The One Big Beautiful Bill Act (OBBBA) has officially passed — and with it comes a wave of sweeping changes that will affect nearly every individual and business owner across the country. Just four days after its signing on July 4th, our team at 1RDG gathered to unpack what this legislation really means.
Led by Cory Raggi, CEO of 1RDG, and joined by tax experts Chris Gamble (Partner) and Mike Kelley (Senior Tax Manager), we took a deep dive into the origins, implications, and planning opportunities surrounding OBBBA. This session was the first in a series of conversations aimed at helping taxpayers and advisors navigate this landmark bill.
Here are the key takeaways from our discussion:
A Quick Look at How We Got Here
Chris kicked things off by explaining the origin story of OBBBA. Many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) were set to expire at the end of 2025. If Congress did nothing, tax law would revert back to pre-2018 standards. But with one party holding control of both legislative and executive branches, a new tax policy was pushed through with razor-thin votes — culminating in a tiebreaker cast by the Vice President.
Signed into law on July 4th, the bill is designed to influence everything from tax brackets and deductions to energy credits and business incentives.
What It Means for Individuals
Mike Kelley walked through the biggest changes for taxpayers:
- Tax Brackets Made Permanent
The current individual tax brackets are now here to stay, though income thresholds will continue to be adjusted for inflation.
- Standard Deduction & Exemptions
Personal exemptions remain eliminated, but the standard deduction is higher and indexed to inflation. For 2025, it’s $31,500 for married filing jointly and $15,750 for singles.
- AMT Thresholds Increased
The Alternative Minimum Tax exemption has been adjusted, reducing its reach for most taxpayers.
- Mortgage Interest Deduction Cap Held
Still capped at mortgages up to $750,000, now includes qualified mortgage insurance premiums as deductible interest.
- Educator Expense Deduction Expanded
Teachers and other school professionals can now deduct more than the previous $300 if they work at least 900 hours per year.
- Casualty Loss Expansion
Loss deductions now include both federally and state-declared disasters.
- ABLE Account Rollover Allowed
529 plans can now roll over into ABLE accounts (for disabled individuals), with certain restrictions.
SALT Deduction & Income Limits
- SALT Deduction Boosted
The cap on state and local tax deductions jumps from $10,000 to $40,000 per filer through 2029, with a 10% annual increase until then. It reverts to $10,000 in 2030.
- Phase-Outs for High Earners
Taxpayers with modified AGI over $500,000 (married filing jointly) will see this benefit phased out.
- Pass-Through Entity Tax Deduction Stays
States can still use this workaround to help high-income filers deduct state taxes at the entity level.
Tips, Overtime, and New Deductions
One of the most talked-about provisions relates to new deductions for workers in tipped and overtime-based professions:
- Tip Income Deduction
Up to $25,000 deductible for service-industry workers (servers, stylists, etc.), subject to income phase-outs and strict definitions.
- Overtime Deduction
Up to $12,500 per worker (or $25,000 for married filing jointly), with similar eligibility rules.
- No Itemization Required
Both deductions are “above-the-line” and don’t require itemizing.
Employers will face new reporting requirements to break out tip and overtime income. Guidance from the Treasury is expected.
New Itemized Deductions and Charitable Changes
- $10,000 Vehicle Interest Deduction
For new personal-use passenger vehicles (2025–2028), subject to income phase-outs.
- Above-the-Line Charitable Giving
Non-itemizers can deduct up to $2,000 (married filing jointly) for eligible cash donations.
- Charitable Floor Introduced
Itemizers must exceed 0.5% of adjusted gross income before deductions apply. For example, someone earning $200,000 must donate more than $1,000 to deduct any charitable amount.
- Itemized Deduction Phase-Outs Return
High earners (over $750,000) will see a reduction in total itemized deductions.
Other Provisions Worth Noting
- Estate and Gift Tax Exemption Set at $15 Million
A unified credit helps with long-term estate planning.
- Trump Accounts Introduced
Government-funded investment accounts for US citizens born after 12/31/2024 and 1/1/29.
- 1099 Threshold Increased
The reporting threshold jumps from $600 to $2,000.
- Extra Deduction for Seniors
Seniors receive an additional $6,000 deduction for the next few years.
Final Thoughts: Don’t Go It Alone
Cory Raggi wrapped up with a key reminder: every taxpayer’s situation is different, and there are a lot of moving parts to this legislation. Now is the time to reach out to your advisors — especially if you’re a business owner or someone impacted by these new provisions.
Whether it’s depreciation, charitable giving, income timing, or tip reporting, the One Big Beautiful Bill Act is full of nuance — and opportunities.
And remember: you don’t need to be a client of 1RDG to ask questions. If something affects you or your business, we’re here to help you make sense of it.
Stay Connected
Follow 1RDG The Financial Center on LinkedIn to stay updated on future LinkedIn Lives, webinars, and deeper dives into OBBBA provisions for both taxpayers and employers.
Let’s keep the conversation going — and make sure we’re all planning smarter, together.