U.S. President Trump’s “One Big Beautiful Bill” (OBBB) was signed into law on July 4th, 2025, and contains extensive tax provisions which implement Trump’s taxation and spending priorities. The legislation introduces major changes that will impact individuals, families, and businesses.
What are the changes that may impact individuals and families?
There are extensive changes to key provisions which may impact individuals and families, most notably the Tax Cut and Job Act (TCJA) provisions that were set to expire at the end of the year have now been made permanent. Additionally, Trump’s OBBB introduces numerous extensions and revisions to various aspects of tax regulations which further shape the landscape for individuals and families.
Impacts to Individuals and Families:
I. Income Tax Brackets:
Lower individual income tax brackets are now permanent, ensuring continued lower rates for most taxpayers through at least 2030, bringing certainty to individuals’ tax planning.
II. Standard Deductions:
The standard deduction has increased and will be adjusted for inflation from 2025 through 2028. Below is the table with current standard deduction and amounts beginning 2026.
| Category | Current Standard Deduction | New Standard Deduction |
| Married Filing Joint Returns | $24,000 | $31,500 |
| Head of Household | $18,000 | $23,625 |
| Single/Married Individual Filing Separately | $12,000 | $15,750 |
Seniors aged 65 and older will also receive a temporary $6,000 deduction for tax years 2025 through 2028, and this deduction is not inflation-indexed.
III. State and local tax (SALT) deduction:
The OBBB contains other extensive provisions that expand deductibles such as the expansion of the State and Local Tax deduction, allowing itemizing taxpayers to deduct up to a certain amount of state and local taxes, such as property, income, or sales taxes from their federal taxable income.
The SALT deduction cap has increased temporarily from $10,000 to $40,000 for 2025, though the deduction phases out for taxpayers with a modified adjusted gross income (MAGI) over a certain threshold.
IV. Child Tax Credit:
Families will receive support with the Child Tax Credit, permanently set at $2,200 per qualifying child, and indexed for inflation, with an increased refundable portion to $1,400.
V. Estate, Gift, and GST Tax Exemption:
The estate and gift tax exemption has been raised to $15 million (year 2026), and indexed for inflation, meaning fewer estates will face federal taxation.
VI. No Tax on Tips & Overtime:
The bill also expands what counts as non-taxable income through 2028, where tipped employees can exclude up to $25,000 of tips from taxable income, and workers can deduct up to $12,500 of overtime pay ($25,000 for joint filers) each year. Although Federal tax is waived on these deductions, payroll and state or local taxes still apply.
VII. Auto Loan Interest:
A deduction of up to $10,000 for certain qualified passenger vehicle loan interest during a given tax year, effective for tax years 2025 through 2028, subject to phaseouts.
VIII. Casualty Loss Deductions:
Under the new rules, casualty loss deductions have been expanded to include losses from state-declared disasters, not just federally declared ones. Therefore, if your property is damaged in a disaster officially declared by your state government, you can now deduct that loss from your federal tax return.
What are the changes that may impact businesses?
Businesses can expect changes in key provisions with Trump’s OBBB. Republicans are referring to the bill as Trump’s major fiscal effort of his second term.
Impacts on Businesses:
I. Qualified Business Income (QBI) Deduction:
The 20% Qualified Business Income (QBI) deduction is now permanent and includes a guaranteed minimum deduction for small businesses, corporations, and partnerships. Additionally, it also increased the phase-in thresholds with inflation adjustments applicable to the new minimum amounts for tax years beginning after 2026.
II. Bonus Depreciation:
The law brings back 100% bonus depreciation, allowing companies to fully deduct the cost of eligible business assets in the first year they are placed in service. This is also applicable to property acquired and in use between January 20, 2025, and January 1, 2030.
III. Domestic Research or Experimental Expenditure (“R&E”):
Research-and-development expenditures paid or incurred in tax years beginning after December 31, 2024, will be immediately deductible rather than amortizing them over five years. Alternatively, taxpayers can make an election to capitalize and amortize these R&E expenditures over 60 months under section 174A or a 10-year period under Section 59(e)(2)(B).
IV. Section 179 Deduction:
The bill further supercharges capital investment by increasing the Section 179 deduction limit from $1 million to $2.5 million, effective January 1, 2025. The phase-out threshold of where the deduction begins to reduce on a dollar-for-dollar basis, has been raised from the previous cap to $4 million. The deduction fully phases out once total purchases reach $6.5 million. Both limits will now adjust for inflation going forward, making it much more favorable for businesses to invest in growth.
In Summary
The OBBB permanently reduces many tax rates, boosts deductions for families and seniors, and eases the tax burden for both small businesses and employees, while also offering more flexibility for casualty losses and SALT deductions through 2028 and beyond. While recent negotiations showcase hope for tax relief on Canadians, Trump’s OBBB introduces serious tax uncertainties and risks for Canadians, especially those with U.S. investments, retirement accounts, or cross-border business interests.
Now is the time for proactive planning with an advisor, and we are here to help.
Please give us a call at 905-821-9215 or send an email to info@scpllp.com if you have any questions concerning these changes.
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