In the House-passed version of the One Big Beautiful Bill (OBBB), businesses can use bonus depreciation to fully expense qualified property acquired and placed in service between January 19, 2025, and December 31, 2029. The maximum amount a taxpayer may expense using the section 179 depreciation rules would increase from $1 million to $2.5 million.

Under the 2017 Tax Cuts and Jobs Act (TCJA), the effective rate on GLTI was set to increase from 10.5% to 13.125% in 2026 and on FDII from 13.125% to 16.406%, also in 2026. The OBBB proposes to extend the 10.5% GLTI rate and the 13.125% FDII rate. Maintaining the current tax rates on both GILTI and FDII will incentivize domestic reinvestment.

Beginning in 2026, the OBBB would permanently raise the federal estate, gift and GST exemptions to $15 million per individual and $30 million for married couples, with annual adjustments for inflation starting in 2027.

Under the TCJA, businesses were required to capitalize and amortize R&D expenditures over five years, starting in 2022. The OBBB proposes a temporary reinstatement of immediate expensing for domestic R&D expenditures, reversing the current requirement to amortize these costs over five years.

The OBBB includes provisions that effectively guarantee and expand access to federal lands and resources for the oil, gas, geothermal and coal industries. These measures are designed to promote energy production by streamlining leasing processes, reducing regulatory barriers and offering financial incentives.

The OBBB speeds up the expiration of the Clean Energy Production Credit (Section 45Y) and the Clean Energy Investment Credit (Section 48E). It requires that projects begin construction within 60 days of the bill’s enactment and be placed in service by December 31, 2028, to qualify for these credits. The OBBB also accelerates the expiration of several clean energy tax credits from their original 2032 end date to December 31, 2025, including credits for residential clean energy installations, energy-efficient home improvements and alternative vehicle refueling property.

OBBB’s major tax provisions impacting individuals include: 1) the permanent extension of TCJA individual income tax rates, 2) the permanent increase of the qualified business income deduction for pass-through from 20% to 23%, 3) the increase of standard deductions, 4) the permanent extension of the child tax credit at $2,000 per qualifying child, 5) the state and local tax deduction cap raise from $10,000 to $40,000 for taxpayers earning $500,000 or less, 6) no tax on overtime or tips (subject to an income limitation) and 7) the increase of health saving account contribution (subject to an income limitation).