July 2025

The One Big Beautiful Bill Act signed into law by President Trump on July 4, 2025, permanently extends key provisions from the 2017 Tax Cuts and Jobs Act while introducing new measures affecting secured lenders and their borrowers. The legislation passed the Senate 51-50 with Vice President Vance casting the tie-breaking vote on July 1, followed by House approval on July 3.

Key Business Tax Provisions

100% Bonus Depreciation Made Permanent

The Act restores full immediate expensing for equipment, machinery, and short-lived assets acquired and placed in service after January 19, 2025. This applies to both new and used equipment purchases.

R&D Expensing Restored

Businesses can again immediately deduct domestic research and development expenses. Small businesses with gross receipts under $31 million can retroactively expense R&D costs incurred after December 31, 2021.

Interest Deductibility Rules Finalized

The Section 163(j) limitation permanently returns to an EBITDA-based calculation. This limitation must be calculated before applying most other interest capitalization provisions.

New Manufacturing Facility Incentive

A temporary provision allows 100% depreciation for Qualified Production Property (QPP)—nonresidential real property used in manufacturing. Construction must begin between January 19, 2025, and January 19, 2029, with the property placed in service by January 1, 2031.

Provisions Affecting Financial Institutions

Rural Lending Incentive

Banks and qualifying financial institutions can exclude 25% of interest income from loans secured by rural or agricultural real property. This applies to new loans originated after the date of enactment.

Pass-Through Deduction Extended

The 20% Section 199A deduction becomes permanent. The income thresholds for the deduction's limitations increase to $75,000 for single filers and $150,000 for joint filers.

CFPB Funding Reduced

The Consumer Financial Protection Bureau's funding cap from Federal Reserve profits drops from 12% to 6.5%.

Individual Tax Changes Affecting Borrowers

SALT Cap Temporarily Increased

The state and local tax deduction limit rises to $40,000 for tax years 2025 through 2028 before reverting to $10,000 in 2029. The higher cap phases out for taxpayers with incomes above $500,000.

Estate Tax Exemption Enhanced

The estate and gift tax exemption increases to $15 million per person ($30 million for married couples) starting in 2026, indexed for inflation.

Other Individual Provisions

• Child tax credit increases to $2,200 and will be indexed for inflation
• Standard deduction increases further with additional inflation adjustments
• New temporary deductions for tip income (up to $25,000), overtime pay (up to $12,500 for single filers, $25,000 for joint filers), and auto loan interest (up to $10,000)

International Tax Changes

The Act modifies the tax treatment of foreign earnings:

• GILTI (renamed Net CFC Tested Income) taxed at an effective rate of 14% after 90% foreign tax credit
• Foreign tax credit increased to 90% for foreign income taxes
• BEAT rate increases to 10.5%
• Elimination of the QBAI deduction for deemed returns on tangible assets.

Clean Energy Credit Modifications

Several Inflation Reduction Act provisions face elimination or modification:

• Clean electricity production and investment credits terminated for wind and solar projects placed in service after 2027
• New restrictions on foreign entity involvement in energy projects
• Clean hydrogen production credit repealed after 2027
• Enhanced support for nuclear, hydropower, and geothermal energy

Effective Dates

Most provisions take effect for tax years beginning after December 31, 2025, with several exceptions:

• Bonus depreciation and QPP provisions apply to property placed in service after January 19, 2025
• Rural lending exclusion applies to loans originated after the date of enactment
• Temporary individual deductions expire after 2028
• SALT cap increase expires after 2028