8 ways the final One Big Beautiful Bill Act changes tax law
President Trump just signed the One Big Beautiful Bill Act into law. After narrowly passing the House of Representatives and Senate on party-line votes, the OBBB will now implement the Trump administration’s tax and spending goals, including huge changes to tax and energy policy and massive cuts to aid programs like Medicaid and SNAP.
The OBBB will touch every aspect of society, including your organization. Let’s dig into what the law means from a tax perspective, plus how you can move forward in this new regulatory era.
1. Accelerated depreciation and 100% expensing rules are back.
100% bonus depreciation is back. Under the OBBB, property owners can claim 100% expensing (using bonus depreciation) to fully deduct the cost of any qualified property acquired starting on January 20, 2025. The new law also broadens the definition of “qualified assets” to cover manufacturing buildings beginning on that same date.
If you own qualified property, consider the timing of any capital expenditures. You can maximize tax savings by making immediate or front-loaded deductions, and you may want to focus on investments that qualify for larger or faster deductions.
2. Wind and solar tax credits are ending.
The OBBB is ending the Clean Electricity Production Credit (Section 45Y) and the Clean Electricity Investment Credit (Section 48E). Energy-focused businesses along with construction companies, designers and other affected property owners should be aware that this change will have a major impact on future clean energy projects.
- Solar and wind projects that either started or will start construction by July 4, 2026, will avoid a placed in-service deadline for ITC or PTC eligibility.
- However, solar and wind projects that start construction after July 4, 2026, must be placed into service before December 31, 2027, to qualify for Section 48E ITCs or Section 45Y PTCs, which are the technology-neutral ITC and PTC.
- A new rule also affects lessor-owned solar water heating and wind property. Such property, which would be eligible to claim the section 25D residential credit if owned by a lessee, can no longer meet qualifications for the technology-neutral ITC or PTC for taxable years that begin after July 4, 2025.
- Solar or wind energy projects that begin construction after December 31, 2024, are no longer eligible for accelerated depreciation.
If you want to claim existing solar or wind tax credit before it’s too late, you may need to accelerate any planned investments. New projects can only take advantage of wind or solar tax credits if you start construction by July 4, 2026.
You should also be aware that for tax purposes, what counts as starting construction is complicated. Your tax advisor can help you understand what steps you’ll need to take in order to qualify.
As you plan future projects, you may want to consider state-level tax incentives or other alternative funding sources as a tool to keep solar and wind investments viable.
3. Certain green energy residential, commercial and vehicle tax credits will now expire within months.
Multiple clean energy tax credits that were set to expire in 2032 will now end no later than mid-2026. Construction firms, designers and other affected property owners should know that the following credits are about to vanish:
- Energy-Efficient Home Improvement Credit (Section 25C): Ended for property placed in service after December 31, 2025.
- Residential Clean Energy Credit (Section 25D): Ended for expenditures made after December 31, 2025.
- Used Clean Vehicle Credit (Section 25E): Ended for property acquired after September 30, 2025.
- Alternative Fuel Vehicle Refueling Property Credit (Section 30C): Ended for property placed in service after June 30, 2026.
- New Clean Vehicle Credit (Section 30D): Ended for property acquired after September 30, 2025.
- Energy Efficient Home Credit (Section 45L): Ended for homes acquired after June 30, 2026.
- Commercial Clean Vehicle Credit (Section 45W): Ended for property placed in service after September 30, 2025.
- Energy Efficient Commercial Buildings Deduction (Section 179D): Ended for property beginning construction after June 30, 2026.
If you’re counting on any of these tax credits to make a project financially viable, you’ll need to move fast. Work with your tax advisor to understand if or how you can still qualify.
4. The federal government is now incentivizing fossil fuels.
Oil, gas, geothermal and coal companies just gained new access to federal resources and land. The OBBB will speed up leasing processes, create new financial incentives to boost fossil fuel production and end certain regulations.
Traditional energy sectors will find new opportunities. However, organizations committed to ESG now face new risks. Any businesses that may be affected here should assess the new regulatory landscape as well as reputational risks.
5. International tax provisions (GILTI and FDII adjustments) have been modified.
In 2026, the effective rate on GILTI was set to rise from 10.5% to 13.125% and on FDII from 13.125% to 16.406%. However, the OBBB means that taxpayers subject to GILTI (now referred to as “Net CFC Tested Income”) and FDII (now referred to as “Foreign Derived Deduction Eligible Income”) will see their Section 250 deduction reduced. This will increase their respective effective U.S. tax rates to approximately 14%.
To maximize tax benefits, leaders at multinational businesses should reassess their international structures, transfer pricing formulas and implement repatriation strategies.
6. The estate and gift tax exemptions are now larger.
The OBBB will permanently increase the federal gift, estate and GST exemptions to $15 million per individual and $30 million for married couples starting in 2026. Annual adjustments for inflation will begin the following year.
Since a future Congress could change or even reverse this exemption window, you may want to consider how you can act while it is in effect
7. Research and development (R&D) tax credit regulations have been revised.
The OBBB reverses the five-year R&D amortization requirement put in place by the 2017 Tax Cuts and Jobs Act (TCJA). Businesses that were previously required to capitalize and amortize R&D expenditures over five years, starting in 2022, will now be able to take advantage of immediate expensing for domestic R&D expenditures. For businesses with average annual gross receipts of under $31 million, the OBBB also provides retroactive relief (2022-2024).
Tech and manufacturing businesses, along with other affected firms, should take another look at their qualifying activities and expenditures to assess how to maximize benefits under the new rules.
8. The OBBB also changes tax law for individuals.
Tax law isn’t just changing for businesses, but for individuals as well. Here are big ways in which you might be affected:
- The TCJA’s individual income tax rates have been made permanent.
- The 20% qualified business income deduction for pass-through income is also now permanent.
- The standard deduction will rise for all taxpayers.
- Taxpayers over 65 can now claim an additional standard deduction of $6,000 through 2028. However, this deduction phases out for taxpayers with modified adjusted gross income over $75,000 for single filers or $150,000 for joint filers.
- Auto loan interest is now deductible (without having to itemize) up to $10,000 on new “U.S assembled passenger vehicles” subject to an income phaseout of $100,000 for single filers or $200,000 for joint filers.
- The maximum (increased) child tax credit at $2,200 per qualifying child has been permanently extended. Phaseout ranges have also been expanded.
- The OBBB raises the cap on the state and local tax (SALT) deduction from $10,000 to $40,000 for taxpayers earning $500,000 or less.
- Up to a certain income, overtime or tips will no longer be taxed.
- The “qualified small business stock provision” of Section 1202 is amended to expand the benefit of owning Section 1202 stock.
- Starting in 2026, non-itemizers will be able to deduct charitable contributions of up to $1,000 (single filers) or $2,000 (married filing jointly). Itemizers can only deduct itemized deductions that exceed 0.5% of their adjusted gross income.
- Subject to an income limitation, Health Saving Account (HSA) contribution limits have been increased.
Your tax advisor can help you understand how your personal finances may be affected by the OBBB. To start a conversation now, contact Wipfli.
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