The One Big Beautiful Bill: Key Tax and Planning Changes After July 2025
Updated September 2026 to reflect IRS guidance.
The One Big Beautiful Bill Act, signed July 4, 2025, made several tax rules permanent and added new deductions that run from 2025 through 2028. Here are the changes that matter most for business owners, real estate investors and families in southwest Missouri.
Bonus depreciation and Section 179
100% bonus depreciation is back, and it's now permanent for qualifying property acquired after January 19, 2025. The Section 179 expensing limit rose to $2.5 million. For real estate investors, bonus depreciation is what makes a cost segregation study pay off in the first year: components a study moves to 5-, 7- or 15-year lives can be deducted in full. Whether you can use that deduction now depends on the passive activity rules, which is why we check before recommending a study. See Real Estate.
The QBI deduction is permanent
The 20% qualified business income deduction was scheduled to end after 2025. It's now permanent. The wage, property and service-business limits still apply, but the income range over which they phase in is wider, and starting in 2026 there's a small minimum deduction for owners with at least $1,000 of qualified income from a business they actively run.
Higher SALT cap, for now
The cap on state and local tax deductions rose from $10,000 to $40,000 for 2025, for single and joint filers alike ($20,000 if married filing separately). It rises 1% a year through 2029 and returns to $10,000 in 2030. The higher cap phases down for modified AGI above $500,000, but not below $10,000. It only helps if you itemize. For partnerships and S corporations, Missouri's pass-through entity tax election is still available and can move state tax off the personal return entirely. See Tax Planning.
New deductions for 2025 through 2028
These are claimed by individuals on their own returns, whether or not they itemize, and each phases out at higher incomes (IRS summary).
Overtime. Employees can deduct up to $12,500 ($25,000 joint) of the overtime premium they're paid under the Fair Labor Standards Act. The phase-out starts at $150,000 of modified AGI ($300,000 joint). For employers: the deduction is your employees', not the business's, but you'll need to track and report qualified overtime separately, so check that your payroll setup captures it.
Car loan interest. Up to $10,000 a year of interest on a loan taken out after 2024 for a new vehicle with final assembly in the U.S., bought for personal use. The phase-out starts at $100,000 of modified AGI ($200,000 joint). Interest on business vehicles was already deductible and hasn't changed.
Seniors. An extra $6,000 deduction for each person 65 or older ($12,000 for a qualifying couple), phasing out above $75,000 of modified AGI ($150,000 joint). This deduction is taken after AGI, so it lowers your taxable income, not your AGI. The amount of Social Security that's taxable is figured the same way as before. The deduction reduces the tax, not the taxable share of benefits.
What to do this year
Most of these changes are worth reviewing before December 31, especially if you bought property or equipment this year, pay employees overtime, or own a pass-through business. If you want to see how they apply to you, book a free consultation and we'll run the numbers.
This article provides general information, not tax advice for your specific situation. Tax results depend on your facts and on current law, and no particular outcome is guaranteed.
