H.R. 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA), introduces major updates to the U.S. tax code, extending and modifying provisions from the Tax Cuts and Jobs Act of 2017 (TCJA).
As strategic advisors, CPAs have a pivotal opportunity to ensure businesses adapt their strategies and to guide clients through the transition. Here are key updates that should be on your radar.
Big changes ahead in tax policy: What H.R. 1 means for you and your clients
Starting in 2025, H.R. 1 introduces permanent boosts to standard deductions — $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly. These amounts will rise annually with inflation.
H.R. 1 also raises the cap on state and local tax (SALT) deductions from $10,000 to $40,000 per household through 2029. That cap will be indexed as well, starting at $40,400 in 2026 but reverting to $10,000 in 2030. The deduction will also be subject to phaseouts for modified adjusted gross income (MAGI) amounts.
“We are thankful to the members of Congress who supported millions of businesses’ ability to retain pass-through entity tax SALT deduction and our partners throughout the state CPA societies and other professional service businesses for their diligent advocacy on this important issue,” said AICPA President and CEO Mark Koziel, CPA, CGMA. Preservation of the SALT deduction was an advocacy priority for AICPA.
Other individual tax provisions include making the income tax rates within the TCJA permanent, along with an additional year of inflation adjustments for the 10%, 12%, and 22% brackets (where the 22% bracket begins).
Seniors would benefit from a temporary $6,000 deduction between 2025 and 2028, which phases out at $75,000 of MAGI for individuals and $150,000 for married couples.
The child tax credit (CTC) is also enhanced — raised to $2,200 and indexed for inflation — with the refundable portion of $1,400 becoming permanent and inflation-adjusted.
H.R. 1 makes the Sec. 199A qualified business income (QBI) deduction permanent, preserving the 20% deduction for pass-through businesses. It also adjusts income thresholds upward and introduces a minimum deduction of $400, further supporting small- and medium-sized enterprises.
Estate and gift tax exemptions will be permanently set at $15 million for individuals and $30 million for joint filers starting in 2026. The alternative minimum tax (AMT) exemptions and phaseouts remain at TCJA levels, but revert to 2018 thresholds, adjusted for inflation. The mortgage interest deductions established by the TCJA will be capped at $750,000 in acquisition debt and become permanent. Interest can still be deducted from home equity loans if the funds are used for eligible expenses.
H.R. 1 clarifies that casualty losses can only be claimed if the event is officially declared a disaster — such declarations now include state-level declarations. Most miscellaneous itemized deductions are off the table. The Pease limitation on high-income itemized deductions is gone. Instead, certain deductions can’t exceed 35% of AGI. Gambling losses are now capped at 90% of the individual’s winnings.
Updates for business and international tax reforms
Business leaders can expect to see the earnings-before-interest-taxes-depreciation-and-amortization (EBITDA) formula once again applied to the Sec. 163(j) interest limitation, beginning in 2025. Businesses can keep fully deducting the cost of eligible production assets, including certain commercial real estate, thanks to the extension of bonus depreciation.
The global tax landscape will shift, too. Deductions for global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) are cut to 40% and 33.34%, respectively; this results in an effective tax rate of 14% for both GILTI and FDII.
H.R. 1 does not repeal or fundamentally alter the base erosion and anti-abuse tax (BEAT) regime but increases the BEAT rate to from 10% to 10.5% for tax years beginning after Dec. 31, 2025, and makes the regime permanent.
H.R. 1 revises sourcing rules and foreign tax credit calculations for GILTI and other inclusions, increasing complexity but aligning U.S. tax policy more closely with international standards.
Additionally, employee retention credit (ERC) promoters face new due-diligence requirements, with a $1,000 penalty per omission. The IRS would gain stronger tools to challenge improper employment tax refund claims tied to ERCs. H.R. 1 also prevents the IRS from issuing any additional unpaid claims under Sec. 3134 (Q3 2021 and Q4 2021 periods), unless a claim for a credit or refund was filed on or before Jan. 31, 2024.
Next steps: What CPAs should do now
H.R. 1 made critical tax changes. With a proactive approach, you’ll be better prepared to lead your clients through this transitional period.
A quick scan of client portfolios will help you identify individuals hit by SALT limits or nearing bracket shifts. You can evaluate potential impacts using projected inflation-adjusted deductions and enhanced standard deduction figures.
For pass-through entity tax (PTET) elections and specified service trades or businesses (SSTBs), ensure they remain advantageous under revised SALT rules. Consider entity-restructuring as needed. You can boost the use of the temporary senior deduction and child tax credits. For older clients, confirm eligibility and MAGI thresholds. Scheduling meetings with high-earning clients nearing cap limits.
Some of your clients might be affected by new deductions on tips and overtime. This provision is effective for 2025; therefore, changes might need to be made for withholding/estimated tax payments to reflect the deductions (if applicable).
Your firm’s forecasting tools will likely need to be updated to reflect the now-permanent TCJA elements — standard deductions, AMT, estate exemptions, and QBI thresholds. Include assumed inflation indexing. Bonus depreciation and interest-limit effects for 2025 filings (and going forward) will need to be projected.
Clear client communication keeps you one step ahead of their questions and strengthens their trust in your expertise. Client letters that highlight key provisions within H.R. 1 will help them understand the new law and how its tax changes affect them.
In this complex and frequently changing tax landscape, you need the latest updates pertaining to advocacy and compliance. The AICPA is continuing to engage with state lawmakers, regulators, and key stakeholders on tax reform advocacy. And with all these changes, IRS guidance is anticipated.
In addition to staying informed of the latest news, you can take proactive steps at your tax practice to remain ahead of the curve. The “Planning after tax changes” news and resource hub provides the latest guidance and tools on a variety of tax topics, including:
2025 OBBBA Charts: Key Tax Provisions and PFP Considerations
Client Letter on Key Provisions in the One Big Beautiful Bill Act
Effective dates of tax provisions in H.R. 1, the One Big Beautiful Bill Act (H.R. 1)
H.R. 1 — The One Big Beautiful Bill Act: Tax Provision Summary & Insights
The sweeping tax reforms introduced by H.R. 1 have added new layers of complexity to an already intricate tax landscape. With changes to deduction rules and shifting client strategies, staying informed is more important than ever. That’s why the bundled Tax and PFP H.R. 1 MasterClass Series was designed specifically for CPAs and tailored to help financial planners navigate these evolving regulations with confidence.
During this transitional period, one of the most important things you can do is remain committed to your own professional development. Register today and mark your calendar for the AICPA National Tax Conference, Nov. 17–18, 2025, where a variety of experts will speak on hot-button tax topics.
For additional updates and legislative news, become a member of the AICPA Tax Section.
Understanding the updates within H.R. 1 ensures you can accurately advise your clients and comply with these new regulations.