TCJA Extensions and Tax Changes Passed with new OBBA bill

Back in May we posted a blog on the TCJA Extensions and Tax Changes that had been making their way through the house. Below are the updates on the various provisions we had noted. In upcoming months we’ll be posting additional content with specific details on some of these provisions so we recommend keeping a close eye on our blog for forthcoming updates. (Click the linked text to see more detailed posts!)

For Businesses

• SALT Workaround Closed: The bill did not end the workaround created by PTET (Pass-Through Entity Taxes). However, with increased individual itemized deductions for taxes, this may be less useful.
• Bonus Depreciation: Returns to 100% for eligible property acquired and placed in service after January 19, 2025. This was made permanent.
• Section 179 Expensing: Increases the expensing limit to $2.5 million with a $4 million overall cap.
• R&D Cost Amortization: Domestic R&D capitalization is no longer required for expenses paid in 2024 and forward. Added provisions for accelerated deduction of previously capitalized R&D costs
•  1099 Threshold Increase: Raises the reporting threshold from $600 to $2,000.
• Childcare Credit Enhancements (IRC §45F):
  • Small businesses (< ≈$31 million in gross receipts) can use third-party intermediaries for childcare services.
  • Increases the base credit to 40% (up from 25%); small businesses may qualify for a 50% credit.

For Individuals

• Tax-Free Tips:
  • Tips up to $25,000 are not subject to federal income tax    
  •  (set to expire in 2028).
  • Not available to professionals in a 199A business (e.g., CPAs).
  • Applies only to industries where tips were customary as of 12/31/2024.
  •  Phase out starts with earned income over $150,000 ($300,000 MFJ).
• Tax-Free Overtime:
  • Overtime pay excluded from taxable income up to $12,500 (also expires in 2028).
  • Phase out starts with income over $150,000 ($300,000 MFJ) 
• Senior Bonus Deduction: New temporary deduction of $6,000 for qualified individuals age 65 and over.
• Partial Charitable Deduction for Non-Itemizers: Provides some charitable deduction without itemizing.
• §199A Deduction:
  • Deduction remains at 20%.
• Increased Standard Deduction: Made permanent.
• Child Tax Credit:
  • Increased to $2,200.
  • Indexed annually for inflation.
  • Permanently extended.
• Personal Exemptions: Permanently set at $0.
• Itemized Deductions:
  • SALT cap increases to $40,000 and is indexed for inflation through 2029.
  • Vehicle Interest Deduction:
    • Up to $10,000 in interest on qualified vehicles.
    • Indebtedness must have occurred after 12/31/2024
    • Includes new cars, motorcycles, ATVs, RVs — but not bicycles.
    • Final assembly must occur in the U.S.
    • Phases out at $100,000 AGI (single) / $200,000 (MFJ).
    • Expires in 2028.

Estate & Gift Tax

• Estate Tax Exemption:
  • Made permanent at $15 million, indexed for inflation.

Other Provisions

• Trump Accounts:
  • New traditional IRA-type accounts for children under 18 years old.
  • Contributions will be capped at $5,000/year.
  • Withdrawals allowed at age 18.
  • $1,000 tax credit for opening accounts for children born 1/1/25 – 12/31/2028.

Clean Energy Tax Credits – Being Repealed or Phased Out
Most energy-related credits are set to expire by the end of 2025:

• Previously-Owned Clean Vehicle Credit
• Clean Vehicle Credit
• Qualified Commercial Clean Vehicle Credit
• Alternative Fuel Vehicle Refueling Property Credit
• Energy Efficient Home Improvement Credit
• Residential Clean Energy Credit
• New Energy Efficient Home Credit

For More Information
For further analysis and a full breakdown of the bill, refer to the Tax Advisor article: Tax provisions in the One Big Beautiful Bill Act
​