The One Big Beautiful Bill Act (OBBBA) tax changes enacted under Public Law 119-21 turn one year old on July 4, 2026. Practitioners have now completed an entire filing season under the law, giving them real-world data on how its provisions actually play out in practice.
Sweeping is an overused word in tax legislation coverage. In this case, it’s accurate. The OBBBA made permanent the expiring provisions of the 2017 Tax Cuts and Jobs Act, introduced new temporary deductions that generated significant client volume, and altered the planning landscape for individuals and businesses alike. Here’s where things stand heading into Q3.
The TCJA Extensions: What’s Now Permanent
Arguably the most consequential piece of the OBBBA wasn’t a new provision at all. It was the permanent extension of TCJA provisions set to expire on December 31, 2025. Without it, individual tax rates, the standard deduction, the QBI deduction, and the estate tax exemption would have reverted to pre-2017 levels (Tax Foundation).
The seven individual income tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent. So is the higher standard deduction, which rose to $15,750 for single filers and $31,500 for joint filers in 2025. The Qualified Business Income deduction, allowing eligible pass-through owners to deduct up to 20% of qualified business income, is also a permanent fixture of the code.
For business clients, three provisions stand out. Full bonus depreciation returned to 100% for qualified property placed in service after January 19, 2025. Domestic research and experimental expenditures can once again be deducted in the year incurred rather than capitalized and amortized over five years. And the business interest expense limitation reverted to the more generous 30% of EBITDA calculation (IRS OBBBA provisions).
The estate and gift tax exemption is now permanently indexed to inflation, rising to $15 million per individual starting in 2026. That’s $30 million for married couples.
New Temporary Provisions: The Ones Generating Client Questions
The TCJA extensions provided long-term certainty. The new temporary provisions created immediate client activity. Four deductions, all available for tax years 2025 through 2028, dominated the first filing season.
| Provision | Deduction Limit | Expires After |
| Qualified tip income | Up to $25,000 | 2028 |
| Overtime compensation | Up to $12,500 single / $25,000 joint | 2028 |
| Auto loan interest (U.S.-assembled vehicles) | Up to $10,000 | 2028 |
| Additional senior standard deduction (age 65+) | Up to $6,000 single / $12,000 joint | 2028 |
All four are above-the-line deductions, available regardless of whether the taxpayer itemizes. All four have income-based phase-outs. And all four created new compliance considerations that weren’t part of the 2024 filing landscape, particularly the tip income deduction, which requires determining whether the taxpayer’s occupation “customarily or regularly” received tips before December 31, 2024.
SALT: Temporary Relief with a Hard Sunset
The state and local tax deduction cap, one of the most debated TCJA provisions, received a temporary increase under the OBBBA. The cap rose from $10,000 to $40,000 for tax years 2025 through 2029, with the full deduction phasing out for taxpayers with modified AGI above $500,000. The cap increases by 1% annually through 2029, then reverts to $10,000 in 2030.
For practitioners in high-tax states, this provision generated the most immediate planning conversations. The five-year window creates a distinct planning horizon, particularly for clients making decisions about the timing of state tax payments, property tax prepayments, and income recognition.
What the First Filing Season Revealed
Several patterns emerged from the first filing season under the OBBBA.
The tip income deduction created substantial confusion around qualification. The IRS and Treasury issued proposed regulations (REG-110032-25) identifying nearly 70 qualifying occupations, but practitioners reported significant client-side uncertainty about whether specific roles qualified. The distinction between “customarily tipped” and occasionally tipped occupations isn’t always clean.
The overtime deduction raised questions about documentation. For 2025, Forms W-2 and 1099 don’t include dedicated boxes for qualified overtime compensation, requiring practitioners to verify overtime status from employer records rather than standard tax documents.
And the interaction between the new deductions and existing phase-out rules caught some practitioners off guard. The tip and overtime deductions phase out beginning at $150,000 of modified AGI ($300,000 for joint filers), creating scenarios where the deduction’s value shifts materially based on other income items on the return.
OBBBA Tax Changes: Looking Ahead to Q3 and Q4 2026
Three areas are likely to drive the most practitioner activity through the remainder of 2026.
Estimated tax adjustments. Clients who received the new deductions on their 2025 returns may have adjusted their 2026 withholding or estimated payments based on the assumption that the deductions remain available. For clients near the phase-out thresholds, the actual benefit may differ from initial projections.
Estate planning with the permanent exemption. The $15 million exemption ($30 million for couples) eliminates the urgency that surrounded pre-sunset gifting strategies. But it also opens longer-term transfer planning conversations that weren’t practical when the exemption faced a potential 50% reduction.
Business investment decisions. The restoration of 100% bonus depreciation and R&E expensing, combined with the permanent Section 179 increase to $2.5 million, shifted the capital expenditure calculus for many business clients. Practitioners are evaluating asset acquisition timing and method elections with a different set of rules than what applied during the 2023-2024 phase-down period.
Surgent CPE’s OBBBA course series covers the full scope of OBBBA tax changes, including individual and business tax provisions, estate and transfer tax modifications, and planning strategies. The series is available at surgentcpe.com/one-big-beautiful-bill-act-cpe-series.
Sources
– One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025
– IRS, One Big Beautiful Bill provisions: irs.gov/newsroom/one-big-beautiful-bill-provisions
– Tax Foundation, Big Beautiful Bill Explained: Tax Changes FAQ: taxfoundation.org/research/all/federal/one-big-beautiful-bill-act-tax-changes/
– Baker Tilly, Inside the One Big Beautiful Bill Act: bakertilly.com/one-big-beautiful-bill-act
– University of Illinois Tax School, OBBBA Update: Qualified Tips and Overtime Compensation: taxschool.illinois.edu
– Treasury Proposed Regulations REG-110032-25 (tipped occupation definitions)