On Friday, July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (H.R. 1) Public Law No: 119-21 (The OBBB Act). The OBBB Act extends and makes permanent many provisions from the 2017 Tax Cuts and Jobs Act. Noteworthy tax changes include expanded deductions for state and local taxes, continued tax breaks for Qualified Opportunity Zones, and a phase-out of tax credits for solar and wind projects unless construction begins shortly after the bill's enactment or projects become operational by the end of 2027. The bill also adopts stricter regulations for new projects.
Tax-wise, the OBBB Act does the following:
- extends or makes permanent many provisions from the first Trump administration's 2017 Tax Cuts and Jobs Act (TCJA) — which would have otherwise expired at the end of 2026 — including deductions for R&D and investments in new equipment; 37% top individual rate; the "qualified business income" deduction lowering rates for individuals operating certain businesses through partnerships, LLCs, or S corporations; and provisions designed to ensnare fewer taxpayers in the "alternative minimum tax";
- increases the individual deduction for state and local taxes (SALT) through 2029 from $10,000 to $40,000 (phased out for high-income taxpayers), and leaves state pass-through entity tax (PTET) workarounds intact (earlier versions of the bill did not increase the SALT limit and eliminated PTET workarounds);
- extends tax breaks from investing in "qualified opportunity zones" past the TCJA's end-of-2026 sunset date, while also tightening Treasury's criteria for designing such zones and expanding reporting by funds investing in these zones (all to enhance the TCJA's goal of ensuring that this program actually benefits and helps rehabilitate blighted areas); and
- phases out tax credits for solar and wind projects from the Biden administration's 2022 Inflation Reduction Act (IRA), except for projects where construction begins within a year after OBBBA's enactment or become operational by the end of 2027 (and also provides rules for when construction begins which are stricter than and not consistent with IRS guidance under the IRA).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
