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Kozi Checks & Balances TaxTactics News

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August 14.2025

2 Minutes Read

What the One Big Beautiful Bill Means for Your Taxes in 2026

US tax changes map showing tax cuts and increases across states.

Understanding the One Big Beautiful Bill: A Tax Revolution

The One Big Beautiful Bill Act (OBBBA), which became law in July 2025, marks a watershed moment in federal tax policy. This legislation is significant as it makes the individual tax provisions implemented under the 2017 Tax Cuts and Jobs Act (TCJA) permanent. Notably, this change prevents a tax hike from impacting 62% of tax filers from 2026 onwards, a relief for many taxpayers.

Key Benefits of the OBBBA

The OBBBA introduces a range of tax cuts that extend beyond the TCJA, incorporating new deductions for overtime and tipped income, alongside an expanded child tax credit. Furthermore, it ensures permanence for 100% bonus depreciation, which allows businesses to recoup expenses more quickly for investments made in their operations. These provisions not only stimulate economic activity but also aid in streamlining tax obligations for many individuals and enterprises.

Geographic Variability of Tax Benefits

Tax Foundation estimates reveal that the benefits of the OBBBA vary widely across the country. For instance, taxpayers in Wyoming will experience an average reduction of $5,375 in 2026, whereas those in West Virginia might only see $2,503. Additionally, mountain resort towns like Teton County, Wyoming, stand out with striking average tax cuts, potentially benefitting business owners and higher earners. This geographical disparity highlights the varying economic landscapes and needs of different communities.

The Changing Landscape of Tax Contributions

According to forecasts, while the average tax cut per individual is $3,752 in 2026, it is projected to fall to $2,505 by 2030 as some deductions expire but will rise again by 2035 owing to inflation adjustments. This fluctuation emphasizes the importance for taxpayers to stay informed about upcoming changes in tax law, which could influence their financial planning strategies.

What This Means for American Taxpayers

The OBBBA represents a significant shift in the tax landscape, providing lasting benefits for American tax filers while potentially invigorating economic growth. As taxpayers reel from previous tax cuts and prepare for new deductions, it's essential to remain engaged with the evolving narrative of federal tax legislation.

Tax Deduction Deep-Dives

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08.06.2025

Exploring the Connection Between Cigarette Taxes and Smuggling Rates

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07.31.2025

Understanding State Tax Implications of the One Big Beautiful Bill Act

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Understanding the Future of BEAT Tax and Its Global Impact

Update The Evolution and Future of the BEAT Tax As corporations navigate the complex US tax landscape, the base erosion and anti-abuse tax (BEAT) emerges as a focal point in discussions surrounding international corporate taxation. First introduced under the Tax Cuts and Jobs Act of 2017, BEAT serves as a mechanism specifically targeting multinational entities that deduct significant expenses linked to profit shifting—a practice that allows companies to sidestep US corporate tax obligations. However, recent legislative developments under the One Big Beautiful Bill Act (OBBBA) have driven a renewed dialogue about the alignment and effectiveness of BEAT in curbing tax avoidance. Understanding BEAT: The Basics BEAT applies to large corporations with average annual receipts exceeding $500 million, particularly those whose base erosion payments reach 3% of their total deductions. This tax was initially set at a rate of 10%, slated to increase to 12.5% in 2026. However, the OBBBA has modified this trajectory by establishing a slightly higher BEAT rate of 10.5%, which, while seeming like an increase, does little to address the systemic issues it aims to solve. This creates a challenging environment for both domestic and foreign companies planning investments in the U.S. Challenges of Implementation and Hidden Flaws The intent behind BEAT is to identify and tax payments likely related to profit shifting, such as royalties and interest. Yet, the current framework neglects crucial considerations about the tax jurisdictions receiving these payments. By not accurately assessing whether these transactions are made to high-tax areas, BEAT risks punishing legitimate business operations and discouraging foreign direct investment more than it deters tax evasion. Future Implications of BEAT under OBBBA Despite initial proposals to revamp BEAT more thoroughly, the OBBBA leaves much unaltered, revealing a legislative struggle between protecting domestic tax revenue and fostering a competitive investment climate. The discarding of substantial changes, such as the punitive enforcement through Section 899, suggests an ongoing debate about how best to balance these two opposing aims. Why Understanding BEAT Matters Now The complexities surrounding BEAT will have lasting implications not only for multinational corporations but also for global economic relations. As investors scrutinize U.S. tax policy, clear communication and responsive modifications to legislation will be crucial in maintaining the nation’s attractiveness as a business destination. Engaging in informed discussions about BEAT and its role in international taxation is essential for business owners navigating this landscape.

What the One Big Beautiful Bill Means for Your Taxes in 2026

Understanding the One Big Beautiful Bill: A Tax Revolution

Key Benefits of the OBBBA

Geographic Variability of Tax Benefits

The Changing Landscape of Tax Contributions

What This Means for American Taxpayers

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