One Big Beautiful Bill: Key Changes for the 2025 Tax Year

President Trump signed the One Big Beautiful Bill (OBBB) into law on July 4, 2025. The OBBB has several potential implications for U.S. taxpayers—including potential implications for the 2025 tax year. In this article, Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, provides an introduction to what both individual and corporate taxpayers need to know.

5 Key Changes for Individual Taxpayers

Here are five key changes for individual taxpayers under the OBBB that take effect in 2025:

• The standard deduction will increase to $31,500 for joint filers, $23,635 for heads of household, and $15,750 for all other individual filers.
• The child tax credit is now permanent. The maximum credit will increase to $2,200 starting next year and then be adjusted for inflation annually.
• Taxpayers who are age 65 and older are eligible for up to a $6,000 senior deduction from 2025 through 2028.
• The maximum itemized deduction for state and local taxes (SALT) is increasing to $40,000 for 2024 and will increase by one percent per year through 2029 for taxpayers who make less than $500,000.
• There is now a permanent $1,000 above-the-line deduction for charitable donations for individual filers ($2,000 for joint filers), and itemized deductions for charitable donations are now subject to a floor of 0.5 percent.

These are just examples of some of the key changes under the OBBB. This is not an exhaustive list. Going forward, individual taxpayers will need to ensure that they address all pertinent changes under the OBBB when preparing their federal returns in order to mitigate their risk of facing an IRS audit.

5 Key Changes for Corporate Taxpayers

Here are five key changes for corporate taxpayers under the OBBB that take effect in 2025:

• Businesses can now immediately expense their research and development (R&D) costs, and those with gross receipts of $31 million or less can retroactively expense these costs back through 2022.
• The Section 199A pass-through deduction for sole proprietorships, partnerships, and S corporations is now permanent, and the phase-in range is increased by $50,000 for individual business owners ($100,000 for those filing jointly)
• The EBITDA-based limit on net interest deductions is reinstated effective immediately.
• 100% bonus depreciation for short-term investments is reinstated effective immediately.
• Itemized deductions for charitable donations are now subject to a floor of 1.0 percent.

These, too, are just examples. While the OBBB includes many provisions that are advantageous to corporate filers, it also includes provisions that have the potential to increase some companies’ federal tax liability. To learn more about the OBBB’s implications for your company, schedule a confidential consultation at Thorn Law Group today.

Request a Call with Washington D.C. Tax Lawyer Kevin E. Thorn

Do you have questions or concerns about tax compliance under the One Big Beautiful Bill (OBBB)? If so, we invite you to get in touch. Call us at 202-349-4033 or contact us online to request a call with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.