Comprehensive Tax Provisions in the "One Big Beautiful Bill" Impact U.S. Tax Laws

The recently enacted reconciliation legislation, known as the "One Big Beautiful Bill" (BBB), introduced comprehensive tax law reforms that build upon the 2017 Tax Cuts and Jobs Act (TCJA). Key updates include an expansion of the Qualified Small Business Stock (QSBS) exclusion and the permanent establishment of Qualified Opportunity Zones (QOZs) with significant modifications taking effect from 2027. The bill also modifies individual and corporate tax provisions, including inflation adjustments to tax brackets and standard deductions for 2025, fixed limits for child tax credits, and adjustments to alternative minimum tax phaseouts.

Permanent measures enacted by the BBB include full expensing for certain business investments, enhanced interest deduction limits under Section 163(j), and the continuation of domestic research and development expensing with retroactive provisions for smaller businesses. New above-the-line deductions are introduced for tip income, overtime income, senior citizens, and interest on car loans for U.S.-assembled vehicles, applying for tax years 2025 through 2028 with income-based phaseouts.

In addition to individual tax changes, the legislation revises itemized deductions by introducing minimum floors on charitable contributions and corporate giving, while permanently capping mortgage interest deductions on acquisition debt. The bill also increases the eligibility threshold for dependent care assistance programs and allows for employer tax exclusions on student loan repayments effective in 2026.

Healthcare provisions under the BBB include modifications to Affordable Care Act premium tax credit rules, increased verification requirements, and cost-sharing for certain Medicaid participants, primarily targeting higher-income beneficiaries. Clean energy credit incentives have been scaled back, requiring new wind and solar projects to commence before 2028 to qualify, while manufacturing investment credits have increased.

International tax adjustments notably reduce foreign-derived intangible income and global intangible low-taxed income deductions. The bill additionally imposes a new excise tax on university endowments exceeding established thresholds and raises the Form 1099 filing income threshold to $2,000. These tax law changes will impact a broad range of stakeholders, including individuals, families, businesses, and educational institutions across the United States.