The most important development of 2025 in the tax world was the passage of the OBBBA in July. The OBBBA permanently restored 100% bonus depreciation for eligible business property acquired after January 19, 2025 (i.e., immediate expensing of qualified property), and added 100% bonus depreciation for “qualified production property” through 2029.
The OBBBA also allows for immediate expensing of research and development costs for years 2025 through 2029, instead of amortization. Other key business tax provisions include changes to the international tax regimes and to the energy tax credit provisions. The energy credit provisions, in particular, have encouraged taxpayers to begin construction before certain credits are reduced and before more restrictive rules regarding foreign investment and control become effective.
On the individual tax side, the OBBBA permanently extended and modified many major individual tax provisions from the 2017 Tax Cuts and Jobs Act. Under the OBBBA, the 20% qualified business income (Section 199A) deduction is made permanent, with new phase-out rules. The state and local tax (SALT) deduction cap remains but is raised to $40,000 (adjusted for inflation) with phase-down provisions for high earners from 2025 through 2029. Likewise, the OBBBA does not restrict the ability of states to enact SALT cap workarounds. The OBBBA also introduced deductions for qualifying tip income and overtime pay (subject to caps).
Outside of the OBBBA, the government shutdown significantly curtailed IRS response times throughout the fall. Likewise, permanent reductions in force within the IRS may affect the 2026 filing season and may continue to limit the IRS’s responsiveness.
Finally, in addition to funding cuts, many tax-exempt organizations have felt a chilling effect from the Trump administration’s targeting of diversity, equity, and inclusion (DEI) initiatives and have been forced to evaluate their programming to ensure continued compliance with Section 501(c)(3). There remains a sense that the Administration could threaten to revoke the tax-exempt status of organizations with which it disagrees.
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