What the One Big Beautiful Act Means for Taxpayers

This past Independence Day, the One Big Beautiful Bill Act (OBBB) was signed into law, marking one of the most significant overhauls to the U.S. tax system since the 2017 Tax Cuts and Jobs Act (TCJA). Championed by President Trump and Republicans in Congress, the OBBB promises to simplify taxes, lower rates, and stimulate economic growth. Now that it’s the law of the land, here’s what taxpayers need to know.

Lower Income Tax Rates for Most Americans

The OBBB makes the tax cuts from Trump’s first administration permanent and goes even further by increasing income falling into the first 3 brackets. It also makes permanent the increased standard deduction, which aims to streamline filing and reduce surprises during tax time. Most wage earners will see more in their paychecks starting in 2026, when most provisions fully take effect.

Key provisions include:

• Individual tax brackets of 10%, 12%, 22%, 24%, 32%, 35% and 37%, are made permanent, preventing a tax increase starting in 2026
• Extra year of inflation adjustment to the lower three brackets, resulting in a 12% tax savings for those making under $100k per year
• Standard deduction increased further starting in 2025, and those over age 65 will receive an additional $6,000 through 2028
• The $750,000 principal limit for the home mortgage interest deduction made permanent
• Child Tax Credit increased to $2,200 per child starting in 2026, and will adjust for inflation going forward
• Creates a permanent $1,000 above-the-line deduction for charitable contributions ($2,000 for joint filers).

Estate Tax

Permanently increases the estate and gift tax exemption to $15,000,000 for individuals ($30,000,000 for those filing jointly), adjusted annually for inflation.

Business Tax Breaks Expanded

Business owners, from corporations to freelancers, stand to benefit from OBBB’s business-friendly provisions:

• Corporate tax rate of 21% made permanent
• The 20% Qualified Business Income Pass-through deduction for LLCs, sole proprietors, and partnerships has been made permanent
• Expands the QBI limitation phase-in window from $50,000 for single filers ($100,000 for married filing jointly) to $75,000 for single filers ($150,000 for married filing jointly) 
• Paid family and medical leave credit made permanent
• Permanently extends 100 percent bonus depreciation for short-lived investments

The impact of lower tax burdens on businesses could mean more investment and potentially more hiring. Critics warn, however, that the bill may disproportionately benefit large corporations.

Extends Opportunity Zone Tax Benefits

New Qualified Opportunity Zones will be designated every 10 years beginning July 1, 2026. For capital gains invested after December 31, 2026, a 10 percent step-up in basis will be allowed if the investment is held for five years. Additionally, the tax on the invested capital gain will be due after five years. No tax is imposed on the OZ investment gains if the qualified investment is held for at least 10 years and up to 30 years.

What Is Next?

The One Big Beautiful Bill Act is now the law, and it’s already reshaping the tax landscape. You should start planning now for how the changes will affect your retirement, family savings, and investments.

It will be important to review your withholding for 2025 and 2026.  The new tax brackets and rates may change how much tax is withheld from your paycheck. Business owners should review their deductions and take advantage of expanded pass-through deductions and plan for expensing of equipment and investments. Those with large capital gains may decide to wait and recognize them in the second half of 2026.

The fireworks may be over, but the financial impact of the OBBB is just beginning. Beacon Hill will continue to review the Act and assess its impact on clients.