Tax Partner
After extensive negotiations Congress has passed and the President has signed into law the ‘One Big Beautiful Bill’ – one of the most comprehensive tax and financial reform packages in recent years. The legislation includes a broad range of provisions affecting business owners and high-net-worth individuals that should be taken into consideration for future tax planning.
Here are the key provisions of the final version that we believe are most important to business owners and high-net-worth individuals as follows:
Business Owners:
Bonus Depreciation
- Permanently extends the 100% first-year (bonus) depreciation deduction for qualifying property placed in service on or after Jan. 19, 2025.
Section 179 Expense
- Section 179 expense increased to $2.5 million (up from $1.25M) and investment limitation phaseout increased to $4 million.
Pass-Through Deduction
- 20% Qualified Business Income Pass-Through deduction is now permanent.
Domestic Research and Development (R&D) Expensing
- Domestic R&D expenses can now be fully deducted in the year incurred for tax years starting in 2025.
- Provides various pathways for small businesses to amend prior years to deduct capitalized expenses and for small or large businesses to accelerate the remaining deductions over a one- or two-year period.
- Foreign R&D expenses must continue to be capitalized and amortized over 15 years.
Limitation on Business Interest Changes
- For tax years beginning in 2025 the interest deduction limitation will be computed without regard to the deduction for depreciation, amortization, or depletion.
Opportunity Zones
- Opportunity zones are now permanent with several changes that will generally take effect Jan. 1, 2027.
Qualified Small Business Stock
- Increases the gain exclusion amount and allows a lessor percentage of gain exclusion for qualifying stock held three or four years instead of the previously required five year holding period.
Excess Business Losses
- Limitation is now permanent.
Clean Energy Incentives
- Terminates a large number of clean energy tax incentives including the electric vehicle credit.
High-Net-Worth Individuals:
Income Tax Rates
- Income tax rates for individuals, estate, and trusts are made permanent for tax years beginning after 2025. The permanent tax rates for individuals are: 10, 12, 22, 24, 32, 35 and 37 percent. The rates for trusts and estates are: 10, 24, 35 and 37 percent.
Estate & Gift Tax Exemption
- Exemption raised to $15 million per person ($30M per couple) with future years indexed for inflation.
State and Local Tax Deduction (SALT)
- SALT limit increased from $10,000 to $40,000 in 2025.
- Increased by 1% through 2029; reverts to $10,000 in 2030.
- Benefit begins to phase out, or decrease, for taxpayers with more than $500,000 of income.
Final Thoughts
The One Big Beautiful Bill Act permanently extends the majority of the 2017 tax act provisions for both business owners and wealthy individuals along with numerous other potentially tax saving provisions that should be reviewed by all taxpayers.
Our team at Wright Ford Young & Co. is here to guide you through the opportunities and ensure you’re positioned for long-term success. Click here to contact us now.
Wright Ford Young & Co. is headquartered in Irvine, CA and is one of the largest local CPA firms in Orange County. WFY is a full service corporate accounting firm offering audit, tax, estate and trust, and business consulting services to closely held company and family business owners. More information about our Firm can be found at www.cpa-wfy.com.