Isn't That Rich Podcast

At Farmers State Bank, we’re committed to helping our customers stay informed and confident—especially when it comes to major financial changes on the horizon. Recently, we partnered with Kemper CPA Group to host a detailed conversation about one of the most talked-about proposals in the financial world: the One Big Beautiful Bill Act.

This legislation is broad, complicated, and packed with provisions that affect nearly every taxpayer. Our goal with this blog post is simple: break down the biggest components in a way that feels manageable, clear, and practical for business owners and individuals alike.

We were grateful to have Robert (Robbie) Baird, CPA, walk us through the bill’s major highlights. Robbie serves on Kemper’s tax committee and specializes in helping business owners navigate tax changes and long-term planning strategies. His ability to take dense, technical information and translate it into everyday language made this conversation especially valuable.

Below is a guided, reader-friendly summary of the key points Robbie covered.

Why This Bill Matters

The One Big Beautiful Bill Act is more than 1,100 pages long and—if enacted—would impact nearly every individual and business with taxable income. Some provisions would be brand new, while others would extend or permanently adopt changes originally implemented under the 2017 Tax Cuts and Jobs Act.

Robbie summed it up well:
The biggest outcome of this bill is clarity.
Permanent rules give people the ability to plan with confidence—and that alone is significant.

Key Changes for Business Owners

Expanded Tip Tax Credit

Historically, the tip credit was limited to restaurants. The new bill dramatically broadens eligibility to include industries like beauty services, entertainers, home maintenance workers, casino dealers, and more. Employers—even self-employed individuals—may qualify for a credit against the employer portion of FICA taxes.

100% Bonus Depreciation

One of the biggest anticipated changes:
Bonus depreciation returns permanently to 100% starting January 20, 2025.

This allows businesses to fully expense qualifying property and equipment in the year it's acquired and placed into service. Effective dates matter here, so be mindful when making capital purchases.

Section 168N for Specific Industries

Manufacturing, refining, production, and extraction businesses receive additional accelerated depreciation options on certain property—potentially including assets previously classified as 39-year property.

Section 179 Expensing Expansion

The new bill increases Section 179 limits to $2.5 million, with phase-outs beginning at $4 million of asset purchases. This gives business owners more flexibility to manage taxable income strategically.

Higher 1099 Threshold

Beginning in 2026, the 1099-NEC and 1099-MISC filing threshold increases from $600 to $2,000.

For 2025, the old $600 rule still applies.

Business Interest Expense Relief

The bill restores the more generous “EBITDA” standard, allowing many businesses to deduct more interest expense than they could under current rules.

R&D Expense Improvements

Domestic research and development expenses once again become immediately deductible rather than capitalized and amortized. This is a major cash-flow relief for industries like tech, manufacturing, and pharmaceuticals.

Charitable Contribution Rules for C-Corps

C-corporations will see a newly introduced floor for charitable deductions (0.5% of taxable income), which adjusts how much they can deduct.

Changes to Energy Credits

Some previously available clean-energy incentives—like the electric vehicle tax credit—are eliminated going forward. Others, such as charging-station installation credits, remain available until mid-2026.

QBI Deduction Adjustments

While the Qualified Business Income deduction remains at 20%, the phase-in thresholds increase and are now indexed to inflation. This is a favorable change for many taxpayers.

Key Changes for Individuals

New Deductions for Overtime

While the phrase “no tax on overtime” was widely circulated, the bill actually creates an above-the-line deduction of up to $12,500 for qualified overtime pay. Only the “overtime premium” portion qualifies.

Employers are encouraged—but not required—to track and report this separately for 2025.

New Deduction for Tips

Tips received in qualifying occupations may now be deducted, up to $25,000. This applies to a wide range of industries beyond restaurants.

Deduction for Car Loan Interest

For the first time, individuals may deduct up to $10,000 of interest on loans for new passenger vehicles purchased between 2025 and 2028.
The vehicle must be:

• New

• Assembled in the U.S.

• Under 14,000 pounds

• For personal (not business) use

Higher SALT Deduction Limits

The state and local tax (SALT) deduction cap increases dramatically:

• $40,000 for married filing jointly

• $40,000 for single

• $20,000 for married filing separately

These higher caps apply to 2025–2029 before reverting to current levels.

Charitable Giving Improvements

Two notable changes:

• A new deduction for taxpayers who don’t itemize: up to $1,000 ($2,000 married filing joint).

• A new 0.5% charitable floor for those who do itemize.

A new tax credit for contributions to Scholarship Granting Organizations begins in 2027, though further IRS guidance is still needed.

Standard Deduction and Tax Rates Made Permanent

The bill locks in the current tax bracket system and permanently increases the standard deduction.

Enhanced Deduction for Seniors

Individuals 65 and older receive a temporary $6,000 above-the-line deduction for the 2026–2028 tax years.

Higher Estate and Gift Tax Exemptions

Another major highlight:
The lifetime estate and gift exemption increases to $15 million per person, indexed for inflation, starting in 2026.

This brings long-awaited clarity for families doing estate planning.

Introduction of “Trump Accounts” for Children

A brand-new concept:
Tax-advantaged custodial “Trump Accounts” for children under 18.
Key features include:

• Up to $5,000 annual contributions

• Additional employer contributions up to $2,500

• Tax-deferred growth

• No limits on how funds may be used after age 18

• Does not require earned income like a Roth IRA

Much more guidance is expected on these accounts before implementation.

Termination of Residential Clean Energy Credits

Credits for home energy improvements—windows, doors, solar, insulation, etc.—are eliminated after 2024.

What’s Not Changing

Some notable tax rules remain exactly as they are today:

• Social Security benefits remain taxable

• Corporate tax rate stays at 21%

• HSA contributions remain unavailable after Medicare enrollment

• Pass-Through Entity (PTE) tax election remains available

• QBI deduction stays at 20%

Planning Ahead: What Should You Do Now?

Robbie encouraged individuals and business owners to begin planning early:

For Business Owners

• Talk with your CPA about capital purchases and depreciation strategies

• Confirm whether you qualify for the expanded tip tax credit

• Review payroll reporting ahead of the new overtime and tip rules

• Consider amending past returns for R&D deductions

• Review energy-related projects before certain credits expire

For Individuals

• Keep documentation of overtime and tips beginning in 2025

• Plan ahead if purchasing a vehicle

• Revisit your estate plan based on the new $15 million exemption

• Prepare for the higher standard deduction

• Check whether higher SALT caps will benefit you

• Ensure your charitable contributions are structured to maximize new deductions or credits

Final Thoughts

While the One Big Beautiful Bill Act is still a proposal, understanding its potential impact now can help you prepare for the year ahead. Clear rules and permanent provisions—particularly around depreciation, gifting, SALT deductions, and standard deductions—give taxpayers more stability as they plan long-term.

We are deeply grateful to Robert Baird and Kemper CPA Group for walking us through these complex changes with clarity and care. Their expertise is invaluable to our customers, and we’re proud to partner with them.

As always, Farmers State Bank is here to help you navigate whatever changes come next.

If you’d like to watch the full recorded session, talk through how these provisions may affect your business, or schedule a planning discussion with one of our partners, feel free to reach out anytime.