Digging into the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA) has been signed into law, which makes now a good time to review how the law financially affects individuals, families, and businesses. Depending on where you look, you can find sweeping praise or stern criticism of the law’s provisions. I’ll offer no such viewpoint here.1
My goal instead is to give readers straightforward, objective commentary on how the bill impacts household and corporate finances, which by extension can provide clues regarding potential investment implications.
I’d like to start with what has not changed. Despite some speculation during the legislative process, the OBBBA doesn’t raise corporate tax rates or alter capital gains tax rates. There is also no “millionaire’s surcharge,” no wealth tax, and no financial transaction tax, proposals that circulated in early drafts but didn’t make it into the final version. For many investors and business owners, the absence of these changes means that planning strategies from recent years remain intact.
Policy Stayed Put. Is Your Portfolio Still in the Right Place?
The new bill left out many of the proposed tax hikes. But even with policy mostly unchanged, markets are moving. Sectors that were behind are now leading, and momentum is building.
Our July Stock Market Outlook Report2 explains what’s driving the shift and how to stay positioned as trends evolve. Inside, you’ll find:
- Asset allocation guidelines for today’s market environment
- Expert forecasts for inflation, rates, and economic trends
- Industry tables and rankings to help you spot opportunities
- Buy-side and sell-side consensus insights at a glance
- And much more!
If you have $500,000 or more to invest and want to take charge of your financial journey, click the link below to get your free report today!
IT’S FREE. Download our Exclusive July Stock Market Outlook Report2
Now let’s jump into what the law means for individuals, families, and businesses.
Key Provisions for Individuals and Families:
A major feature of the OBBBA is that it makes the 2017 Tax Cuts and Jobs Act individual tax rates permanent. This includes:
- Lower marginal tax brackets
- The expanded standard deduction was locked in, and will now be adjusted for inflation starting in 2026. In that year, the standard deduction for single filers will rise to $16,550, while married couples filing jointly will be able to deduct $33,100. For 2025, single filers will see a temporary $1,000 increase in the standard deduction while joint filers will receive $2,000.
- The repeal of personal exemptions
- Higher thresholds for the alternative minimum tax (AMT)
- For individuals who own small businesses, OBBBA also made permanent the 20% deduction for qualified business income (QBI) from pass-through entities like S corps and partnerships.
Several new deductions were also added, but many come with income phaseouts or sunset provisions. Here are the key deductions I think will impact most readers:
- The state and local tax (SALT) deduction cap rises from $10,000 to $40,000 from 2025 to 2029, but it phases out above $500,000 of modified adjusted gross income (MAGI) and reverts to $10,000 in 2030.
- A new $6,000 per-person deduction for seniors (age 65+) begins in 2025 and runs through 2028. It begins to phase out at $75,000 of income for singles and $150,000 for married couples.
- A deduction of up to $25,000 for tips and $12,500 for overtime pay is available—but again, both are subject to income phaseouts and expire in 2028.
These new deduction provisions offer targeted relief and are allowed even if the standard deduction is taken, which helps widen their reach. However, they do not reduce adjusted gross income (AGI), meaning they won’t lower exposure to the 3.8% net investment income tax or Medicare IRMAA surcharges.
Key Provisions for Businesses
OBBBA reinstates and makes permanent 100% bonus depreciation for qualified property placed in service after January 19, 2025. It also adds a new category, Qualified Production Property, for U.S.-based manufacturers and refiners. Importantly, both bonus depreciation and the expanded standard deduction will now be adjusted for inflation starting in 2026, offering longer-term planning consistency for businesses.
Other key changes for business owners include:
- Increased Section 179 expensing limits (now $2.5 million), which allows businesses to write off the full cost of eligible assets in the year they’re placed in service, rather than depreciating them over time. For business owners making large capital investments—this can deliver meaningful tax savings and improve after-tax cash flow in the near term. In other words, good for earnings.
- Retroactive R&D expensing for 2022 and 2023
- More lenient business interest deductibility under Section 163(j), which effectively raises the ceiling on deductible interest expense, especially for capital-intensive industries. Companies that invest heavily in equipment, facilities, or R&D often have large depreciation expenses. Excluding those from the interest deduction formula means more of their borrowing costs can be written off, making financing growth more attractive.
Bottom Line for Investors
There’s a lot to unpack here, and I did not broach the issue of deficits and the trajectory of U.S. debt, both of which could impact interest rates over time. That said, many of the new provisions expire before the end of the decade, and future Congresses will almost certainly debate the economic and fiscal impact in future years.
In the meantime, investors should view this through the lens of being substantial fiscal stimulus, which also comes as the Federal Reserve appears poised to ease monetary policy to bring the benchmark fed funds rate back to the neutral level. When you have fiscal stimulus and monetary stimulus in the same year, it’s difficult to make a case against owning equities.
To understand how these forces are shaping markets and what they may signal for the months ahead, I encourage you to download our July Stock Market Outlook Report3. Inside, you’ll find:
- Asset allocation guidelines for today’s market environment
- Expert forecasts for inflation, rates, and economic trends
- Industry tables and rankings to help you spot opportunities
- Buy-side and sell-side consensus insights at a glance
- And much more!
If you have $500,000 or more to invest and want to take charge of your financial journey, click the link below to get your free report today!
Download our Exclusive July Stock Market Outlook Report3
Disclosure
1 Congress. https://www.congress.gov/bill/119th-congress/house-bill/1/text
2 Zacks Investment Management reserves the right to amend the terms or rescind the free-Stock Market Outlook Report offer at any time and for any reason at its discretion.
3 Zacks Investment Management reserves the right to amend the terms or rescind the free-Stock Market Outlook Report offer at any time and for any reason at its discretion.
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