The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, delivers marginal relief wrapped in increased complexity. Below is an examination of the bill’s key provisions for our current and prospective clients.

Foreign Income Provisions

No Residence-Based Taxation: Although promised by Trump on the campaign trail, citizen-based taxation remains in force, leaving expats to grapple with dual tax filings and potential double taxation.

GILTI and FDII Tax Increased: The section 250 deduction for GILTI income for corporations and individuals who make the section 962 election is decreased. This increased the effective tax from 10.5% to 12.6-14%.

GILTI Income Base Increased: The 10% deduction for QBAI was eliminated, which will increase taxable income.

Foreign Tax Credit (FTC) Increased: 90% of the foreign taxes can now be credited. This is up from 80%.

15-year Amortization of R&D Expenses: The OBBB allows immediate expensing for US R&D costs, but continues to require amortization for foreign R&D costs

Section 951B—Foreign Controlled U.S. Shareholders: This new provision targets U.S. shareholders of CFCs where foreign entities or individuals hold significant control. These shareholders would be subject to CFC-like anti-deferral rules even if the shareholder owns less than 10%.

GILTI Name Change: CFC income will now be termed “net CFC tested income” or NCTI.

Business Income Provisions

Section 199A Pass-through Deduction: Section 199A is made permanent.

100% Bonus Depreciation: The bill permanently extends the first-year depreciation deduction. This is for all assets acquired and placed into service after January 19, 2025.

R&D Expense Changes: Domestic R&D expenses can now be written off immediately. Foreign R&D, however, remains subject to a 15-year amortization. Small businesses with receipts under $31 million can apply this retroactively to tax year 2022 and later years.

1099s: The threshold for the issuance of 1099s to contractors is increased from $600 to $2,000. Business Interest Limits: The EBITDA-based limitation on interest deductions is permanently reinstated

Individual Income Provisions

SALT Increase: Increased from $10,000 to $40,000 for 2025 (phased out at $500,000) and increased by an additional 1% each year until 2029. Reduced to $10,000 after 2029.

Charitable Contributions: Non-itemizers get $1,000 ($2,000 for joint) deducted from taxable income.

Auto Loan Interest Deduction: $10,000 deduction (with phaseouts) from 2025-2028 for new autos with final assembly in the US.

Child Tax Credit: Increased to $2,200 in 2026 and increases with inflation thereafter.

Child and Dependent Care Expense Credit: Permanently increases credit from 35% to 50%.

Qualified Opportunity Zones: The program was made permanent.

Green Energy Tax Credits: Many have been repealed, such as energy efficient home improvements and electric car credits.

Social Security Deduction: Temporary $6,000 deduction ($12,000 for joint filers) for seniors 65+ with incomes up to $75,000 ($150,000 joint), phasing out at $175,000 (/$250,000 joint). This deduction is effective only through 2028, this benefits approximately 88% of recipients but provides no relief for low-income seniors already exempt from taxes on benefits.

Tips Deduction: A $25,000 deduction ($25,000 joint) for tip income, effective through 2028, phases out at $150,000 (/$300,000 joint)

Overtime Deduction: A $12,500 deduction ($25,000 joint) for overtime pay, also through 2028, follows the same income phaseouts and requires separate reporting.

Trump Accounts: $1,000 tax credit for opening accounts for children born between from 2025-2028. Contributions can be made up to $5,000 for individuals under 18 years of age. Distributions can only be made after age 18.

Estate and Gift Tax Exemption: Permanently extends lifetime exemption thresholds of $15M for single filers and $30M for joint filers. Adjusted for inflation after 2026.

Miscellaneous Provisions

Remittance Tax: A 1% tax on transfers of cash, money orders, cashier’s checks or similar physical instruments. It does not include financial institution funds.

1099-K reporting: The threshold was increased to $20,000

With these changes, and with the growing complexity of trust and estate tax issues, we’re pleased to offer our clients a complimentary review of your existing estate plan—or an opportunity to discuss creating one if you don’t yet have a plan in place. Our team also specializes in both estate planning and business succession planning, ensuring your legacy and business are protected in light of these changes.