Rupa Pereira
By Rupa Pereira
It just hit me; we’re two months away from the end of the year! Where did 2025 go and how is it going to end? As I write this, we’re still battling an onset of shutdown-imposed consequences – delays at airports, delays in postal services and delays in non-emergency public services. When will government shutdown be a thing of the past? My hope is by the time this article makes it in the November edition that we’re not staring at the stark consequences of the shutdown, but then, who has the crystal ball?
I don’t have the power to call off the shutdown, but I can surely educate you on landmark legislation that had us all fawning over till the shutdown stole its thunder. If you’ve been following my series in the past couple of months, I covered tax provisions of the “One Big Beautiful Bill Act” that was signed into law by President Trump in July 2025. It was a significant tax act that will take months to implement. We discussed changes to personal tax scenario and education planning. In this final instalment, I’ll focus on other aspects of the “One Big Beautiful Bill Act”, i.e. OBBBA in short and how it applies to other entities.
Let’s look at how businesses will be impacted. When we speak of businesses, we’re referring to an entity that exists on its own, long after its original owner has passed. Corporations primarily fit this bill and to some extent Partnerships or LLCs, if they choose to be treated as Corporations. Businesses rely on various tax provisions to manage their operating and financial footprint.
Provisions related to previous Tax Cuts and Jobs Act that were extended as a result of OB3 were:
● Corporate Tax Rate remains intact at 21%.
● Qualified Business Income Deduction of 20% retained for Passthrough Entities.
● 100% Bonus Depreciation restored beginning January 2025.
● Immediate Expensing of Capital Expenditure rather than amortizing or capitalizing the spend – up to a dollar limit.
● Domestic Research and Development expenditure can now be expensed where previously they had to be amortized.
● An increase in reporting threshold from $600 to $2000 for those that are paid as a contractor or for independent work relieves stress for the businesses that issue these 1099s.
A particular provision related to sale of stock of a qualified small business can benefit from a higher exclusion gap such that gains can be tax free. Imagine you enjoyed growth and success from a tech or biotech startup as a founding member or investor over the past 5-10 years. Chances are good that when you sell, your gain may be tax-free if it meets the size, holding period and nature of involvement in the business.
There are no income or AGI restrictions to qualify for this provision.
While our primary focus would be on income tax reduction, there’s another looming tax that hits us when we’re deceased – the Estate Tax. As one prospers and adds zeros to their net-worth, the value of their Estate can mushroom within a limit that is subject to Estate Taxation.
Without OBBBA, the previous limit, above which Estates would be taxed, would have decreased from current $14M to $6M, sending high-net worth families in a frenzy of estate planning strategies. With the new law, the Estate Tax Limit has been permanently changed to $15M beginning 2025 and will be indexed for inflation beginning 2027.
On Healthcare front, those who rely on Marketplace and Affordable Care Act for their health insurance may see their out-of-pocket premiums go higher as a result of lower premium tax credit and more restrictive coverage.
A relatively unknown but important change is a 1% tax on foreign remittances beginning in 2026. Those that use cash, money orders, cashier’s checks will be affected. Using a US bank account/credit/debit card or digital payment processors can avoid this 1% tax surcharge.
In summary, there’s a lot to like about the “One Big Beautiful Bill Act”. It offers stability in tax brackets and tax rates, as well as improved deductions for seniors and those in the service workforce.
This, however, it has also shifted conversations around student loan planning, estate planning, senior planning and healthcare planning.
There are income phaseouts for new deductions: No Tax on Tips, No Tax on Seniors, Full Child Tax Credit, entire SALT (State and Local Taxes) deduction when itemizing, which means making too much can sometimes hurt. Ouch!
There you have it. It’s a wrap on the OBBBA series and I leave you with this parting note as we stay afloat through a government shutdown (which is simply a case of overspending where the most powerful country in the world is unable to balance their checkbook).
A shutdown caused quite a hangama,
The offices now feel bekaar.
The bosses yelled, “Arey yaar!”
“No bandobast for this budget tamasha!”
Rupa Pereira is a CFP, EA, CSLP and an Advice-Only Planner and Tax Professional based in North Carolina. She specializes in cross-border matters and all things financial planning. Contact: info@fwjplanning.com
