Navigating the New Tax Landscape: What the One Big Beautiful Bill Act Means for Real Estate Investors, Business Owners, and High‑Net‑Worth Individuals

The recently enacted "One Big Beautiful Bill Act," signed into law on July 4th, 2025, introduces a sweeping overhaul of the tax code, making many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent while also adding new, impactful measures. This thousand-page bill brings hundreds of changes, and understanding its implications is crucial for effective tax planning, especially for real estate investors, business owners, and high-net-worth individuals.

2025 is a pivotal tax-planning year. This in-depth article outlines the most significant changes and what they mean for your financial strategy.

I. General Tax Landscape for High-Net-Worth Individuals

• Permanent Tax Rates: The individual tax rates established in 2017, including the top 37% bracket, are now permanent. The bill also adds an additional year of inflation adjustment for determining the dollar amounts at which any rate bracket higher than 12% ends and at which any rate bracket higher than 22% begins.

• Increased Standard Deduction: The larger standard deduction amounts from the TCJA are permanently extended. For 2025, this means $15,750 for single filers and $31,500 for married individuals filing jointly, with annual inflation adjustments thereafter. This change is retroactive to include 2025.

• Personal Exemptions & Senior Deduction: The deduction for personal exemptions is permanently set at zero. However, a temporary $6,000 deduction for individual taxpayers age 65 or older is available for tax years 2025 through 2028. This deduction begins to phase out when Modified Adjusted Gross Income (MAGI) exceeds $75,000 ($150,000 for joint filers).

  
  

• Alternative Minimum Tax (AMT) Exemption: The increased individual AMT exemption amounts from the TCJA are permanently extended. While the exemption phaseout thresholds revert to their 2018 levels ($500,000 for single filers, $1 million for joint returns, indexed for inflation), the phaseout percentage for the exemption amount has increased from 25% to 50% of the amount by which your alternative minimum taxable income exceeds the threshold. This change could potentially impact more high-income earners.

  
  

• Estate and Gift Tax Exemption: The bill permanently increases the estate tax exemption and lifetime gift tax exemption amounts to $15 million for single filers ($30 million for married filing jointly) in 2026, with inflation indexing thereafter. This provides significant certainty for wealth transfer planning.

  
  

• Itemized Deduction Cap for High-Income Taxpayers: The bill permanently repeals the Pease limitation but replaces it with a new cap on the value of itemized deductions for taxpayers in the 37% bracket starting in 2026. Specifically:

  • The maximum tax value of itemized deductions is limited to 35%, even for those in the 37% bracket.

  • This prevents high-income taxpayers from receiving the full tax savings from each dollar deducted.

  • For example, if your taxable income exceeds the threshold for the 37% bracket, deductions like mortgage interest and SALT will only reduce your tax liability by 35 cents per dollar, not 37 cents.

  
  

• Floor on Charitable Contributions for Itemizers: For taxpayers who itemize deductions, a new 0.5% floor now applies to charitable contributions. This means:

  • Charitable donations are only deductible to the extent they exceed 0.5% of your contribution base (typically AGI).

  • For example, if your AGI is $500,000, only contributions exceeding $2,500 will be deductible.

  This limitation may reduce the effectiveness of smaller charitable gifts for itemizers and should be factored into year-end giving strategies.

II. For Business Owners & Real Estate Investors: Immediate Power Plays

🟦 1. 100% Bonus Depreciation—Permanent Rule

For investors, especially those in real estate, the permanent extension of the Section 168 additional first-year (bonus) depreciation deduction is a game-changer. This allowance, previously scheduled to phase down and expire, is now increased to 100% for qualified property acquired and placed in service on or after January 19, 2025.

This means that you can now deduct the entire cost of eligible assets in the first year they are placed in service. This is particularly impactful for:

• Real Estate Investors: By conducting a cost segregation study, components of a property with useful lives of less than 20 years (such as land improvements or certain personal property) can be immediately expensed. This powerful strategy can potentially allow you to write off a substantial portion, even up to 90%, of a property's value in the first year, creating significant tax savings and incentivizing new investments.

  
  

• Businesses acquiring new equipment: Instead of depreciating assets over their standard recovery periods, you can accelerate your deductions, which can greatly improve your cash flow.

A key advantage of Section 168(k) bonus depreciation is its ability to create a loss, which can then be used to offset other income if you qualify for certain strategies. However, it's crucial to remember that you have the flexibility to opt out of 100% bonus depreciation if a staggered deduction over several years better aligns with your overall tax strategy, especially if you anticipate being in a higher tax bracket in the future.

In addition, the bill introduces a temporary 100% deduction for "Qualified Production Property" (Sec. 70307), specifically targeting nonresidential real estate and related property used in manufacturing facilities placed in service after January 19, 2025.

🟦 2. Section 179 Expensing Enhanced

The bill increases the maximum Section 179 expensing limit to $2.5 million (from $1 million) and the phase-out threshold to $4 million (from $2.5 million), with inflation adjustments starting in 2025.

🟦 3. QBI Deduction: Permanent & Expanded

The 20% deduction for qualified business income is permanently extended and enhanced. It also includes a minimum deduction of $400 for active qualified business income (with an aggregate QBI of at least $1,000), subject to inflation adjustments after 2026. Income phaseout thresholds for specified service trades or businesses are also permanently increased to $75,000 ($150,000 for joint returns).

🟦 4. Interest Deduction Limit Reverts to EBITDA

(Section 163(j)): The bill reinstates the EBITDA limitation for tax years beginning after December 31, 2024. This means that adjusted taxable income for the interest deduction limitation will be computed without regard to the deduction for depreciation, amortization, or depletion. New rules are introduced for coordination with interest capitalization provisions. The definition of adjusted taxable income has also been modified to include amounts from sections 951(a), 951A(a), and 78.

🟦 5. Full R&D Expense Deductions (Section 174A)

A new Section 174A allows for the immediate deduction of domestic R&E expenditures paid or incurred during the taxable year. This reverses the TCJA's requirement to amortize these expenses.

🟦 6. Opportunity Zones (QOZs)

The act permanently renews and significantly enhances the Opportunity Zone (OZ) program, providing long-term certainty for investors. Key updates include a new decennial redesignation process allowing states to refresh OZ boundaries every 10 years, ensuring they reflect current economic need. The bill also improves capital gains incentives by reintroducing a 10% exclusion for 5-year holds and a new 15% exclusion for 7-year holds, while preserving the full exclusion for gains on investments held 10+ years. Enhanced reporting requirements for Qualified Opportunity Funds (QOFs) and a refined definition of low-income communities aim to increase transparency and ensure investments generate meaningful community impact. These changes make OZs a more powerful and accountable tool for tax-advantaged investing.

🟦 7. Low-Income Housing Tax Credit (LIHTC) and New Markets Tax Credit (NMTC)

The act provides a permanent increase to the State housing credit ceiling for LIHTC, applying to calendar years beginning after December 31, 2025. The Section 45D New Markets Tax Credit is made permanent, providing ongoing incentives for investments in low-income communities.

🟦 8. New Tax Incentives for Rural and Agricultural Investments

The act introduces two targeted provisions to support agricultural and rural investment. First, from 2025 through 2028, qualified lenders may exclude 25% of interest income from loans secured by rural or agricultural real property from gross income—creating a strong incentive for financing in these underserved areas. Second, Section 1062 allows sellers of qualified farmland to defer income tax by paying in four annual installments when the buyer is a qualified farmer. These measures aim to boost access to capital for agricultural communities and encourage generational land transfers.

🟦 9. More Favorable Qualified Small Business Stock (QSBS) Treatment

(Section 1202): The bill increases the exclusion for gain from QSBS. For stock acquired after the enactment date and held for at least four years, the gain exclusion rises to 75%, and to 100% if held for five years or more. The aggregate gross asset limit for a qualified small business is also increased to $75 million (from $50 million).

III. Watch Out for Tax‑Minimizing Moves

• SALT Deduction Expanded (Temporarily): The cap on the state and local tax (SALT) deduction has been temporarily raised from $10,000 to $40,000 for individuals and $80,000 for joint filers, with inflation adjustments through 2029. However, the benefit is phased out by 30% for taxpayers with MAGI over $500,000 (or $1 million for joint filers), though it never falls below the original $10,000 floor. The cap reverts to $10,000 starting in 2030, so now is a key window for SALT planning. Importantly, state-level Pass-Through Entity Tax (PTET) workarounds remain untouched, preserving a critical planning strategy for business owners.

  
  

• Permanent Disallowance of Miscellaneous Itemized Deductions: Deductions suspended under the TCJA—such as unreimbursed employee expenses, tax prep fees, and investment advisory costs—are now permanently nondeductible at the individual level. However, similar expenses may still be deductible if incurred through a trade or business, such as a real estate or investment enterprise. Careful entity structuring is key to unlocking these deductions.

  
  

• Mortgage Interest Deduction Locked at Lower Cap: The $750,000 cap on mortgage interest for acquisition indebtedness is now permanent. Home equity interest is still only deductible if used to buy, build, or substantially improve the property securing the loan. Mortgage insurance premiums are now explicitly treated as qualified interest, restoring a tax break that had previously expired.

  
  

• Casualty Loss Deduction Limited: Deductions for personal casualty and theft losses are now permanently restricted to those stemming from federally declared disasters, with a new expansion that includes certain state-declared disasters as well. Routine property damage and uninsured losses outside these declarations are no longer deductible.

  
  

• Excess Business Losses (Section 461(l)): The limitation on excess business losses of noncorporate taxpayers is made permanent (it was scheduled to expire after 2028).

IV. Temporary But Worthy: Deductions Through 2028

• "No Tax on Tips": A temporary deduction of up to $25,000 for qualified tips is available for tax years 2025 through 2028. This deduction applies to both W-2 employees and independent contractors, and is available even for non-itemizers. It phases out for MAGI over $150,000 ($300,000 for joint filers). New reporting requirements for tips are also introduced. The Section 45B tip credit is also extended to certain beauty service businesses.

  
  

• "No Tax on Overtime": A temporary deduction of up to $12,500 ($25,000 for joint returns) for qualified overtime compensation is available for tax years 2025 through 2028. It also phases out for MAGI over $150,000 ($300,000 for joint filers) and is available to non-itemizers. Employers will have new reporting requirements for overtime compensation.

  
  

• "No Tax on Car Loan Interest": For tax years 2025 through 2028, interest on qualified passenger vehicle loans (for vehicles assembled in the U.S.) is excluded from personal interest. This exclusion is capped at $10,000 per year and phases out for MAGI over $100,000 ($200,000 for joint filers).

• "Trump Accounts": This bill establishes a new form of Individual Retirement Account (IRA) for individuals under 18. Annual contributions are capped at $5,000. A $1,000 tax credit is available for opening a Trump account for a child born between January 1, 2025, and December 31, 2028. Employer contributions to these accounts are not included in the employee's income, but distributions are taxed as ordinary income upon withdrawal.

  
  

• Charitable Contribution Deduction (for Non-Itemizers): A new deduction allows non-itemizers to claim up to $1,000 (single) or $2,000 (joint) for certain charitable contributions. For itemizers, a new 0.5% floor applies, meaning contributions are deductible only to the extent they exceed 0.5% of the taxpayer's contribution base.

  
  

• Health Savings Accounts (HSAs): The bill includes the permanent extension of the safe harbor for telehealth services, allowing them to be covered by high-deductible health plans without impacting HSA eligibility. It also expands the definition of "high deductible health plan" to include Bronze and Catastrophic plans, allowing more individuals to qualify for HSAs and their triple tax benefits.

V. Clean Energy Credit Deadlines: Act Before They Expire

Clean energy credits are closing fast:

• Terminating 9/30/2025

  • Previously-Owned Clean Vehicle Credit (Sec. 25E)

  • Clean Vehicle Credit (Sec. 30D)

  • Qualified Commercial Clean Vehicles Credit (Sec. 45W)

    
    

• Terminating 12/31/2025

  • Energy Efficient Home Improvement Credit (Sec. 25C)

  • Residential Clean Energy Credit (Sec. 25D)

    
    

• Terminating 6/30/2026

  • Alternative Fuel Vehicle Refueling Property Credit (Sec. 30C)

  • New Energy Efficient Home Credit (Sec. 45L)

    
    

• Terminating end of 2027

  • Clean Electricity Production Credit (Sec. 45Y)

  • Clean Electricity Investment Credit (Sec. 48E)

  
  

For individuals and businesses considering investments in electric vehicles, solar installations, or other clean energy projects, the window to capitalize on these credits is closing rapidly. Missing these deadlines means missing out on valuable tax savings. If you plan to adopt clean energy, you must act now.

VI. Reduced Reporting Burden—But Stay Alert

• 1099-K Reporting Threshold: The bill reverts to the prior, higher thresholds for Form 1099-K reporting for third-party network transactions: $20,000 in aggregate value AND more than 200 transactions. This provides relief for many small businesses and independent contractors who might have faced new reporting requirements.

  
  

• General 1099 Reporting Threshold: The general information-reporting threshold for payments to persons engaged in a trade or business and for remuneration for services is increased from $600 to $2,000 in a calendar year, with inflation adjustments after 2026.

VII. Important Considerations for Your Planning

• Complexity and Nuance: This legislation is incredibly complex, with hundreds of changes and varying effective dates. Congress's intent to "tax the rich" is evident in several provisions, so high-income taxpayers should be especially attentive to new limitations and phase-outs.

  
  

• Crucial Planning Year: This year (2025) is considered one of the most crucial years for tax planning due to the immediate and upcoming changes. Some provisions may require action in 2025 to preserve deductions, while others might benefit from waiting.

  
  

• Temporary vs. Permanent: Be mindful that while many provisions are "permanent," new tax breaks like those for tips, overtime, and car loan interest are only temporary, typically through 2028, making their future uncertain.

  
  

• Consult a Tax Professional: Due to the bill's complexity and the potential for ambiguity in interpretation, consulting with a knowledgeable tax professional is highly recommended. The IRS will likely issue further interpretations and regulations over time. The "One Big Beautiful Bill Act" represents a significant shift in the U.S. tax landscape. Proactive planning is essential to optimize your tax position and ensure compliance.

Don't Leave Money on the Table

The recent tax legislation presents both challenges and tremendous opportunities. Understanding the nuances of provisions like 100% bonus depreciation, the new 35% cap on itemized deductions, and the critical deadlines for expiring tax credits is essential for optimizing your financial position.

My team and I are ready to provide tailored insights and strategic guidance to help you navigate these complex changes. We can help you determine the most advantageous path for your unique circumstances, ensuring you capture every available benefit.

📅 Contact me today to schedule a personalized strategizing session and ensure your tax plan is optimized for the years ahead.

Ready to Take Action?

This monumental law offers tremendous opportunity—but only if you act with foresight and guidance.

Here’s how we can help:

• Asset acquisition planning with strategic timing

• Cost segregation and depreciation tailored to your needs

• Business structure reviews to optimize QBI deduction

• State tax planning and SALT/PTET strategies

• Clean energy and EV credit acceleration

• Estate and legacy planning optimization

📞 Schedule Your Strategic Session Today – Let’s craft a tax plan that makes this law work for you.

Final Thought

This is not just tax reform—it’s a foundational shift. The One Big Beautiful Bill Act can shift outcomes, but only with the right action. Don’t wait. 2025 is the year to shape your tax future wisely.