Significant Legal Developments under the One Big Beautiful Bill Act (H.R. 1 – OBBBA 2025)

On July 3, 2025, Congress enacted H.R. 1, the One Big Beautiful Bill Act (“OBBBA”), a landmark bill subsequently signed into law by President Donald J. Trump. This sweeping legislation introduces remarkable, practical changes across the federal tax code, estate and gift taxation, business taxation, federal benefits, education funding, energy policy, defense spending, and immigration enforcement.

This article briefly outlines the most relevant provisions likely to affect individuals, families, and businesses.

I. Estate and Gift Tax Law

OBBBA permanently increases the federal estate and gift tax lifetime exclusion amount. Beginning in 2025, the exclusion amount is approximately $13.61 million per individual and $27.22 million per married couple. In 2026, these figures are scheduled to increase to $15 million for individuals and $30 million for married couples. Thereafter, these thresholds will automatically increase annually, indexed for inflation. These exclusions are now permanent and do not sunset.

II. Individual Income Tax Reforms

• Existing tax brackets are made permanent.
• The standard deduction is increased by $750 for single filers and by $1,500 for joint filers.
• The SALT (state and local tax) deduction is capped at $40,000 for joint filers for five years.
• Temporary above-the-line deductions include:
  • Up to $25,000 for reported tips.
  • Up to $12,500 for overtime wages.
  • Up to $10,000 for interest on car loans for U.S.-assembled vehicles.
• The child tax credit is increased by $200 per qualifying child, with a requirement for a valid Social Security number.

III. Business and Corporate Tax Provisions

• The 20% qualified business income deduction under Section 199A is made permanent.
• 100% bonus depreciation under Section 168 is permanently extended for qualified property placed in service after January 19, 2025.
• Immediate expensing of domestic R&D expenditures under Section 174 is restored beginning in 2025. Small businesses may apply this retroactively to 2021.
• The Section 163(j) limitation on interest expense is returned to an EBITDA-based formula.
• The CHIPS Act manufacturing credit under Section 48D increases from 25% to 35% for property placed in service after December 31, 2025.

IV. International Taxation

• GILTI is renamed “Net CFC Tested Income” and is taxed at a 14% rate. QBAI is repealed.
• FDII is renamed “Foreign-Derived Deduction Eligible Income” and also taxed at 14% with QBAI repealed.
• BEAT is made permanent at 10.5%.
• Downward attribution rules under Section 958(b) are restored with modifications.
• A 1% remittance tax is imposed on outbound transfers, subject to limited exceptions.

V. Health Savings Accounts and Related Healthcare Changes

• HSA eligibility is expanded to include ACA bronze and catastrophic plans.
• HSAs may be used to pay for direct primary care services.
• Telehealth services may be covered on a pre-deductible basis for HDHP enrollees.

VI. Higher Education and Student Loan Policy

• ICR plans are replaced with a new Repayment Assistance Plan (RAP) beginning July 1, 2026.
• Graduate PLUS loans are eliminated for loans issued after July 1, 2026.
• New loan limits are imposed on graduate, professional, and parent borrowers.
• Pell Grant eligibility is narrowed and Workforce Pell is expanded to include short-term vocational programs.

VII. Agriculture and Rural Development

• SNAP work requirements are expanded and federal cost-sharing is reduced.
• Reference prices for row crops are increased and commodity support programs are extended through 2031.
• Crop insurance is expanded and a new poultry insurance pilot program is launched.
• Unspent IRA funds are reallocated to traditional agricultural conservation and disaster relief programs.

VIII. Environmental and Energy Law

• Significant IRA clean energy and climate funding is rescinded.
• Methane royalties are eliminated.
• Oil and gas leasing is expanded and reinstated on federal lands and offshore areas.
• Renewable energy project fees on federal lands are adjusted, with new state and county revenue sharing.
• Timber harvest quotas are increased and long-term contracts are permitted with private parties.

IX. Defense and National Security

• Total DOD spending for FY 2026 exceeds $1 trillion.
• $25 billion is allocated to missile defense under the “Golden Dome” initiative.
• $29 billion is allocated to naval shipbuilding and $15 billion to nuclear modernization.
• Resources are concentrated in the Indo-Pacific Command region to counter Chinese military influence.
• Substantial investments are made in defense housing, modernization, and supply chain resilience.

X. Immigration and Border Security

• New and increased filing fees:
  • $100 for asylum applications.
  • $1,000 for parole requests.
  • $500 for Temporary Protected Status.
  • $550 for work authorization under TPS.
• $45 billion to expand immigration detention facilities.
• $29 billion for ICE operations, including recruitment and transportation.
• $3.3 billion for additional immigration judges and court support personnel.
• $10 billion in reimbursements to state and local governments for border-related costs since January 2021.

Conclusion

The One Big Beautiful Bill Act represents a fundamental shift in federal tax and regulatory policy. We encourage all clients to contact our office to review how these developments may affect your estate plan, tax obligations, or business structure. Our firm stands ready to assist in taking full advantage of available opportunities and ensuring compliance with the new legal framework.