One big beautiful bill act: 5 important policies to know

Congressional Republicans have passed the president Donald Trump’s A package of tax cuts and spending policies known as the One Big Beautiful Bill Act (OBBBA) that the President is due to sign the law on July 4th.

The bill will be extended Tax reduction Originally enacted by the 2017 Tax Cuts and Employment Act (TCJA), it is expected to expire this year, some of which have been permanently extended, including lower tax rates and higher standard deductions for taxpayers.

The OBBBA also includes new forms of tax cuts, including provisions to address tax issues for small businesses and those facing costly capital investments, including tips and provisions to provide relief to workers and retirees who are earning overtime.

Given the range of bills, businesses, workers, families and retirees are seeing tax policy changes that affect them. Let’s take a look at five key policy areas that the bill touches on.

What are the “big, beautiful bills” for American workers?

Federal Income Tax

One big beautiful bill act (OBBBA) makes low tax brackets permanent with revised revenue thresholds established by the TCJA.

OBBBA also provides standard deductions. This has almost doubled under the TCJA and has become permanent ahead of the scheduled expiration this year. The bill also increases the $750 for individuals, $1,500 for married couples and $1,125 for heads of households, which are effective for the 2025 tax year. About 90% of federal taxpayers use standard deductions rather than itemizing them.

Costs of capital investment and factory investment

The OBBBA will recover the immediate 100% cost of capital investments temporarily permitted under the TCJA and retroactively apply it to investments made since January 19, 2025, before President Trump’s inauguration.

The provision for capital investment costs is permanent under the OBBBA, with the maximum limit for taxpayers to pay costs increasing to $2.5 million under the bill.

Republicans rebel against fiscal critics to push Trump’s signature “beautiful” tax cuts

Encourage the construction of Manufacturing factory It also makes the construction of new US factories economically viable, allowing businesses to fully spend new factories and improvements on their factories.

In fact, businesses can quickly realize the tax benefits of incentives, making such investments more attractive. Under pre-OBBBA tax laws, businesses had to deduct costs of non-resident property for 39 years.

Small and Medium Enterprise Deduction

OBBBA makes 20% deduction permanent Small and Medium EnterprisesDeduct up to 20% of eligible business income, including sole ownership, partnerships and S-companies, plus 20% of eligible real estate investment trusts (REITs) dividends and 20% of eligible public transaction partnership (PTP) income.

Also create a new one Inflation adjustment A minimum $400 deduction for taxpayers with at least $1,000 in qualifying business income to allow eligible small business owners to access the enhanced baseline deduction.

If a house cannot pass “big and beautiful bills”, most Americans will rise to rise

Retirement Tax Relief

In addition to the standard deduction available to all taxpayers, OBBBA offers a $6,000 bonus deduction to taxpayers age 65 and older, with an existing additional standard deduction for single filers, and $1,600 per qualifying spouse of $1,600 per joint filer age 65 and older.

The $6,000 bonus deduction is temporary and will remain valid until 2028. High-income retireesearning individuals receive a full deduction that allows them to use up to $75,000 or $150,000 for joint filers. It’s completely step-by-step, as individuals and couples earn $250,000 in and out of $175,000.

This provision was devised as an alternative to a proposal to eliminate taxes social security Instead, instead offsetting some of what they owe based on their income level, they bring benefits.

Tips and overtime

Although the bill cannot completely eliminate federal income taxes. Advanced income And as discussed in the campaign trajectory, working overtime will generate new deductions that will provide relief to such workers by 2028 when they are set to expire.

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Tip workers such as restaurant servers, barbers and drivers can deduct up to $25,000 with qualified tips.

Additionally, the bill will create a revenue deduction above the line for overtime premium payments of up to $12,500 for overtime workers.