Key Tax Provisions in the One Big Beautiful Bill Just Passed by Congress

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill fulfilling his promise to enact a major tax reform by Independence Day.

Here are some of the highlights:

1. Pass-Through Deduction (Section 199A) Made Permanent

The 20% deduction for qualified business income from pass-through entities (partnerships, LLCs, S-corps) is no longer set to expire — it is now permanent.

2. “Trump Account” – A New Tax-Advantaged Savings Tool

A new account designed to build generational wealth:

• $1,000 per birth and/or adoption
• Up to $5,000/year in deductible contributions
• Tax-deferred growth
  Funds may be used for education, training, or a first-time home purchase.

3. Auto Loan Interest Deduction

Interest on loans for new U.S.-assembled vehicles can now be deducted if:

• The car is for personal use
• The taxpayer’s income is under a regulatory threshold
• Loan terms meet IRS rules
  Applies through 2028.

4. New Tip & Overtime Deduction

Taxpayers earning under $150,000 (single) or $300,000 (joint) can deduct up to $25,000 of income from:

• Tips
• Overtime pay
  Valid through 2028.

 5. Estate & Gift Tax Exemption Expanded

Starting in 2026, the unified estate/gift tax exemption will be $15 million per person – inflation adjusted.

This avoids a sharp rollback under previous law.

🧾 No change for nonresident aliens.

6. Corporate Tax Rate Held at 21%

The corporate income tax rate remains at 21%, solidifying the TCJA-era cut and preserving U.S. tax competitiveness.

 7. GILTI and FDII Tweaks

• Effective tax rates for GILTI and FDII increase to ~14%
• FDII made permanent to encourage IP and service exports to stay onshore

8. 100% Bonus Depreciation & R&D Expensing Restored

• Full expensing of eligible capital assets in the first year is now permanent
• R&D costs can again be deducted immediately, rather than amortized
• Temporary 100% depreciation allowed for qualified industrial property (excludes residential/commercial)

9. Participation Exemption Tightened

Stricter standards now apply to U.S. corporations excluding foreign dividends:

• Hybrid entities scrutinized
• Related-party rules enforced
• Minimum ownership clarified

Goal: stop base erosion via aggressive cross-border structures.

10. 1% Tax on Informal Remittances

International remittances made outside the formal banking system (e.g., money transmitters or exchange houses) are now subject to a 1% tax.

• Bank-processed transfers are exempt.

11. SALT Deduction Cap Temporarily Raised

For five years, the deduction cap on state and local taxes jumps from $10,000 to $40,000.

12. Individual Tax Rate Cap Extended

The current 37% top individual rate is made permanent — avoiding a reversion to 39.6% in 2026.

13. Section 899 “Revenge Tax” Dropped, Section 891 Stays

The proposed Section 899 (targeting jurisdictions adopting OECD’s global minimum tax) has been removed.

However, Section 891 still permits the President to impose retaliatory double-tax rates on discriminatory foreign regimes.

How Does This Affect You?
If you own a business, plan to transfer wealth, or make cross-border investments—this bill likely touches your world. These changes offer significant new opportunities, but also raise important questions about compliance, timing, and strategic planning.

Are you maximizing your eligibility for the permanent pass-through deduction? Should you consider funding a Trump Account for your children or grandchildren? Does your estate plan reflect the expanded gift and estate tax exemption? Are you correctly positioned to benefit from bonus depreciation or the renewed R&D expensing rules? And if you send or receive money across borders—are you now exposed to the new 1% remittance tax?

RJS LAW can help | One Big Beautiful Bill
Our team of tax attorneys, international tax attorneys, and estate planning professionals can guide you through the new law’s complexities and tailor a plan that protects your assets, reduces tax exposure, and aligns with your personal and business goals. Whether you are restructuring your business, revising your estate plan, evaluating international holdings, or simply want peace of mind in a changing tax landscape — we are here to help you navigate the path forward and make sure you are taking full advantage of these new provisions.

The experienced attorneys at RJS LAW provide Tax Planning, Tax Controversy, and Estate Planning Services.  We can help you plan for your next vehicle purchase or perhaps help you plan for bigger and better things.  Please do  contact us for a free consultation if you have any questions about any Tax, International Tax and/or Estate Planning issue.