One Big Beautiful Bill Act (OBBBA) Signed Into Law
Jul 10, 2025
On July 4, President Trump signed into law H.R.1, widely recognized as the One Big Beautiful Bill Act (OBBBA). This comprehensive legislation introduces significant budgetary measures addressing border security, defense, energy policy, and federal spending reductions. Most notably, OBBBA represents one of the most consequential federal tax reforms since the Tax Cuts and Jobs Act of 2017 (TCJA), with far-reaching implications for both individuals and businesses.
The most prominent provisions are outlined below. For a more comprehensive overview of how these changes may impact your specific situation, we encourage you to connect with your William Vaughan Company advisor.
Key Provisions for Businesses
- Research and Experimentation (R&D) Deductions: OBBBA establishes new IRC Section 174A, enabling immediate deductibility of domestic R&D expenses incurred after December 31, 2024, replacing the prior five-year amortization rule, and enhancing tax benefits for U.S.-based innovation. Companies with capitalized domestic R&D expenses between 2022 and 2024 can elect to accelerate those deductions. Eligible small businesses, generally those with average annual gross receipts not exceeding $31 million, can elect to retroactively apply the full expensing of domestic R&D expenses to tax years beginning after December 31, 2021, by amending their returns for 2022, 2023, and 2024 to claim refunds for taxes paid because of amortization. Other taxpayers with capitalized domestic R&D expenses between 2022 and 2024 can choose to accelerate deductions of the remaining unamortized amount over a one or two-year period, starting with the 2025 tax year. Foreign R&D expenditures remain subject to 15-year amortization.
- Bonus Depreciation: Restores 100% bonus depreciation, allowing businesses to immediately expense qualifying assets placed in service after January 19, 2025, thereby eliminating the previously scheduled phase-down.
- Qualified Production Property (QPP): Manufacturers can claim a 100% deduction for the cost of new “qualified production property,” including nonresidential real property, defined as property used in a “qualified production activity” (the manufacturing, production, or refining of a qualified product that results in a substantial transformation of the property). This change applies to qualified property placed in service after the date of enactment and before January 1, 2031.
- Business Interest: Restores the more favorable EBITDA-based calculation for the business interest deduction limitation under Section 163(j) for tax years beginning after December 31, 2024. This reverts to the approach used from 2018 through 2021, which generally allowed larger deductions. It also provides specific rules regarding the interaction of the business interest expense limitation with other tax provisions that capitalize interest.
- Pass-through Businesses: Makes permanent the Section 199A qualified business income deduction, with no change to the current 20% deduction percentage. Additionally, the bill expands the limitation phase-in window from $50,000 for single filers ($100,000 for married filing jointly) to $75,000 for single filers ($150,000 for married filing jointly).
- Pass-through Entity Tax (PTET) Elections: Electing pass-through entities (PTEs) can continue to deduct state income taxes paid at the entity level, effectively allowing business owners to bypass the limitation on individual SALT deductions.
- Advanced Manufacturing Investment Credit: The advanced manufacturing investment credit rate increases from 25% to 35% for property placed in service after December 31, 2025.
- Federal Tax Exclusion for Capital Gains from Qualified Small Business Stock (QSBS): Updates Section 1202 of the Internal Revenue Code by raising gain exclusion caps from $10 million to $15 million and allowing investors to access tax benefits after a shorter holding period (as little as three years in some cases). The asset limit is also increased from $50 million to $75 million, making it easier for larger start-ups to qualify.
- Employee Retention Tax Credit: Retroactively bars the IRS from issuing refunds for Employee Retention Tax Credit (ERTC) claims for Q3 2021 (and in some cases Q4 2021) filed after January 31, 2024. The bill also requires ERTC promoters to comply with due diligence requirements regarding a taxpayer’s eligibility and the amount of an ERTC for affected quarters. In addition, OBBBA includes a $1,000 penalty for each failure to comply and extends the penalty for excessive refund claims to employment tax refund claims.
Key Provisions for Individuals
- Tax Rates: Permanently extends most of the individual income tax rate structures established by the TCJA of 2017.
- Standard Deduction: Makes the TCJA’s increased standard deduction amounts permanent. For tax years beginning after 2024, the standard deduction increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married individuals filing jointly. The standard deduction will be adjusted for inflation thereafter. These changes are retroactive to include 2025.
- SALT Cap: The $10,000 cap on state and local tax deductions is raised to $40,000 for most taxpayers. However, the benefit phases out for households with adjusted gross income (AGI) exceeding $500,000, tapering to restore the lower cap for high earners. Both the SALT cap and the income threshold for the phase-out will increase by 1% each year from 2026 through 2029. The $40,000 limit is not permanent; it is scheduled to revert to $10,000 starting in 2030.
- Alternative Minimum Tax (AMT): The higher AMT exemptions under the TCJA are made permanent, reducing the likelihood of AMT applying for many taxpayers. The exemption phase-out threshold is set at 2018 levels under the TCJA ($500,000 for singles and $1 million for joint filers), indexed for inflation. The exemption also phases out more quickly for higher earners.
- Excess Business Loss (EBL) Limitations: Makes permanent the current limitations on business losses allowed to offset non-business income, with losses exceeding the limit treated as net operating losses (NOLs) and carried forward to future years.
- New Deduction for Seniors: OBBBA provides a temporary bonus deduction of $6,000 for individuals age 65 or older (and for each spouse meeting the criteria in the case of a joint return) for taxable years 2025 through 2028. The deduction phases out for joint filers with income starting at $150,000 and $75,000 for all other taxpayers.
- Charitable Contributions: Creates a permanent deduction for taxpayers who do not itemize. For tax years beginning after December 31, 2025, non-itemizing taxpayers can claim a deduction of up to $1,000 (single filer) or $2,000 (married filing jointly) for certain charitable contributions.
- Child Tax Credit: Extends and enhances provisions related to the Child Tax Credit (CTC), including increasing the nonrefundable portion of the credit to $2,200 per child. The refundable Additional Child Tax Credit (ACTC) remains at $1,700 for 2025 and will be adjusted annually for inflation. The nonrefundable portion of the CTC will also be indexed for inflation beginning in 2026. Taxpayers must have a valid Social Security number for themselves (or one spouse if married filing jointly) and the qualifying child.
- Tips & Overtime Pay Deductions: Establishes new above-the-line deductions for the 2025–2028 tax years, allowing taxpayers to deduct up to $25,000 per individual in tip income and up to $12,500 per individual (or $25,000 for joint filers) in overtime compensation. These deductions are subject to phase-out at specified AGI thresholds.
- Individual Trust Accounts (Trump Accounts): Introduces a new category of tax-advantaged accounts specifically designed to support children under age 18. These accounts can be utilized for qualified expenses such as education, small business investments, and first-time home purchases. Annual contributions are capped at $5,000 per account, with a one-time, government-funded deposit of $1,000 for eligible children born between December 31, 2024, and January 1, 2029. Employers are also permitted to make tax-free annual contributions to these accounts.
Other Notable Provisions
- Estate Planning: Increases the estate, gift, and generation-skipping tax exemption amounts to $15 million for estates of decedents dying and gifts made after December 31, 2025, and makes them permanent. This is compared to the TCJA’s temporary $10 million exemption (adjusted for inflation to $13.99 million in 2025).
Next Steps
The impact of the One Big Beautiful Bill Act is substantial, introducing changes that warrant continuous review and proactive planning. We strongly recommend that you engage with your William Vaughan Company advisor to assess how these legislative developments may affect your tax liabilities, cash flow, and overall business or personal wealth strategies. Our team is here to help you navigate these complexities and identify opportunities aligned with your objectives.
Categories: Tax Planning
Should I Cancel My Ohio CAT Account?
Sep 26, 2023
Commercial Activity Tax Changes Under Ohio House Bill 33
We recently covered the changes to Ohio’s tax codes that were enacted by Ohio House Bill 33 after it’s passage into law in July of 2023. The new law introduced several changes to state tax codes that could prove advantageous for Ohio business owners. One of the more significant changes to the tax law relates to how CAT is reported.
The CAT is calculated using a business’s taxable gross receipts. As a result of the passing bill, beginning January 1, 2024, the CAT annual minimum tax will be eliminated, and the exemption amounts for businesses will be significantly increased. Under the new law, the CAT rate of .26% will stay the same, but will now only affect taxpayers with gross receipts over $3 million in 2024, (that number will increase to $6 million in 2025).
Taxpayer Implications
Businesses currently reporting under $1 million in gross receipts, and that are predicted to have less than $3 million in gross receipts in 2024, should cancel their CAT account effective December 31, 2023, and file a final annual CAT return, due May 10, 2024. Once the final CAT return is filed, taxpayers with gross receipts under the exemption amount will no longer have to file an annual CAT return in subsequent years. Taxpayers that predict they will have annual gross receipts between $3 million and $6 million should file their final CAT return the following year, 2025. All remaining CAT payers that do not meet the exclusion amount must still file quarterly returns for tax periods after January 1, 2024.
If a taxpayer does not cancel their CAT account, they will still be required to file a CAT return until the account is canceled, even if nothing is due. Taxpayers may cancel their CAT account by visiting the CAT Cancel Account Transaction on the Ohio Department of Taxation’s Business Gateway (preferred method.) Alternatively, those wishing to cancel their CAT account can also complete and submit a “Business Account Update Form” available in the “Tax Forms” section of the Ohio Department of Taxation’s website.
If a business’s gross receipts happen to exceed the exclusion amount in subsequent periods, the taxpayer must reactivate their CAT account and resume filing returns and paying the Commercial Activity Tax at that time.
Conclusion
Ohio House Bill 33 has made several alterations to Ohio’s tax laws, with the regulations around Commercial Activity Tax being particularly affected. For more information on these changes, visit the official release from the Ohio Department of Taxation.
William Vaughan Company will continue to monitor the changes resulting from this bill as well as other state and federal tax bills.
Questions or concerns about how these changes apply to your specific CAT filings? Connect with us today to get a better understanding of these new developments and mitigate tax risks in your business.
Categories: Tax Compliance
Scam Alert: Distraint Warrant Scam
Jul 05, 2023
William Vaughan Company was recently made aware of a highly concerning scam surfacing in Lucas County. Many local businesses have received fraudulent “Distraint Warrants” in the mail, sent by a fictitious entity called the “Tax Resolution Unit.” While these letters seem to primarily target businesses, a handful of individuals have also received them. In the interest of our community and the individuals we serve, here are some important detail about this distraint warrant scam along with essential tips on safeguarding yourself against such fraudulent activities.
The Scam:
In this distrain warrant scam, individuals and businesses receive official-looking documents in the mail from the Lucas County “Tax Resolution Unit.” The document claims that a Distraint Warrant has been issued against the recipient due to unpaid tax debts. The scammers exploit fear and urgency, attempting to coerce victims into making immediate payments via telephone to a toll-free number. However, it’s crucial to note that Lucas County does not have a Tax Resolution Unit or an office of Public Judgment Records.
How to Protect Yourself:
Verify the source: Take a moment to verify the authenticity of any suspicious document you receive. Contact the relevant county offices or authorities to confirm the legitimacy of the warrant or notification. Don’t hesitate to reach out to our team if you need assistance in this regard.
Exercise caution: Be wary of unexpected or unsolicited communications regarding taxes or debts. Genuine organizations typically communicate through official channels and offer multiple opportunities to resolve any issues. Be skeptical of sudden demands for payment or urgent actions.
Guard your personal information: Under no circumstances should you share sensitive personal or financial information, such as social security numbers, bank account details, or credit card numbers, in response to such requests. Legitimate authorities, like the IRS, will not ask for this information via email or phone. Nor will the IRS take payment by cashier’s check, in the form of gift cards, or wire transfer.
Report the scam: If you receive a suspicious document or believe you have encountered a scam, promptly report it to the relevant authorities. You can report it to the IRS by either calling 1-800-366-4484 or visiting the US Treasury website. Consider calling your local police so it is aware of the scam as often times communities are targeted all at once. Finally, the Federal Trade Commission’s Report A Fraud site is shared with law enforcement across the country. Your report can help bring attention to the scam and prevent others from falling victim.
Spread awareness: Share this information with your friends, family, and colleagues to raise awareness about the scam. Utilize social media, local community groups, or any platform that can reach a wider audience. The more people are informed, the harder it becomes for scammers to succeed.
As trusted tax and business advisors, our clients’ financial well-being and security is our top priority. The “Distraint Warrant” scam targeting Lucas County residents and businesses is an unfortunate reminder of the dangers posed by fraudulent activities. However, by staying vigilant, verifying sources, and reporting suspicious incidents, we can collectively protect ourselves and our community from falling victim to these scams. If you have any concerns or require assistance, please don’t hesitate to contact us.
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Categories: Fraud & Forensics, Tax Compliance
Ohio Tax Update: State Offers Dollar-for-Dollar Tax Credit for Scholarship Fund Donations
Dec 14, 2022
Starting with the 2021 tax year, the state of Ohio began offering dollar-for-dollar tax credits to individuals who donate to an Ohio-certified scholarship granting organization, or SGO. Defined by the state, SGOs are organizations exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code, that prioritize awarding academic scholarships for low-income students to attend primary and secondary schools (K-12), and that receive certification from the Office of the Ohio Attorney General.
Individuals that donate to an SGO can expect to receive a tax credit equal to 100 percent of their contribution (up to $750,) while married couples could receive up to a $1,500 credit. In addition to claiming the state tax credit, eligible charitable contributions can also be claimed on federal income tax returns if the taxpayer opts to itemize their deductions.
Currently, there are 25 certified SGOs in the state of Ohio, all of which are listed on the Ohio Attorney General’s website.
“This is a very easy credit for Ohio taxpayers to take advantage of,” says William Vaughan Company Tax Partner, Sandi Towns. “Those who have donated to Ohio-certified SGOs in 2022 need simply include their proof of donation letter(s) with other tax documents given to their accountants.”
Says Towns, “William Vaughan Company’s tax team will continue to monitor this and other tax credit updates, however I urge anyone wishing to take advantage of these credits to contact their accountant in order to determine which credits make the most sense for their specific tax and financial situation.”
Sandi Towns, CPA/PFS, CFP®
Tax Partner
sandi.towns@wvco.com
Categories: Tax Planning
IRS Tax Update: Filing Deadlines Extended to February 15, 2023 for Hurricane Ian Victims
Oct 04, 2022
On September 29th, the IRS announced Hurricane Ian victims in the state of Florida will now have until February 15th, 2023, to file various federal returns.
The tax relief measure applies to businesses and individuals operating and residing in areas designated to receive disaster relief from FEMA. Those eligible must also have had a filing deadline of September 23rd, 2022, or later. In other words, any business or individual in the state of Florida that filed to extend their 2021 federal tax returns out to October 17th, 2022, will now have until February 15th, 2023, to file any returns or taxes.
For businesses, the extension relief will also apply to quarterly payroll and excise tax returns normally due on October 31, 2022, and January 31, 2023. For individuals, the tax relief applies to any quarterly estimated income tax payments due on January 17, 2023. Additionally, penalties on payroll and excise tax deposits due on or after September 23, 2022, and before October 10, 2022, will be abated as long as the deposits are made by October 10, 2022.
The IRS will automatically apply this relief measure to taxpayers with a record of address in the disaster area, meaning there is no need to contact the agency directly. However, if an affected taxpayer receives a late filing or payment notice (that had an original or extended filing, payment, or deposit due date falling within the postponement period,) the taxpayer should call the number listed on the notice as soon as possible to abate the penalty.
For more information on the tax relief measure or to see if you qualify, contact your trusted team of tax professionals at William Vaughan Company as we continue to monitor IRS updates and the situation in Florida.
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Categories: Other Resources, Tax Compliance, Tax Planning