Last updated on July 24th, 2025
On July 4, the president signed into law the One Big Beautiful Bill Act (OBBBA), implementing many significant tax and spending policy changes. The law’s provisions are wide sweeping and will have impacts across a range of industries. This article highlights some of the key provisions of the new legislation impacting veterinarians.
Permanent Extension of TCJA Tax Rates
The OBBBA makes permanent the tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA) of 2017.
Increased SALT Cap
The OBBBA temporarily increases the federal deduction limit for state and local taxes (SALT cap) from $10,000 to $40,000. The limit will be adjusted each year for inflation until 2029. In 2030, the SALT cap will revert to $10,000. The deduction phases out for taxpayers with modified gross income (MAGI) greater than $500,000 in 2025, with the MAGI threshold adjusted for inflation until 2029. For high-income earners before 2030, the SALT deduction is reduced by 30% of their MAGI over the threshold amount, but the deduction will not be reduced below $10,000. The OBBBA places no limitations on Pass-Through Entity Taxes (PTET), which are workarounds for SALT.
Increased Section 179 Deduction
The Section 179 deduction allows businesses to deduct the full purchase price of qualifying property immediately, rather than spreading the deduction out over several years. The OBBBA increases the Section 179 expensing limit to $2.5 million. The limit is reduced by the amount by which the cost of qualifying property exceeds $4 million (new phasedown threshold).
No Tax on Overtime
The OBBBA creates a temporary deduction of up to $12,500 ($25,000 for joint returns) for individuals who receive qualified overtime compensation (as defined by the Fair Labor Standards Act). The deduction applies only to overtime compensation. The deduction begins to phase out when the taxpayer’s modified adjusted gross income (MAGI) exceeds $150,000 ($300,000 for joint filers). This deduction is available for tax years 2025 through 2028.
Estate & Gift Tax Exemption Amounts
The OBBBA permanently increases the federal estate tax and lifetime gift exemption amount to $15 million for single filers ($30 million for married couples filing jointly), beginning in 2026. This amount will be indexed for inflation annually.
Alternative Minimum Tax Exemption (AMT)
The OBBBA permanently extends the increased individual AMT amounts established by the TCJA, which will be indexed annually for inflation. The income thresholds for which the exemption begins to phase out have reverted to their 2018 levels of $500,000 for single filers ($1 million for married couples filing jointly), also adjusted annually for inflation. The phaseout rate has been increased to 50% (from 25%) of the amount by which a taxpayer’s alternative minimum taxable income (AMTI) exceeds the threshold amount.
Trump Accounts
The OBBBA establishes a “Trump account,” a new tax-deferred investment account for children who are U.S. citizens under the age of 18. Contributions to these accounts are capped at $5,000 a year (adjusted for inflation after 2027) and can be made by parents, relatives, employers, and other taxable entities, as well as non-profit and government entities. Accounts opened for children born between January 1, 2025, and December 31, 2028 will include a one-time $1,000 government contribution.
Charitable Contributions
For taxpayers who do not itemize, the OBBBA creates a charitable contribution deduction of up to $1,000 for single filers for certain charitable contributions ($2,000 for married couples filing jointly). For taxpayers who choose to itemize, the OBBBA establishes a 0.5% floor on the charitable contribution deduction. For corporations, the bill establishes a 1% floor for charitable deduction contributions. Deductions for corporate charitable contributions cannot exceed 10% of the corporation’s taxable income.
Increased 1099 Reporting Threshold
The OBBBA increases the information-reporting threshold from $600 to $2,000, indexed annually for inflation.
Additional Guidance
The above provisions represent just some of the recent tax and policy changes that may impact you and your practice. To learn about additional relevant provisions—and for insights and guidance on how these changes could affect you—please don’t hesitate to reach out to our veterinary accounting professionals at RBT CPAs. Our team is here to support all of your tax, audit, accounting, and advisory needs. Give us a call today to find out how we can be Remarkably Better Together.