While many of us were busy firing up the grill, gathering with family and friends, and looking forward to fireworks in celebration of Independence Day, something significant was happening in Washington. On Friday, July 4th, as the holiday festivities were underway, the President signed into law the long-anticipated tax legislation known as the One Big Beautiful Bill (OBBB). This new law brings sweeping changes to the tax landscape—changes that could impact individuals and business owners starting in 2025 and for years to come.
With the OBBB now signed into law, we finally have some much-needed certainty around the tax code. This opens the door for proactive planning and smarter financial decisions. As your trusted advisors, we are here to help you understand what this means for you, your business, and your future.
We believe, first and foremost, that it is extremely important to be aware of the new federal tax provisions taking effect on January 1, 2025 for individuals and business owners. Many of the OBBB’s changes require decisions before December 31, 2025 to fully benefit from them or to avoid costly pitfalls.
Two key provisions for individuals and families include the change to the State and Local Tax (SALT) cap and No Tax on Tips/Overtime. The SALT cap was one of the most hotly contested provisions during the reconciliation process and resulted in a significant change in the deduction. The SALT provision retroactively increases the individual limit from $10,000 to $40,000 beginning in 2025 and until 2029 and includes a phaseout for Modified Adjusted Gross Income (MAGI) greater than $500,000 for Single or Married Filing Jointly filers and $250,000 for Married Filing Single filers in 2025. The allowable deduction will not fall below $10,000.
- Action Steps: Planning for the Increased SALT Cap: (1) Consider planning now for your other deductions in 2025 to take full advantage of itemization. (2) With a higher cap on deductible SALT, some individuals may experience larger deductions and lower taxable income. Reviewing withholdings and estimated payments this year can help smooth cash flow and prevent over-withholding.
- Action Steps: Individuals Planning for No Tax on Tips or Overtime: (1) Up to $25,000 per taxpayer for allowable deductible tips means qualified individuals may wish to review their tax withholding. This could potentially increase monthly take-home pay. (2) Up to $12,500 per taxpayer may be deductible from taxable income, even for itemizers, subject to limitations, for eligible overtime pay. This is another reason to review federal withholding at this point in the year and consider submitting a revised IRS Form W-4, Employee Withholding Certificate.
Similarly, business owners should be aware of new federal tax provisions that may warrant action during 2025 or before the year ends. These include changes to Bonus Depreciation and expensing of Research and Experimental Costs. Let’s break these down into some actionable steps you can use now:
- Action Steps: 100% Bonus Deprecation (1) Businesses should consider updating their capital spending timeline with optimal purchase dates to take full advantage of the 100% bonus depreciation being restored for assets placed in service after January 19, 2025. This increased deduction could significantly lower taxable income, potentially reducing estimated tax payments or freeing up cash for other business needs. Some businesses may opt to accelerate income recognition into 2025 to align with the increases in available deductions.
- Action Steps: R&E Expense Deduction Changes (1) Businesses should review all activities from 2022, 2023, 2024 that may qualify as domestic Research & Experimental (R&E) expenses under Section 174 and create a comprehensive list of R&E projects throughout these years. (2) Business taxpayers with annual revenue less than $31 million may be eligible to amend previously filed tax returns. Other business taxpayers must either elect to deduct remaining unamoritized R&E all in 2025, or elect to take 50% deduction in 2025 and 50% in 2026. We strongly encourage our business clients to meet with their tax advisor to model the refund potential and feasibility of amending tax returns…we are ready to assist you!
The One Big Beautiful Bill introduces a range of tax changes—some highly publicized, others more quietly tucked into the fine print—that could impact individual taxpayers and business owners starting as soon as January 1, 2025. While the new rules offer opportunities for tax savings and smarter planning, they also create complexity and the need for timely action.
The good news? You don’t have to figure it all out on your own. We’re here to help you navigate these changes with confidence—whether that means adjusting your tax strategy, timing business purchases, or taking advantage of new deductions. If you’d like to discuss how the new law could affect you or your business—and explore proactive steps to make the most of it—schedule a conversation with us today.
Let’s turn the uncertainty of change into an opportunity for smarter tax decisions in 2025 and beyond.
For more information or to schedule an appointment, contact us today by calling 716.633.1373 (Williamsville office) or 716.438.2190 (Lockport Office).
Blog Author: Lisa A. Mrkall, CPA/PFS, MBA, Partner
