Article
President signs sweeping tax reform, spending bill into law
July 7, 2025 · Authored by Jessica L. Jeane
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 here.
A break down of the OBBBA’s key provisions, takeaways and talking points prepared by Baker Tilly’s national tax professionals, can be viewed here:
Joint Committee on Taxation
The Joint Committee on Taxation (JCT) estimates that the OBBBA would cost $715 billion over a 10-year window under the controversial current-policy baseline, which assumes no revenue effect for the extension of expiring TCJA provisions. Using a more traditional approach, however, JCT estimates the tax measure would cost $4.475 trillion relative to a current-law baseline from 2025 through 2034.
Looking ahead
Treasury and IRS officials have said their teams are already preparing for the OBBBA’s implementation, aware of the expected impact on next year’s tax filing season. Additionally, proposed regulations and other guidance will be forthcoming. We will continue to monitor all related regulatory developments. Stay tuned for our July 2025 Policy Pulse and additional alerts.
The OBBBA will have a significant impact on individual and business tax strategy and wealth planning. If you have questions about how this may have an impact on your tax situation, please contact your Baker Tilly tax advisor.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
