One Big Beautiful Bill Act (OBBBA)

Definition:
A major U.S. federal budget and tax reconciliation law (H.R. 1) that became Public Law No. 119‑21 on July 4, 2025, after narrow votes in both the House (218–214) and Senate (with Vice President Vance breaking a 50–50 split).
(congress.gov)

🔑 Core Provisions

• Permanent TCJA rules extended:
  Tax brackets, standard deduction (e.g. $15,750 for single, $31,500 married), and AMT exemptions remain through 2026 and beyond.
  (tax.thomsonreuters.com)
• New temporary deductions (2025–2028):
  • Up to $25,000 for tip income (phase‑out starts at AGI $150K/$300K)
  • Up to $12,500 for overtime pay
  • Up to $10,000 interest deduction on U.S.-assembled vehicle loans
  • Additional $6,000 standard deduction for seniors aged 65+ (phases out above set AGIs)
    (irs.gov)
• Small‑business boost:
  • Section 199A pass-through deduction made permanent
  • Child tax credit raised to $2,200 (inflation‑indexed)
  • Estate tax exemption increased to $15 million per decedent and made permanent
    (taxfoundation.org)
• Corporate and investment incentives:
  • 100% immediate expensing for machinery and R&D
  • Opportunity Zones made permanent, with new deferral rules and stricter reporting
    (whitehouse.gov)
• Clean energy and Medicaid rollback:
  • Phases out clean energy credits after 2027
  • Substantial Medicaid and SNAP cuts implemented
  • New eligibility conditions and state requirements reduce coverage
    (investors.com)

💼 Entrepreneurial Highlights

• Tax stability & clarity: Permanency of TCJA rules reduces uncertainty—good for long-term planning.
• Capital spending incentive: Immediate expensing lowers upfront cost of growth investment.
• Broad benefit skew: While marketed as middle-class relief, most long-term gains accrue to high earners and businesses.

📉 Fiscal & Growth Impact

• Revenue loss: Estimated reduction of $4–4.5 trillion; adds roughly $3.3–3.4 trillion to the deficit over ten years.
  (kiplinger.com)
• GDP trajectory: Short‑term boost (~0.2% annually) masks long-term slowdown; by 2054 GDP could be ~3% lower due to higher debt and interest rates. Debt-to-GDP may hit 194%.
  (budgetlab.yale.edu)

⚠️ Criticisms & Risks

• Regressive design: Many deductions favor those with high marginal rates. Workers earning tips or overtime may benefit less in practice.
  (americanprogress.org)
• Reduced safety nets: Medicaid, food aid, and student loan reforms could undercut any gains for lower-income households.
  (investors.com)
• Clean-tech setback: Scaling back of green incentives may slow renewable investment.
  (jw.com)

✅ Strategic Takeaways for Business Owners & Self‑Employed

• Capital-intensive firms benefit most: aim to accelerate qualifying purchases.
• Owners of pass-throughs and high-income earners gain from perpetual Section 199A.
• Families with seniors, tip-based or overtime-based incomes need tailored tax planning.
• Be cautious if your business or clients rely on clean energy incentives or Medicaid-based clients.

🔍 Glossary Summary

Further Reading

• Big Beautiful Bill Clears Congress; Here's What It Does
• Elon Musk and Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'
• 7 Things Taxpayers Need To Know About the Big Beautiful Bill Act