The U.S. House of Representatives passed its sweeping tax and spending bill, dubbed, “The One, Big, Beautiful Bill Act” (OBBBA), by a vote of 215 to 214. The bill includes extensions of many provisions of the Tax Cuts and Jobs Act (TCJA) that are set to expire on December 31. It also includes some new and enhanced tax breaks. For example, it contains President Trump’s pledge to exempt tips and overtime from income tax.

The bill has now moved to the U.S. Senate for debate, revisions and a vote. Several senators say they cannot support the bill as written and vow to make changes.

Here is an overview of the major tax proposals included in the House OBBBA.

Business tax provisions

The bill includes several changes that could affect businesses’ tax bills. Among the most notable:

Bonus Depreciation
100% expensing (bonus depreciation) for qualified property is restored for property placed in service from Jan. 19, 2025, through Dec. 31, 2029.

Section 179 Expensing
The maximum amount a business may expense is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.

Domestic Research and Experimental Expenditures
Allows full expensing of domestic R&D from Jan 1, 2025 through 2029; amortization resumes in 2030.

Business Interest Deduction
For 2025–2029, the limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than EBIT.

Low-Income Housing Tax Credit
The 9% credit allocation is increased for 2026–2029, the bond-financing threshold for the 4% credit is lowered, and Indian and rural areas are designated as “difficult development areas.”

Opportunity Zones
A new round of opportunity zones is created for 2027–2033, with revised eligibility and incentives, including special rules for rural areas.

Clean Energy and IRS Credits
The bill would terminate or phase out several clean energy credits from the Inflation Reduction Act (IRA).

Individual tax provisions

The OBBBA would extend or make permanent many individual tax provisions of the TCJA. Among other things, the new bill would affect:

Individual Income Tax Rates
The OBBBA would make permanent the TCJA income tax rates and brackets.

Child Tax Credit
The credit would increase from $2,000 to $2,500 per child and include a temporary enhancement for 2025–2028.

Itemized Deduction Limitation
The OBBBA would make permanent the repeal of the Pease limitation on itemized deductions. But it would impose a new limitation on itemized deductions for taxpayers in the 37% income tax bracket that would go into effect after 2025.

Standard Deduction
The nearly doubled standard deduction would be made permanent, with an additional inflation adjustment and a temporary increase for 2025–2028 ($1,000 for single filers, $2,000 for joint filers).

Enhanced Deduction for Seniors
For 2025–2028, a $4,000 deduction is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers).

Qualified Business Income Deduction (Sec. 199A)
The 20% deduction for qualified business income from pass-through entities is made permanent and increased to 23% for tax years after 2025.

State and Local Tax (SALT) Deduction Cap
The SALT deduction cap is increased to $40,000 per household with a $500,000 income cap.

Federal Gift and Estate Tax Exemption
The increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.

Moving Expense Deduction
The OBBBA permanently terminates the deduction except for Armed Forces.

Other Deductions and Credits
The OBBBA makes permanent or enhances several other deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits.

New tax provisions

On the campaign trail, President Trump proposed several tax-related ideas. The OBBBA would introduce a few of them into the U.S. tax code:

No Tax on Tips
The OBBBA would offer a deduction from income for amounts a taxpayer receives from tips. Tipped workers would not be required to itemize deductions to claim the deduction. However, they would need a valid SSN to claim it. The deduction would expire after 2028. (Note: The Senate recently passed a separate no-income-tax-on-tips bill that has different rules. To be enacted, the bill would have to pass the House and be signed by President Trump.)

No Tax on Overtime
The OBBBA would allow workers to claim a deduction for overtime pay they receive. Like the deduction for tip income, taxpayers would not have to itemize deductions to claim the write-off but would be required to provide an SSN. Also, the deduction would expire after 2028.

Car Loan Interest Deduction
The bill would allow taxpayers to deduct interest payments (up to $10,000) on car loans for 2025 through 2028. Final assembly of the vehicles must take place in the United States, and there would be income limits to claim the deduction. Both itemizers and nonitemizers would be able to benefit.

Charitable Deduction for Nonitemizers
Currently, taxpayers can claim a deduction for charitable contributions only if they itemize on their tax returns. The bill would create a charitable deduction of $150 for single filers and $300 for joint filers for nonitemizers.

What’s next?

These are only some of the provisions in the massive House bill. The proposed legislation is likely to change (perhaps significantly) as it moves through the Senate and possibly back to the House. In addition to disagreements about the tax provisions, there are Senators who do not agree with some of the spending cuts. Regardless, tax changes are expected this year. Turn to us for the latest developments.

For more information, please contact Michael Loesevitz at [email protected] or your ORBA advisor at 312.670.7444. Sign up here to receive our blogs, newsletters and Client Alerts.