The One Big Beautiful Bill Act

What It Means for You

Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) is the most comprehensive tax overhaul since 2017. It offers immediate savings and long-term planning opportunities for individuals, families, and businesses.

At Kuhl, Phillips, and Jans, Inc., we help clients navigate today’s complexities while planning for tomorrow’s changes.

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Quick Links Overview:
Learn how these updates affect you.

New deductions, restored expensing, QSBS updates, and permanent lower rates. Are you ready?

What’s Already in Effect

Make sure you’re taking full advantage of the provisions now in place:

  • Senior Deduction Bonus
    $6,000 additional above-the-line deduction ($12,000 for married couples over 65)
  • New Vehicle Loan Interest Deduction
    Up to $10,000 deduction for interest on loans for new, U.S.-assembled passenger vehicles
  • Qualified Tip Income Deduction
    Up to $25,000 deduction for reported tip income in service industries
  • Overtime Income Deduction
    Joint filers can deduct up to $25,000 of qualifying overtime income ($12,500 for single filers).
  • Increased SALT Deduction Cap
    Raised to $40,000 (joint) / $20,000 (separate); phased out above $1M AGI
  • 100% Bonus Depreciation Restored
    Immediate expensing for qualified property placed in service after January 19, 2025
  • Expanded 529 Plan Qualified Expenses
    The definition of qualified 529 distributions now includes non-tuition costs related to elementary, secondary, religious, and private school education, as well as expenses for acquiring or maintaining professional credentials. (Effective for distributions made after July 4, 2025)
  • Employer Educational Assistance (Extended)
    Employers may continue providing up to $5,250 annually in tax-free educational assistance, now including student loan payments permanently (the prior provision was set to expire after 2025). This change is effective for tax years beginning after December 31, 2025.

What’s Changed for 2026

Provisions effective January 1, 2026, that require early planning:

  • Permanent Lower Tax Brackets
  • Higher Standard Deduction
    $15,750 (Single), $31,500 (MFJ), $23,625 (HOH)
  • Expanded Qualified Business Income (QBI) Deduction
    Full 20% deduction up to $500,000 (MFJ) / $250,000 (Single)
  • Enhanced Qualified Small Business Stock (QSBS) Exclusion
    100% exclusion made permanent Up to $20 million capital gain exclusion per taxpayer Applies to qualifying stock issued after January 1, 2026 Includes early-stage tech, healthcare, and advanced manufacturing companies
  • Increased Child Tax Credit
    $2,200 per child, fully refundable
  • Charitable Deduction for Non-Itemizers
    Up to $2,000 (MFJ) / $1,000 (Single) for cash gifts
  • 529 Plan Tuition Limit Increase
    Beginning in 2026, 529 plans may be used to pay up to $20,000 annually for elementary or secondary school tuition—up from the previous $10,000 cap.
  • Employer Educational Assistance
    Beginning in 2026, the $5,250 annual limit for tax-free employer-provided education assistance will be indexed for inflation.
  • Newborn Savings Accounts
    Federally funded savings accounts established for children born from 2025 through 2029, featuring an initial $1,000 federal contribution per child.
  • Eligibility:
  • Available for U.S. born children
  • Accounts must be opened by a parent or legal guardian within 12 months of birth
  • Requires the child’s Social Security number or Taxpayer Identification Number
  • Income phaseouts apply
  • Contributions phase out gradually above these thresholds
  • Benefits and Uses:
  • Tax-advantaged growth in contributions and earnings
  • Funds may be used for qualified expenses including:
  • Education (tuition, books, supplies, tutoring)
  • Healthcare costs not covered by insurance
  • Childcare expenses
  • Higher education and post-secondary credentialing expenses
  • Obtaining a small business loan
  • First-time home buying expenses
  • Flexible savings designed to support children’s long-term financial well-being.
  • Employer Contributions:
  • Employers can contribute to employees’ Newborn Savings Accounts on a tax-favored basis, similar to other workplace savings programs
  • Employer contributions are limited to $2,500 per child per year
  • Total contributions (employer plus others) are limited to $5,000 per child per year
  • Contributions count toward annual limits and must comply with IRS rules governing the accounts.
  • Encourages employers to support working families by assisting with early childhood expenses.
  • Employer Assistance for Dependent Care
    Employers may currently provide up to $5,000 tax-free to help with dependent care. Starting in 2026, that limit increases to $7,500 per employee.
  • Child and Dependent Care Credit Expansion
    The credit for working parents will increase from 35% to 50% of qualifying expenses. A new phaseout schedule will apply, with a minimum floor of 20%.
  • Adoption Expense Credit Reform
    Of the $10,000 maximum adoption credit, $5,000 will become refundable beginning in 2026—making the credit partially available to lower-income families with little or no tax liability.

Estate and Gift Tax Updates

  • Lifetime Exemption Increased to $15 Million
    $30 million for married couples, indexed for inflation Now permanently in place

Business Provisions

  • Section 179 Expensing Limit Raised
    Increased to $2.5 million; phase-out begins at $4 million
  • Advanced Manufacturing Investment Credit
    Credit increased to 35% for qualifying property
  • Domestic R&D Costs
    Expensing fully restored for U.S.-based research activity retroactive to 2022

Gambling Limitations

Gambling losses will be limited to 90% of reported gambling winnings, even for itemizers who maintain proper substantiation. This eliminates the long-standing ability to fully offset gambling winnings with documented losses.

  • Effective for tax years beginning after December 31, 2024
  • Applies to casual and professional gamblers
  • Substantiation rules under §165(d) remain unchanged
  • No changes to W-2G reporting thresholds or withholding requirements

Impact Example:
Client with $240,000 in gambling winnings and $250,000 in documented losses:

  • 2024 rules: Full offset, $0 taxable income
  • 2025 rules: Losses capped at 90% of winnings = $216,000
  • Taxable income: $24,000

This will not affect clients who win approximately 10% more than they lose, as their losses would still fall within the allowable 90% cap. However, for clients with high volume and less than 10% profit, this creates real exposure and likely surprises unless addressed in planning.

Let’s Talk Strategy

We help individuals, business owners, and investors:

  • Reposition for maximum benefit under new tax laws
  • Structure QSBS and pass-through income efficiently
  • Update estate and gift plans with new exemption thresholds
  • Time capital investments for optimal depreciation treatment
  • Implement 529, charitable, and savings strategies

Have questions? We’re here to help! Give us a call, and our team will be happy to assist you.

(319) 545-2215
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