Tax Incentives: Unraveling the One Large, Stunning Legislative Proposal
In a move that has created confusion among taxpayers, the One Big Beautiful Bill Act (OBBBA) was signed into law by President Donald Trump on July 4, 2025. This comprehensive legislation, spanning nearly 900 pages, brings about a host of new provisions and changes that have left many grappling with its implications.
One of the key new provisions causing confusion is the charitable deduction for non-itemizers. Starting after 2025, non-itemizing taxpayers can claim a charitable deduction of up to $1,000 for singles and $2,000 for married couples filing jointly. While this new provision affects how taxpayers approach charitable giving, it may confuse non-itemizers who were previously not eligible for any charitable deductions.
The legislation also extends or makes permanent many tax rules from the 2017 Tax Cuts and Jobs Act (TCJA) that were otherwise set to expire at the end of 2025. This includes adjustments to income brackets, estate planning rules, capital gains, and pass-through entity taxation, adding complexity to tax planning as taxpayers and advisors reconcile old and new rules.
OBBBA's sweeping immigration-related changes, slashing health care, nutrition, and tax benefits for immigrants, expand detention and enforcement. The impacts on tax credits, such as the Child Tax Credit for children of immigrant parents, can confuse taxpayers in affected communities due to new eligibility constraints and enforcement provisions.
Moreover, changes expanding carbon oxide sequestration credits and extending clean fuel production tax credits add complexity to tax filings involving energy and environmental incentives, further complicating compliance for individuals and businesses leveraging these credits.
The National Association of Tax Professionals (NATP) is hosting several events to help taxpayers navigate these changes. The NATP Las Vegas Tax Forum will be held at the Paris Hotel, Las Vegas, Nevada, on September 17-18, 2025, while the NATP Taxposium 2025 will be held at Caesars Palace, Las Vegas, Nevada, on July 21-23, 2025. The Bridging the Gap Conference will be held at the Denver Marriott Tech Center on July 22-24, 2025, and the Tax Summit 2025 will be held at the Grand America Hotel, Salt Lake City, on July 28-30, 2025. Registration is required for all events.
In addition to these changes, there are several other important tax-related updates to be aware of. For instance, the IRS Nationwide Tax Forum will be held in New Orleans, Orlando, Baltimore, and San Diego from August 5-September 16, 2025. The due date for individuals and businesses affected by storms in Arkansas and Tennessee that began on April 2, 2025, is November 3, 2025, while the due date for those impacted by wildfires and straight-line winds in southern California that began on January 7, 2025, is October 15, 2025.
Furthermore, a new $6,000 deduction for seniors (age 65 and over) was introduced in OBBBA, with the deduction up to $12,000 for jointly filed returns (both spouses must be qualifying seniors aged 65 or older). Tip income would be temporarily deductible for tax years 2025 through 2028 for individuals in traditionally and customarily tipped industries, with the deduction limited to $25,000 of reported tips. Workers who receive overtime will be eligible for a deduction for qualified overtime pay of $12,500 ($25,000 for married taxpayers filing jointly) for tax years 2025 through 2028.
The due date for individuals and businesses impacted by recent terrorist attacks in Israel is September 30, 2025. The Beckham Law in Spain allows some foreign workers who move to the country to pay a reduced rate of personal income tax (IRPF) for a limited period, a provision that was called "Beckham's Law" because of the speculation that it was passed in favor of footballer David Beckham.
Given the complexity of the OBBBA and its wide-ranging implications, it is crucial for taxpayers to carefully analyze the provisions or seek expert advice to optimize tax outcomes under the new law.
Finance and business professionals may find it essential to study the new provisions of the One Big Beautiful Bill Act (OBBBA) meticulously, as it introduces complexities in various areas, such as charitable deductions, tax planning, immigration-related changes, energy incentives, and senior deductions. Given the wide-ranging implications of OBBBA, seeking expert advice or professional guidance could help taxpayers optimize their tax outcomes and navigate through these changes effectively.
