Enactment of the One Big Beautiful Bill Act (OBBBA)

By: Juliya L. Ismailov

On July 3, the “One Big Beautiful Bill Act” passed Congressional approval in 218-214 vote with a narrow Republican majority and was signed into law by President Trump on July 4. 

The changes in the final version - from the prior version covered in our prior article - are outlined below:

SALT Deduction – Effective as of tax year 2025, SALT deduction has increased to $40,000 for 2025, with the following additional adjustments:

• subject to a 1% increase 2026 through 2029

• for high-income earners, SALT cap phases down by 30% of adjusted gross income in excess of $500,000 threshold (with 1% threshold increase each year), until reaching a $10,000 floor

• in 2029, the cap will return to $10,000

PTET Workaround – The state-level passthrough entity tax (PTET) workaround to the SALT limitation (discussed in our prior article) remains available without further limitations, despite the prior version of the House bill excluding certain service businesses(e.g. law, accounting, architecture, medicine, etc.).

Charitable Deductions – Effective as of tax year 2026, charitable deduction will be subject to a new 0.5% floor of adjusted gross income.

QSBS Exclusion – Effective as of July 4, 2025 (date of enactment), qualified small business stock (QSBS) exclusion of capital gain has been increased to the greater of $15 million (from $10 million) or 10x basis, the gross assets test has been increased to $75 million (from $50 million), and a new alternative 75% benefit is provided for a 4-year holding period and a 50% benefit for a 3-year holding period.

QBI – Effective as of tax year 2026, the deduction for qualified business income is permanently extended, with the deduction cap remaining at 20% (despite prior House bill increasing it to 23%); the final version continues the exclusion of the QBI deduction for specified service trades or businesses (e.g. law, accounting, architecture, medicine, etc.).