8 major tax changes in the One Big Beautiful Bill Act
On July 4, President Trump signed the One Big Beautiful Bill Act (OBBB) into law after it narrowly passed the House of Representatives and Senate on party-line votes. The OBBB implements the Trump administration’s tax and spending goals, including sweeping changes to tax and energy policy and major cuts across certain government assistance programs.
The OBBB will no doubt have wide-ranging implications for your organization. Here’s a closer look at what’s in the law from a tax perspective, along with ideas for how you can take advantage of opportunities and safeguard against potential risks.
1. Restored: Accelerated depreciation and 100% expensing rules
The OBBB permanently reinstates 100% expensing (using bonus depreciation) to fully deduct the cost of qualified property acquired beginning January 20, 2025. Additionally, the OBBB expands the scope of “qualified assets” to cover manufacturing buildings beginning January 20, 2025.
Planning considerations:
Property owners should strategically plan the timing of capital expenditures. Prioritize investments that qualify for larger or faster deductions and maximize tax savings through immediate or front-loaded deductions.
2. Ending: Wind and solar tax credits
Time is now running out for the Clean Electricity Production Credit (Section 45Y) and the Clean Electricity Investment Credit (Section 48E). This is a major change that will affect construction companies, real estate firms, property owners, designers and energy-focused businesses.
1. Wind and solar projects that began or will begin construction by July 4, 2026, do not face a placed in-service deadline for ITC or PTC eligibility.
2. Wind and solar projects that begin construction after July 4, 2026, must be placed into service before December 31, 2027, to be eligible for Section 48E ITCs or Section 45Y PTCs, the technology neutral ITC and PTC.
3. With the introduction of an anti-abuse rule, lessor-owned solar water heating and wind property that would qualify for the section 25D residential credit if owned by a lessee no longer qualifies for the technology neutral ITC or PTC. This applies to taxable years beginning after July 4, 2025.
4. Accelerated depreciation for wind or solar energy property is terminated for property where construction begins after December 31, 2024.
Planning considerations:
Prepare to substantially speed up any planned investments in clean energy tax credits. New wind and solar projects must begin construction by July 4, 2026, to claim existing wind or solar tax credits before they end.
However, from a tax perspective, the “beginning of construction” isn’t as simple as just putting a shovel in the ground. Talk to your tax advisor to assess what you need to do to qualify.
Moving forward, your business will also need to consider whether certain renewable energy projects still make financial sense and look for alternative funding or state-level incentives.
3. Ending: Certain green energy residential, commercial and vehicle tax credits
The OBBB accelerates the expiration of multiple clean energy tax credits from their original 2032 end date to much earlier dates in 2025 or 2026.
Affected clean energy credits that property owners, construction firms and designers should be aware of include:
- Energy-Efficient Home Improvement Credit (Section 25C): Terminates for property placed in service after December 31, 2025.
- Residential Clean Energy Credit (Section 25D): Terminates for expenditures made after December 31, 2025.
- Used Clean Vehicle Credit (Section 25E): Terminates for property acquired after September 30, 2025.
- Alternative Fuel Vehicle Refueling Property Credit (Section 30C): Terminates for property placed in service after June 30, 2026.
- New Clean Vehicle Credit (Section 30D): Terminates for property acquired after September 30, 2025.
- Energy Efficient Home Credit (Section 45L): Terminates for homes acquired after June 30, 2026.
- Commercial Clean Vehicle Credit (Section 45W): Terminates for property placed in service after September 30, 2025.
- Energy Efficient Commercial Buildings Deduction (Section 179D): Terminates for property beginning construction after June 30, 2026.
Planning considerations:
You may need to accelerate any projects or investments that rely on any of these tax credits for financial feasibility. Your tax advisor can help you understand the full implications and make sure you qualify when possible.
Want to learn more? Sign up to attend our free July 11 webinar, “The future of energy tax credits: How the One Big Beautiful Bill impacts incentives.” Register here to reserve your spot.
4. Added: New fossil fuel incentives
The new law will grant the oil, gas, geothermal and coal industries expanded access to federal lands and resources. The text includes sections that will streamline leasing processes, lower regulatory barriers and offer additional financial incentives.
Planning considerations:
The fossil fuel incentives offer opportunities for traditional energy sectors while posing risks for organizations with strong ESG commitments. Affected businesses should work to understand the new regulatory environment along with related reputational risks; other sectors should prepare for potential shifts in energy costs.
5. Affected: International tax provisions (GILTI and FDII adjustments)
Under 2017’s Tax Cuts and Jobs Act (TCJA), the effective rate on GILTI was set to rise from 10.5% to 13.125% in 2026 and on FDII from 13.125% to 16.406%, also in 2026. Under the OBBB, taxpayers subject to GILTI (now referred to as “Net CFC Tested Income”) and FDII (now referred to as “Foreign Derived Deduction Eligible Income”) will see their Section 250 deduction reduced, thereby raising their respective effective U.S. tax rates to approximately 14%.
Planning considerations:
Multinational firms should review international structures, transfer pricing formulas and implement repatriation strategies to maximize benefits.
6. Increased: Estate and gift tax exemption
Beginning in 2026, the OBBB will permanently raise the federal estate, gift and GST exemptions to $15 million per individual and $30 million for married couples. The new law also makes annual adjustments for inflation that start in 2027.
Planning considerations:
Business owners should be aware that this expanded exemption window could be closed or reversed by future legislation. If you are affected, you may want to expedite wealth transfer strategies to act while it is available.
7. Revised: Research and development (R&D) tax credit regulations
Under the TCJA, businesses were required to capitalize and amortize R&D expenditures over five years, starting in 2022. The OBBB allows for a permanent reinstatement of immediate expensing for domestic R&D expenditures, which reverses the TCJA’s five-year amortization requirement. It also provides for retroactive relief (2022-2024) for businesses with average annual gross receipts under $31 million.
Planning considerations:
Firms — especially those in the technology, software and manufacturing sectors — should reevaluate qualifying activities and expenditures to maximize benefits under the potential broader eligibility rules.
8. Also changed: Significant provisions in the OBBB affecting individuals
The OBBB makes additional changes to tax law that may affect you as an individual. Key changes include:
- The TCJA’s individual income tax rates are now permanently extended.
- The 20% qualified business income deduction for pass-through income is now permanent.
- The standard deduction will increase for all taxpayers.
- There is now an additional standard deduction (through 2028) of $6,000 for taxpayers over 65. This deduction phases out for taxpayers with modified adjusted gross income over $75,000 for single filers or $150,000 for joint filers.
- Auto loan interest is deductible (without having to itemize) up to $10,000 on new “U.S assembled passenger vehicles” subject to an income phaseout of $100,000 for single filers or $200,000 for joint filers.
- The maximum (increased) child tax credit at $2,200 per qualifying child has been permanently extended with expanded phaseout ranges.
- The cap on the state and local tax (SALT) deduction is raised from $10,000 to $40,000 for taxpayers earning $500,000 or less.
- Overtime or tips will no longer be taxed, although this is subject to an income limitation.
- The “qualified small business stock provision” of Section 1202 is amended to expand the benefit of owning Section 1202 stock.
- Starting in 2026, non-itemizers will be able to deduct charitable contributions of up to $1,000 (single filers) or $2,000 (married filing jointly). Itemizers can only deduct itemized deductions that exceed 0.5% of their adjusted gross income.
- Health Saving Account (HSA) contribution limits are now increased. However, this is also subject to an income limitation.
Planning considerations:
Work with your tax advisor to assess how you may be affected by the individual tax provisions of the OBBB and create a plan to move forward.
How Wipfli can help
Tax law has just changed dramatically. Ask our team to help you understand exactly how the OBBB now affects you, your business and your future opportunities. Start with our policy updates page to learn more, or contact us directly.
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