Big, Beautiful Bill Tax Reform: Key Changes for 2025 and Beyond
- Jessica Benjamin
- Aug 4
- 3 min read
The recently passed One Big Beautiful Bill Act introduces several major changes to federal tax law. These include a temporary increase in the SALT deduction cap, enhanced bonus depreciation for businesses, and a limited above-the-line deduction for charitable contributions—even for taxpayers who take the standard deduction.
While the bill presents potential opportunities for taxpayers and business owners, its provisions are complex and, in some cases, subject to temporary income limits. As always, the impact of these changes will vary depending on your specific circumstances.
For Individuals
SALT Deduction Increase
Under the new tax reform bill, the cap on state and local tax (SALT) deductions has been increased to $40,000. This cap will be adjusted for inflation by 1% each year until 2030, after which it is scheduled to return to the current $10,000 limit. This adjustment may significantly impact taxpayers in higher-tax areas, depending on their individual filing circumstances.
Above-the-Line Deductions for Tips & Overtime
Income earned from tips and overtime pay may now qualify as an above-the-line deduction on a temporary basis. This means eligible taxpayers—whether they claim the standard deduction or itemize—can deduct these earnings directly from their gross income. The deduction begins to phase out when the taxpayer’s modified adjusted gross income (MAGI) exceeds $150,000 ($300,000 for joint filers). This change can affect workers in industries where tips and overtime make up a substantial portion of their income.
Charitable Deductions with the Standard Deduction
This bill introduces a deduction for charitable contributions made by taxpayers who do not elect to itemize. Individuals can now deduct up to $1,000 ($2,000 for joint filers) while still claiming the standard deduction.
These provisions are intended to expand deduction eligibility and provide additional options for a broader range of taxpayers.
For Businesses
Bonus Depreciation Boosted
The bill extends the first-year depreciation deduction by increasing the allowance to 100% for equipment placed in service on or after January 19, 2025. This change may affect how businesses plan capital investments by allowing for a full deduction in the year the property is placed in service.
R&D Expensed Upfront
Instead of spreading research and development (R&D) costs over several years, companies will be allowed to fully deduct eligible R&D expenses in the year they are incurred. This provision applies to R&D expenditures beginning after December 31, 2024. Businesses that made qualifying investments between December 31, 2021, and January 1, 2025, may accelerate any remaining amortized deductions over a one- or two-year period. These provisions may impact how businesses approach R&D planning and expense timing.
1099 Reporting Threshold Raised
The threshold for issuing 1099 forms has been increased to $2,000 per calendar year, with annual adjustments for inflation beginning after 2026. This change may reduce the number of small transactions subject to reporting requirements and affect compliance procedures for businesses, particularly smaller entities.
These provisions will impact business tax treatment of depreciation, R&D expenses, and reporting thresholds.
Ready to Make the Most of It?
Whether you are a W-2 employee, an entrepreneur, or managing a larger business, these tax law changes could create new opportunities to reduce your tax burden and plan more strategically.
Tax laws are complex, and these updates may offer both advantages and disadvantages depending on your unique circumstances. At Griffin & Furman, LLC, our team stays on top of the latest changes so you can make the most of them.
Contact us today for a consultation and let us help you take advantage of these new opportunities.
Sources: