President signs sweeping tax reform, spending bill into law

On July 4, 2025, President Trump signed into law the sweeping tax reform and spending reconciliation bill known as the One Big Beautiful Bill Act (OBBBA) (H.R.1). The celebratory signing ceremony at the White House on the Fourth of July took place just one day after the House cleared the Senate-approved bill on July 3, 2025, by a 218-to-214 vote. The Senate first passed the revised bill by a 51-to-50 vote on July 1, 2025, with Vice President JD Vance casting the tie-breaking vote, making significant changes to the initial reconciliation bill the House passed on May 22.

The OBBBA’s enactment on July 4, 2025, marks a major legislative achievement for the president, House Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD), just over six months into the 119th Congress. Republican leadership moved the measure through Congress using the budget reconciliation process, which allowed Senate Republicans to approve the bill with a simple majority, bypassing the upper chamber’s 60-vote threshold under regular order.

What’s in it

The OBBBA makes permanent key business tax breaks as well as individual provisions that were set to expire at the end of the year under the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97). Additionally, the legislation makes the section 199A qualified business income deduction permanent at 20%and extends and increases the TCJA’s cap on the state and local tax deduction to $40,000 through 2029, while retaining the deductibility of state and local taxes for pass-through entities.

The legislation makes significant reforms to the U.S. international tax regime and repeals/phases out certain clean energy tax credits enacted under the Inflation Reduction Act (IRA) (P.L.117-169), also moved through budget reconciliation by Democratic lawmakers during the Biden administration. Read more about the OBBBA’s IRA changes