On 4 July 2025 President Trump signed H.R. 1, the budget reconciliation measure known as the One Big Beautiful Bill Act, into law. Title VII of the enrolled bill contains the most extensive changes to the US federal tax code since the Tax Cuts and Jobs Act of 2017, many of whose individual provisions had been due to expire at the end of 2025.
Corporate INTL Newsroom · Tax
One Big Beautiful Bill Act Signed Into Law With Sweeping US Tax Changes
By The Corporate INTL Newsroom · 7 July 2025
Section 70101 extends and enhances the reduced individual income tax rates and section 70102 does the same for the increased standard deduction. Section 70106 raises the basic estate and gift tax exclusion amount to $15 million for estates of decedents dying and gifts made after 31 December 2025, with inflation indexing in later years.
New deductions for individuals
The Act creates deductions that were central to the political debate. Section 70201 allows a deduction for qualified tips of up to $25,000, reduced for taxpayers with modified adjusted gross income above $150,000 ($300,000 for joint returns). Section 70202 allows a deduction for qualified overtime compensation of up to $12,500 ($25,000 for joint returns), with the same income phase-down, and section 70203 introduces a deduction for interest on certain car loans.
Section 70120 changes the cap on the deduction for state and local taxes. The limit becomes $40,000 for 2025 and $40,400 for 2026, rising by 1 percent a year until it returns to $10,000 for tax years beginning after 2029, and it is reduced for taxpayers with higher modified adjusted gross income.
Business and international provisions
For businesses, section 70301 makes full expensing for certain business property permanent and section 70302 allows an immediate deduction for domestic research and experimental expenditures. Sections 70321 to 70323 revise the international regime under the new headings of foreign-derived deduction eligible income and net CFC tested income, and section 70331 extends and modifies the base erosion minimum tax. Sections 70512 and 70513 terminate and restrict the clean electricity production and investment credits.
Who is affected
The One Big Beautiful Bill Act reaches individual taxpayers, owners of family wealth, domestic manufacturers and multinational groups with US operations. Effective dates differ from provision to provision, so advisers will need to check the official text section by section. Implementation now passes to the Treasury Department and the Internal Revenue Service, which administer the new deductions and reporting requirements.
Sources
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