President Trump’s sweeping domestic policy bill has been signed into law, but its hundreds of provisions take effect on many different dates stretching over several years. The One Big Beautiful Bill Act, signed into law July 4, 2025, ushers in a maze of implementation dates for tax reductions, changes in benefit programs, and new deductions that will remake federal policy through 2028 and beyond.
Tax changes: Most take effect January 1, 2025
The most significant tax changes are effective retroactively in tax year 2025 and thus they are for the 2026 taxes of the 2025 tax year. They include:
- No taxation of overtime pay and tips: Employees may exempt up to $25,000 of qualified tip income and up to $12,500 of overtime pay (joint return filers, $25,000) from taxation to the federal government. These exclusions apply for tax years 2025 to 2028 and are phased in for those with incomes over $150,000 ($300,000 for joint return filers).
- Increased SALT Deduction: The cap on state and local tax deduction, which is $10,000, rises to $40,000 for tax year 2025. The exemption gradually comes to an end for taxpayers with modified adjusted gross income above $500,000 and will rise 1% every year until 2029, then returns to $10,000 in 2030.
- Senior tax bonus: Those 65 and above get an extra $6,000 standard deduction for tax years 2025 through 2028, phasing out at $75,000 for individuals and $150,000 for couples.
The law permanently extends the expiring 2017 Tax Cuts and Jobs Act provisions as of the end of 2025, such as the existing tax brackets, doubled standard deduction, and broadened child tax credit. The child tax credit grows to $2,500 per child for the years 2025 through 2028, and then levels off at $2,000 permanently.
Business tax provisions: Effective January 19, 2025
The bonus depreciation for qualified business property is revived for property placed in service on or after January 19, 2025. This permits businesses to deduct equipment and other qualifying assets in full when they’re purchased instead of depreciating them over a period of years.
Qualified Production Property is treated differently with 100% expensing on equipment and factories, subject to property where construction starts after January 19, 2025, and before January 1, 2029.
Research and development expensing
The act reinstates full expensing of U.S. research and development spending from 2025 to 2029. Businesses have been obligated since 2022 to amortize the deductions over a five-year period but can now write off R&D expenses immediately under the new act.
Among the most important provisions transferring wealth, one becomes effective on January 1, 2026, when the gift and estate tax exemption rises to $15 million for individuals ($30 million for married couples) and is made permanent. It is a substantial increase over the present exemption of $13.99 million and saves the reduction that is due to occur under present law to around $7 million.
SNAP and Medicaid changes: Enacted later implementation timeline
Stronger work requirements for SNAP benefits become effective on enactment, broadening the definition of “Able Bodied Adults Without Dependents” to encompass persons up to age 64 and persons with children 14 and older. States are allowed, though, until December 1, 2028, to ask “good-faith” waivers to delay implementation in Alaska and Hawaii.
Administrative cost-sharing changes begin on October 1, 2026, when states must reimburse 75% of SNAP administrative costs compared to the current requirement of 50%.
Read more: Goodbye to health care for thousands: the impact of Trump’s one, big beautiful bill
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