H.R. 1, commonly known as OBBBA, ushered in significant changes to the U.S. tax code, and additionally extended and modified provisions from the 2017 Tax Cuts and Jobs Act (TCJA). Be prepared — here’s what H.R. 1 means for you and your clients.
Wins, such as raising the cap on state and local tax (SALT) deductions to retroactively reinstating old reporting thresholds for third-party payment transactions, are the result of the years’ long effort of AICPA to monitor and advocate on key issues that affect the profession.
Legislative shifts present opportunities to guide clients and businesses with confidence, while also creating opportunities to share your insights and experiences to shape future advocacy initiatives.
“Whenever a large bill is signed into law, the implementation aspect of it is something that everybody gets worried and nervous about; and the start of the [tax] filing season goes hand in hand with that,” said Melanie Lauridsen, vice president — Tax Policy & Advocacy at AICPA.
A proactive approach that includes education and keeping abreast of changes is important during this implementation stage.
A snapshot of provisions within H.R. 1
SALT deductions increased up to $500,000 and will be indexed as well, starting with $40,400 in 2026 and returning to $10,000 in 2030.
H.R. 1 raised the reporting thresholds for multiple forms, most notably 1099-K. Key changes to this threshold include reverting back to the original level of $20,000 in gross payments and more than 200 transactions. The change is retroactive to 2022.
Qualifying business property is once again eligible for 100% bonus depreciation under H.R. 1, whereas it must be both acquired and placed into service after Jan. 19, 2025. While TCJA phased down bonus deprecation over several years, the permanent provision eases uncertainty around long-term tax planning.
“Small businesses truly are the backbone of the American economy, and these small business provisions are a win because it is helping to stimulate the economy,” said Lauridsen. “A lot of our members are small business owners, and it’s a personal win for them, too.”
Several recent bills, including H.R. 1, aim to improve and streamline the disaster recovery process. State-level declarations of a disaster now qualify for individuals or businesses claiming casualty losses.
“All of these provisions have been bipartisan in the making, and that helps,” Lauridsen added. “[With] the amount of work and effort that we had done over the years … we are very pleased that it all came together.”
Why staying informed is as critical as knowing the law
Reading the fine print of the legislation is Lauridsen’s recommended strategy for this period of flux.
Lauridsen cited the example of the research and experimental (R&E) rule, IRS Section 174 amortization. Although the new section came with options for implementation, questions arose over overall application.
“Section 174A regulations were announced and those are favorable for retroactivity for the small businesses,” said Lauridsen. “The legislative aspect is just one aspect of the win but there are also implementation and regulatory aspects that we need to work through, like we’ve already seen with Section 174A.”
While it’s essential to familiarize yourself with H.R. 1 and other legislation, staying informed is an ongoing process, as updates and revisions continue to shape practice application. New layers of complexity have been added to an already multifaceted tax landscape, and you can remain committed to your own professional development.
As you navigate the constraints of the new law and uncover its limitations, we’re here to help. For updates and legislative news, consider becoming a member of the AICPA Tax Section and exploring the efforts of the AICPA Advocacy team.
“There’s a sense we need more guidance because people ultimately want to implement it correctly and appropriately for their members, clients, and taxpayers. [AICPA] can provide that guidance and move forward with it,” said Lauridsen.
Your interactions with clients and businesses will continue to reveal areas that need clarity. The feedback you share with us plays a vital role in empowering the AICPA Advocacy team to pursue meaningful changes and advocate for improvements grounded in real-world experience. Feel free to contact us at advocacyteam@aicpa-cima.com.