The most recent bill, signed into law on July 4, 2025, brings a wave of tax reforms that extend and enhance provisions from the 2017 Tax Cuts and Jobs Act (TCJA) while introducing fresh incentives. This article highlights the potential tax benefits for businesses and high-net-worth individuals, focusing on equipment depreciation, deductions, and other opportunities to boost your financial strategy.
For Businesses
1. 100% Bonus Depreciation Restored and Expanded
The bill permanently reinstates 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Without this bill, bonus depreciation was set to drop to 40% in 2025, 20% in 2026, and 0% in 2027. Qualified property includes tangible personal property with a recovery period of 20 years or less (e.g., machinery, vehicles) and certain qualified improvement property for real estate. This provision may allow businesses to deduct the full cost of assets upfront.
A separate 100% bonus depreciation applies to Qualified Production Property (QPP) used in U.S.-based manufacturing, production, or refining, for projects starting after January 19, 2025, and placed in service before January 1, 2031. These provisions may benefit domestic manufacturers, depending on individual circumstances.
2. Section 179 Deduction Increase
The bill modifies the definition of Adjusted Taxable Income (ATI) for the Section 163(j) business interest expense deduction by excluding depreciation, amortization, and depletion. This revision may allow for greater deductibility of interest expense for certain businesses starting in 2025.
3. Business Interest Deduction Enhancement
The bill revises the definition of Adjusted Taxable Income (ATI) for the Section 163(j) business interest expense deduction, excluding depreciation, amortization, and depletion. This allows businesses to deduct more interest expense starting in 2025, permanently. For every $100,000 in depreciation or amortization, you can deduct an additional $30,000 in interest, a boon for capital-intensive industries like real estate and manufacturing.
4. Immediate Expensing of R&D Costs
Beginning in 2025, businesses may fully deduct domestic R&D costs in the year incurred, reversing the TCJA’s five-year amortization rule. Alternatively, businesses may choose to capitalize and amortize these costs over at least 60 months. Refundable R&D credits for certain small businesses and startups may also provide cash flow support.
5. Qualified Business Income (QBI) Deduction Made Permanent
The 20% QBI deduction for pass-through entities (e.g., sole proprietorships, partnerships, S corporations) under Section 199A is now permanent, avoiding its 2025 expiration. Higher income thresholds for specified service businesses (e.g., law, consulting) may allow more owners to benefit, lowering the effective tax rate on pass-through income.
6. Excess Business Loss Limitation
The bill makes permanent the limitation on noncorporate business losses ($313,000 for single filers, $626,000 for joint filers in 2025, adjusted for inflation). Excess losses can be carried forward as Net Operating Losses (NOLs), which may provide tax planning flexibility.
7. Advance Manufacturing Investment
The bill boosts the Advance Manufacturing Investment Credit from 25% to 35% for property placed in service after December 31, 2025. This credit supports investments in manufacturing facilities, especially in semiconductors, encouraging domestic production.
8. New Market Tax Credit and Opportunity Zones
The New Market Tax Credit is now permanent, supporting investments in low-income communities. The bill also introduces a new permanent Opportunity Zone program, effective after December 31, 2026, replacing the TCJA’s version. These provisions incentivize investments in economically distressed areas, potentially ideal for businesses in real estate or development.
9. Qualified Small Business Stock (QSBS) Exclusion
The bill expands the QSBS exclusion, allowing a $15 million tax-free gain on the sale of qualified small business stock held for at least three years (down from five). This exclusion could be a powerful tax-saving tool for startups and/or investors.
For Individuals
1. Estate Tax Exemption Increase
The bill permanently raises the estate and gift tax exemption to $15 million per individual (indexed for inflation after 2026), up from $14 million. This provision might allow high-net-worth individuals to transfer more wealth tax-free during life or at death. Note that some states impose their own estate or inheritance taxes, which are not affected by this federal exemption increase.
2. State and Local Tax (SALT) Deduction Cap Increase
The SALT deduction cap rises to $40,000 (from $10,000) for taxpayers with Modified Adjusted Gross Income (MAGI) under $500,000 ($250,000 for married filing separately) from 2025 to 2029. The cap phases down by 30% for higher MAGI, reaching $10,000. This helps taxpayers in high-tax states, with pass-through entity tax (PTET) workarounds preserved for added relief.
3. Mortgage Interest Deduction
The bill permanently extends the TCJA’s mortgage interest deduction limit to interest on the first $750,000 ($375,000 for married filing separately) of home acquisition debt. Interest on home equity loans remains disallowed.
4. Additional Deduction for Seniors
Taxpayers aged 65 and older can claim an additional $6,000 deduction (up from $2,000), phasing out for MAGI above $75,000 (single) or $150,000 (joint). This could offer tax relief for seniors within these income limits.
5. Car Loan Interest Deduction
A new deduction allows individuals to deduct car loan interest through 2028, subject to MAGI limits of $150,000 (single) or $300,000 (joint). This deduction may benefit those looking to purchase a new vehicle.
6. Casualty Loss Deduction
The bill extends the TCJA’s casualty loss deduction limit to federally and state-declared disasters, permanently. This helps taxpayers with properties in disaster-prone areas deduct significant losses.
7. Overtime and Tip Income Deductions
Taxpayers earning overtime or tip income can deduct up to $12,500 (overtime) and $25,000 (tips) through 2028, subject to MAGI limits of $150,000 (single) or $300,000 (joint). This could benefit individuals with diverse income sources.
Considerations and Planning Opportunities
- Businesses: Review capital investment plans to leverage 100% bonus depreciation and Section 179 deductions. Model R&D expensing and consult tax advisors to optimize cash flow.
- Individuals: Reassess estate plans to see if you could use the $15 million exemption and explore PTET workarounds for SALT relief.
- QSBS: Business owners and investors may consider whether their holdings qualify for the updated QSBS rules.
Conclusion
The bill delivers robust tax benefits for businesses and high-net-worth individuals, from immediate expensing and enhanced deductions to wealth transfer advantages. Businesses can drive growth with bonus depreciation, Section 179, and R&D credits, while individuals gain from estate tax relief, SALT cap increases, and new deductions. Olistico Wealth does not provide tax advice. We coordinate with your tax professionals to support your planning decisions. If you have any questions, don’t hesitate to reach out to us.
This article is for informational purposes only and and is based on information available as of August 1, 2025. It is not intended to provide specific legal, tax, or investment advice. Please consult with your tax advisor or attorney regarding your specific situation. Advisory services are offered through Olistico Wealth, a registered investment adviser.
