The One Big Beautiful Bill is Ready for the President’s Signature: What CPAs Need to Stay Ahead

The One Big Beautiful Bill (OBBB) has passed both the House and Senate and is expected to be signed by President Trump. The tax law changes affect individuals, businesses, real estate developers, and investors starting in 2025.

While many provisions are effective for tax year 2025, others hinge on construction start dates, acquisition dates, or the date of enactment, making planning and timing especially critical. A view into some of the selected provisions is below.

I. Individual Taxpayer Changes

Tip & Overtime Income Deductions

• Tips: Up to $25,000 deductible
• Overtime: Up to $12,500 (single) / $25,000 (joint)
• Phaseout Thresholds: $150K (single) / $300K (joint)

SALT Deduction Cap Increased and will be inflation adjusted

• New cap: $40,000 for joint filers
• Phaseout begins at $500,000 of AGI

II. Pass-Through Entity & Small Business Owners

Section 199A: QBI Deduction Made Permanent

• 20% deduction for qualified pass-through income

PTET Deduction Limits

• The latest Senate version drops the limitations to the PTET deduction

III. Depreciation & Real Estate Provisions

For clients planning industrial facilities, now is the moment to align construction timelines to secure 100% bonus treatment and confirm eligibility under QPP definitions.

100% Bonus Depreciation Returns

• Effective for property acquired after January 19, 2025
• Permanent under the final bill

Qualified Production Property (QPP)

• Applies to new non-residential property used for manufacturing/refining
• Must begin construction after Jan 19, 2025, and be placed in service by Jan 1, 2031
• Excludes office, software, sales, lodging, and parking

IV. Energy Efficiency & Clean Energy Incentives

Clients pursuing energy-efficient or clean energy projects should accelerate timelines or consider whether project viability changes with shorter incentive windows.

Section 45L Credit (New Residential Homes)

• The credit will end for property acquired (e.g. sold or leased) after June 30, 2026. The prior version was 12 months after enactment.

Section 179D (Commercial Buildings)

• The deduction will end for property beginning construction after June 30, 2026. The prior version was 12 months after enactment of the bill.

Clean Energy Credits (Sections 45Y and 48E)

• Wind and Solar projects must now be in service before the end of December 31, 2027, previous version allowed for a credit for projects beginning construction up until 2027. There is a carveout for projects that begin construction within one year of enactment.
• Special 5-year cost recovery period repealed

V. Section 174: Research & Experimental (R&E) Expensing

This is a major win for innovation-heavy clients. Consider amending 2022 or 2023 returns for eligible small businesses and advise all clients on the 2025 catch-up strategy.

• Amortization Repealed Permanently
• Small Business Relief: Retroactive deduction option for businesses under $31M in gross receipts for tax years starting in 2022
• Catch-Up Option: All taxpayers may accelerate unamortized balances as of 12/31/24 over one or two years

Source Advisors is here to support your firm and your client. Our experts work behind the scenes so you can deliver exceptional results with confidence.