.
Depreciation and Expensing
Bonus depreciation: The Act permanently allows taxpayers to immediately deduct 100% of the cost of certain depreciable property acquired and placed in service after January 19, 2025.
Nonresidential real property deduction: Taxpayers are allowed to immediately deduct 100% of the cost of certain nonresidential real property used in manufacturing, agricultural and chemical production, or refining of tangible personal property. The property must be placed in service after July 4, 2025, and before January 1, 2031, and construction on the property must begin after January 19, 2025, and before January 1, 2029.
Section 179 expense deduction: The Section 179 expense deduction limit has been increased to $2.5 million, and the phase-out threshold has been increased to $4 million, for property placed in service in tax years beginning after 2024.
Clean Energy Credits
The Act repeals or accelerates the phase-out dates for several clean energy credits. It also imposes new restrictions on certain foreign entities, prohibiting them from earning or purchasing these credits. However, the Act preserves the transferability of clean energy credits.
Business Interest Deduction
Beginning in tax year 2025, the business interest deduction limitation will be calculated by reference to EBITDA, rather than EBIT.
Research or Experimental Expenditures
For tax years beginning after 2024, domestic research or experimental expenditures may be fully deducted in the year they are paid or incurred. Taxpayers may also elect to deduct any remaining unamortized amounts from expenditures paid or incurred between 2022 and 2024. Small businesses with annual gross receipts of $31 million or less may apply the new deductibility rule retroactively to tax years 2022 through 2024. Foreign research expenditures must still be amortized over 15 years.
Qualified Opportunity Zones (“QOZ”)
The Act permits the designation of new QOZs beginning in 2027 and allows for gain deferral for up to five years following an investment in a QOZ. The amount of post-investment appreciation that must be recognized may be reduced or eliminated depending on the holding period of the investment and whether the QOZ is located in a rural area.
Executive Compensation Deduction
Under the Act, compensation paid by all entities within a controlled group will be aggregated when calculating the $1 million deduction limit for executive compensation by public companies.
Employer Child Care Credits
The employer child care tax credit is significantly expanded for tax years beginning after 2025. Employers may claim a credit equal to 40% of qualified child care expenses they provide for their employees. The maximum credit is increased to $500,000 for most employers and $600,000 for certain small businesses. Additionally, small businesses may pool resources with other employers to offer child care and may engage a third-party intermediary to facilitate services on their behalf.
III. CHARITABLE PROVISIONS
Private Foundations
The Act did not make any changes to the excise taxes imposed on private foundations.
Individual Charitable Contributions
Itemizing taxpayers: Beginning in tax years after 2025, individuals who itemize their deductions may only claim a charitable contribution deduction to the extent that the deduction exceeds a floor of 0.5% of their contribution base.
Non-itemizing taxpayers: For the same tax years, individuals who do not itemize may claim a charitable deduction of up to $1,000 ($2,000 for married taxpayers filing jointly) for qualifying contributions.
Corporate Charitable Contributions
For tax years beginning after 2025, a corporation may claim a charitable contribution deduction only to the extent that the deduction exceeds a floor of 1% of the corporation’s taxable income. Deductions are also subject to a cap of 10% of taxable income. Any deductions disallowed due to the 10% cap may be carried forward for up to five years.
Tax on Excess Employee Compensation
For tax years beginning after 2025, the 21% excise tax on compensation exceeding $1 million paid by certain tax-exempt organizations will apply to: (i) any current employee of an applicable tax-exempt organization (or its predecessor), and (ii) any former employee who was employed by the organization (or its predecessor) in any taxable year after 2016.
Gifts to Scholarship Granting Organizations
U.S. citizen or resident individuals may now claim an income tax credit of up to $1,700 for donations to certain tax-exempt organizations that provide scholarships to elementary and secondary school students.
IV. INTERNATIONAL PROVISIONS
FDII and GILTI
The Act modifies deductions for foreign-derived intangible income (“FDII”) and global intangible low-taxed income (“GILTI”), setting both at a 14% effective tax rate for tax years beginning after 2025.
Base Erosion Anti-Abuse Tax (“BEAT”)
The BEAT minimum tax rate is permanently set at 10.5% for tax years beginning in 2026.
WHAT TO DO NOW:
The Act introduces sweeping and permanent reforms to the federal tax landscape, creating both new planning opportunities and complexities for taxpayers. It simplifies the Internal Revenue Code for many while inserting complex trade-offs for others. For individuals, businesses, and charities alike, this is a moment to re-strategize. Be proactive not reactive. Here are steps to take:
- Conduct a holistic tax review—the Act’s provisions may impact prior, current, and future tax years.
- Evaluate estate, business, and charitable strategies in light of new floors, caps, and deduction frameworks.
- Seize opportunities early—especially for deductions and credits with sunset or phase-out dates.
- Engage advisors who understand both the opportunities and limitations of the Act in real-world terms.
- Contact your tax lawyer for legal guidance.
Gunster’s Tax and Private Wealth Services attorneys are available to provide guidance and support for individuals, businesses, and charitable organizations navigating these changes.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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