One Big Beautiful Bill Act (OBBBA)

OBBBA §70431 restructured §1202 qualified small business stock exclusions for stock issued after July 4, 2025. The prior regime allowed a uniform 100% exclusion (for stock held 5+ years) with a $10M per-issuer cap. OBBBA introduced:

• Tiered exclusion: 50% at 3-year holding; 75% at 4-year holding; 100% at 5-year holding.
• Per-issuer cap raised to $15M (from $10M). The cap applies per taxpayer per issuer.
• Aggregate-asset threshold raised to $75M (from $50M). The C-corporation's aggregate gross assets must not exceed $75M at the time of issuance.

The tiered structure applies only to stock issued after July 4, 2025. Pre-OBBBA stock continues under the prior §1202 framework absent a retroactive election. Practitioners advising founders or early-stage investors should note that the 3- and 4-year partial exclusion tiers are new optionality — a 3-year sale that was previously a 0%-exclusion event now qualifies for 50% exclusion, generally.

OBBBA §70120 raised the individual SALT deduction cap from $10,000 to $40,000 for tax years beginning in TY2025 through TY2029. The cap increases 1% annually ($40,400 in TY2026, etc.) through 2029, then reverts to $10,000 ($5,000 MFS) in TY2030 — the raise is temporary, not permanent. Practitioners planning past 2029 should not assume the $40K cap remains available.

Married filing separately filers face a $20,000 cap (50% of the $40K general limit). OBBBA retained the MFS haircut. At 2030 reversion, MFS drops back to $5,000.

The $40K cap phases down for MAGI above $500,000 ($250,000 for MFS). The reduction is 30% of MAGI in excess of the threshold, floored at $10,000 ($5,000 for MFS). At $600,000 MAGI ($300,000 MFS) in TY2025, the cap is fully reduced to $10,000. The $500K/$250K thresholds increase 1% per year through 2029. High-income taxpayers in high-SALT states (California, New York, New Jersey) may find the phase-out limits the benefit substantially. Practitioners running Schedule A planning for affected clients should model the phase-out directly, not assume the full $40K is available.

The state and local tax workaround via pass-through entity tax (PTET) elections continues to be available under OBBBA. The §164(b)(6) cap applies at the individual level; entity-level PTET deductions at the partnership or S-corporation level are not subject to the cap. Practitioners in PTET states should confirm the client's PTET election status before assuming the SALT cap increase changes the calculus.

The American Rescue Plan Act of 2021 (Pub. L. 117-2) amended §6050W to lower the Form 1099-K reporting threshold from the prior $20,000 / 200-transaction level to $600, effective for calendar years beginning after December 31, 2021. The IRS issued successive transition relief delays (Notice 2022-36, Notice 2023-74, Notice 2024-85), introducing a $5,000 threshold for TY2024 and a $2,500 threshold for TY2025, before a final $600 threshold was scheduled for TY2026.

OBBBA reversed the §6050W reduction and restored the $20,000 / 200-transaction threshold retroactively for TY2025 and forward. The $600 threshold never took effect for TY2025 or later years under the OBBBA reversal. Practitioners with clients who received Form 1099-Ks under the transition-relief $5,000 / $2,500 thresholds should confirm reporting treatment for TY2024 and TY2025 — the reversal applies prospectively; TY2024 treatment followed Notice 2024-85's $5,000 transition threshold.

Estate and gift tax exemption — permanent. The TCJA doubled the §2010(c)(3) basic exclusion amount to approximately $13.6M per person in TY2025 (indexed for inflation). Without OBBBA, the doubled exemption would have sunset to approximately $7M, reverting to the pre-TCJA indexed level. OBBBA permanently raised the §2010(c)(3)(A) exclusion to $15,000,000 per individual / $30,000,000 per married couple (via portability / DSUE), effective January 1, 2026. The GST exemption tracks at the same $15M. The new amounts are inflation-indexed annually for tax years after 2026.

§163(j) business interest limitation — EBITDA-based ATI restored. OBBBA §70303 made a material §163(j) change: for tax years beginning after December 31, 2024, the EBITDA-based ATI calculation is permanently restored. The EBIT floor that applied for TY2022–TY2024 (where depreciation, amortization, and depletion were excluded from ATI) is gone from TY2025 forward. Practitioners with highly leveraged clients should recalculate the §163(j) limitation using EBITDA-based ATI for TY2025 and beyond. Additional §70303 changes: electively capitalized interest retains its §163(j) character (effective TYs beginning after Dec 31, 2025); the floor-plan financing definition was expanded to cover trailers and campers; certain CFC inclusions are excluded from ATI.

ERTC SOL extension. OBBBA extended the statute of limitations for IRS assessment of ERTC (Employee Retention Tax Credit) claims. The standard 3-year SOL was extended to 6 years for ERTC claims; OBBBA further extended assessment periods for certain 2021 Q3/Q4 claims through January 31, 2030. Practitioners with ERTC clients should not assume SOL has run. The claim window closed April 15, 2025, but examination exposure continues.

§179D energy-efficient commercial building deduction — construction-start sunset added. OBBBA §70507 amended §179D to add a construction-start sunset: the deduction does not apply to property where construction begins after June 30, 2026. Projects that begin construction on or before June 30, 2026 remain eligible (the placed-in-service date may be later). Practitioners advising on commercial-building energy upgrades should identify whether their client's project breaks ground before the June 30, 2026 deadline.

BOI / Corporate Transparency Act. OBBBA did not amend the CTA or reverse the FinCEN interim final rule of March 21, 2025, which exempted US domestic companies and US persons from BOI filing requirements. Foreign reporting companies remain subject to FinCEN filing. OBBBA is not the relevant authority for CTA status — the FinCEN rulemaking is.

AI research tools trained before mid-2025 commonly return pre-OBBBA figures. The specific failure modes we've observed in testing as of May 2026:

• GILTI / NCTI mislabeling. Tools return "GILTI" rate calculations using pre-OBBBA §250 deduction rates (50%) rather than the post-OBBBA 40% NCTI deduction. The effective US rate on NCTI is roughly 14%, not 10.5%. Wrong output for TY2026 returns.
• §1202 cap misstatement. Tools return $10M cap and uniform 100% exclusion for post-July-4-2025 stock. The correct post-OBBBA framework is $15M cap, tiered 50/75/100%. A 3-year hold that a tool calls "no exclusion available" may now qualify for 50% exclusion.
• §174 vs §174A. Tools may return mandatory capitalization rules under §174 without acknowledging the §174A restoration. For domestic R&E after December 31, 2024, expensing is the correct default posture.
• SALT cap. Tools occasionally return the $10K cap. The operative cap for TY2025 and forward is $40K, subject to income phase-out.
• §199A sunset framing. Tools may frame §199A as a "sunsets Dec 31, 2025" risk in planning context. It does not — OBBBA made it permanent.

Blue J, Hive Tax, and CPA Pilot have each announced OBBBA training updates, generally — verify current coverage with the specific vendor before relying on OBBBA-affected outputs. Bloomberg Tax AI Answers and CCH iQ have published explicit OBBBA update notes; check vendor release logs for the specific dataset cutoff date.

Per Circular 230 §10.22, the practitioner remains responsible for accuracy regardless of AI tool output. The operational posture on OBBBA-affected provisions: use AI tools as first-pass research, then verify the operative figures against Pub. L. 119-21 or the IRC sections as amended. The govinfo.gov text at Pub. L. 119-21 is the primary source.