On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, marking one of the most sweeping federal tax reforms in recent history. The legislation makes several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent, introduces new deductions, and expands opportunities for taxpayers to manage income, build wealth, and plan strategically.
At Carlile Patchen & Murphy, we recognize that tax changes impact our clients in various ways, some focus on managing and growing a business, while others strive to preserve family wealth and plan for the next generation. This overview highlights the key provisions of the OBBBA through two lenses: Business Planning and Family Wealth & Individual Planning.
Business Planning Highlights
Bonus Depreciation: 100%, Effective for Property Placed in Service After January 19, 2025
One of the most significant changes in the OBBBA is the permanent return of 100% bonus depreciation. This provision replaces the previous 40% rate in effect in 2025 that was scheduled to fully phase out in 2027 under the TCJA. Businesses can now fully deduct the cost of qualifying assets—including new or used machinery, vehicles, equipment, and software—in the year those assets are placed into service.
This change applies to qualifying property acquired and placed in service after January 19, 2025, and is particularly advantageous for Ohio businesses in the manufacturing, construction, and agricultural sectors. For companies that purchase fleet vehicles, heavy machinery, or business-critical software, this enhanced depreciation rule can significantly reduce taxable income and improve near-term cash flow.
That said, the benefit should be used strategically. While front-loading deductions can lower current-year tax liability, they may also lead to uneven taxable income in future years, especially for businesses with cyclical earnings. Careful planning will be necessary to avoid unexpected spikes in taxable income as depreciation deductions decrease.
Qualified Business Income Deduction (QBID) Secured
The popular 20% deduction for pass-through entity owners is now a permanent fixture of the tax code. The law also introduces a $400 minimum deduction, indexed to inflation, for taxpayers with at least $1,000 in qualified business income.
Incentives for Innovation and Investment
- R&D expenses are now fully deductible in the year incurred, reversing the prior five-year amortization rule.
- Qualified Small Business Stock (QSBS) exclusions are now tiered: 50% after 3 years, 75% after 4 years, and 100% after 5 years, with higher caps and inflation indexing.
- Opportunity Zones have been permanently extended, with a rolling 10-year designation period beginning in 2027.
New Considerations for Employers
Two new deductions apply to W-2 workers’ tip and overtime income, creating opportunities and administrative challenges for businesses with large hourly or tipped workforces. These deductions phase out at higher income levels and apply only to certain types of compensation.
Family Wealth & Individual Planning Highlights
Estate Tax Exemption Made Permanent
The federal estate tax exemption is now permanently set at $15 million per individual (or $30 million for married couples) and will continue to adjust for inflation. This replaces the scheduled sunset that would have halved the exemption, providing a stable foundation for long-term estate planning.
Changes to Itemized Deductions and SALT
The Pease limitation, which reduced itemized deductions for high-income earners, has been repealed. However, a new formula now limits deductions based on income above the top federal tax bracket.
The State and Local Tax (SALT) deduction cap increases to $40,000 in 2025, with phasedown rules for high earners and a reversion to $10,000 in 2030.
Charitable Giving Adjustments
Non-itemizers may now deduct up to $1,000 (or $2,000 for married filers) in charitable donations. For itemizers, a new 0.5% of AGI floor applies, creating a more strategic giving environment for high-net-worth individuals and philanthropic families.
Standard Deduction and Child Tax Credit
The standard deduction has been raised to $15,750 (single) and $31,500 (married filing jointly). The Child Tax Credit increases modestly to $2,200 per child.
Trump Accounts: A New Intergenerational Tool
A new tax-advantaged account, known as a Trump Account, has been introduced for children born between 2025 and 2028. Each qualifying child receives a $1,000 seed contribution from the government, with total annual contributions capped at $5,000 (including up to $2,500 tax-free from an employer). The funds grow tax-free and are available for education, business startup costs, home purchases, and unrestricted access at age 30.
What About Ohio?
While the OBBBA makes sweeping changes at the federal level, Ohio has also enacted necessary tax reforms that may impact planning decisions:
- The top personal income tax rate drops to 3.125% in 2025 (retroactive to January 1)
- Beginning in 2026, Ohio will move to a flat tax rate of 2.75%
- Several sales tax exemptions have been eliminated, including those affecting refrigerated vending machine sales and specific marketing and publishing services—a point of particular relevance to clients in those industries
We will explore these state-level changes in a separate Ohio-specific alert.
Looking Ahead
The OBBBA presents both opportunities and complexities. Whether you’re a business owner looking to leverage bonus depreciation and QBID or a family preparing to protect generational wealth, strategic tax planning is more critical than ever.
Over the coming weeks, Carlile Patchen & Murphy will publish a series of focused articles that explore these changes in greater detail. If you have questions about how the OBBBA affects your tax strategy, please get in touch with your CPM attorney.
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