OBBBA Effective Dates: What Starts Now, What Ends When

Aug 22

Clients ask two questions about the new law. When do the changes start, and when do they end. This guide answers both and groups provisions by start and end date so you can act on them before deadlines pass.

Retroactive or Pre-2025 Items

R&D amortization relief for small businesses. A retroactive election is available for tax years 2022 through 2024 for small businesses as defined under Section 448(c). The election must be made within one year from July 4, 2025 and amended returns are required for affected years.

ERC limitations and longer assessment window. Refunds for the last two quarters of 2021 are disallowed unless claims were filed by January 31, 2024. ERC-related assessments and related income tax adjustments carry a six-year statute, generally running from when the claim was filed, through as late as January 31, 2030.

Effective July 4, 2025

529 plan expansion. Distributions can include certain postsecondary credentials. The K-12 limit increases to 20,000 dollars. Effective on enactment July 4, 2025.

Effective for Tax Year 2025

Made permanent beginning with 2025 filings.
• Lower individual rate schedule consistent with TCJA levels
• Higher AMT exemption and phase-out thresholds
• New overall limitation on itemized deductions
• Termination of 2 percent miscellaneous itemized deductions except educator expenses
• 100 percent bonus depreciation for qualifying property acquired after January 19, 2025
• Section 179 expensing at higher amounts
• Full expensing of domestic R&E through new Section 174A
• Modified business interest limitation using EBITDA add back
• Increased standard deductions
• Section 199A deduction retained with updated phase-ins
• Corporate charitable deduction floor of 1 percent and individual charitable deduction floor of 0.5 percent
• Other dependent credit of 500 dollars
• 1099 reporting threshold increased to 2,000 dollars with indexing beginning in 2027
• Expanded casualty loss rules, mortgage interest limited to 750,000 dollars of acquisition debt with no home equity interest, and expanded community development credits

Temporary deductions available 2025 through 2028.
• Up to 25,000 dollars deduction for cash tips, subject to phase outs
• Up to 12,500 dollars deduction for overtime pay, subject to phase outs
• Up to 10,000 dollars deduction for interest on loans for new vehicles with final assembly in the United States, subject to phase outs
• 6,000 dollars deduction for seniors age 65 and older, subject to phase outs
These are available for 2025 through 2028 and then end.

IRS

SALT. A 40,000 dollar deduction cap applies and is indexed for inflation after 2025. A phase-out applies but not below 10,000 dollars. The cap returns to 10,000 dollars in 2030 and later.

1099-K threshold. The prior 20,000 dollars and 200-transaction threshold is restored beginning in 2025.

Unamortized pre-2025 domestic R&E. Deduct in 2025 or ratably over the two tax years beginning with 2025.

Energy and vehicle credit sunset dates.
• Energy efficient home improvement credit and residential clean energy credit end for expenditures made after December 31, 2025
• Commercial clean vehicle, new clean vehicle, and previously owned clean vehicle credits end for vehicles acquired after September 30, 2025
IRS

Effective in 2026

Trump Accounts. The government funded pilot applies to children born after December 31, 2024 and before January 1, 2029. Contributions are not accepted before July 4, 2026.

Energy items ending by June 30, 2026. Alternative fuel vehicle refueling property credit, new energy efficient home credit, and the Section 179D energy efficient commercial building deduction end for expenditures made after June 30, 2026.

Effective in 2027 and Beyond

New Opportunity Zone designations. Rolling ten year OZ designations begin January 1, 2027 with some reporting changes taking effect after July 4, 2025.

Clean electricity credit sunsets.
• Wind and solar facility credits end for expenditures made after December 31, 2027
• All other clean electricity facility credits end for expenditures made after December 31, 2032

Practical deadline calendar

• September 30, 2025. Last acquisition date for vehicles eligible under the clean vehicle credit rules as amended.
• December 31, 2025. Last day for many residential energy expenditures to qualify.
• June 30, 2026. Last day for certain energy efficient and refueling property expenditures.
• 2025 through 2028. Window for the four temporary individual deductions.