"One Big Beautiful Bill"—Actions for Individuals, Business Owners, and Investors from Tax Reform to Investment Strategy
Signed on July 4, 2025, the "One Big Beautiful Bill" (hereinafter OBBB) incorporates a wide range of reforms including tax systems, expenditures, and debt ceilings, holding the potential for broad impacts ranging from individual investors to business owners and the macroeconomy. In this article, based on the OBBB explanatory webinar by J.P. Morgan Wealth Management, we organize the main contents of the bill and explain it in an easy-to-understand manner from three perspectives: "actions to take now," "investment themes to watch," and "long-term risks and opportunities." We propose how to utilize this for asset management and business strategy, incorporating specific examples and citations.
1. Overview of OBBB
1-1. Extension of Existing Preferential Measures
Permanent extension of the 37% top income tax rate, and the Alternative Minimum Tax (AMT)
Lifetime exemption for gift and estate taxes increased from the current $13.99 million to $15 million (effective January 2026, with annual inflation adjustments thereafter)
Mortgage interest deduction cap maintained at $75,000
Permanent 20% special deduction for pass-through business income
Restoration of 100% bonus depreciation and R&D amortization
State and Local Tax (SALT) deduction cap increased to $40,000 for 2025–2029 (phased out for ultra-high-income earners)
1-2. Reduced Expenditures and Tax Incentives
Repeal of EV tax credits and phase-out of renewable energy-related tax credits created by the Inflation Reduction Act
Medicaid support reduced by approximately $930 billion by 2034, with the addition of work requirements
SNAP (food assistance) budget reduction
Private foundation tax rate maintained at the current 1.9% due to the abandonment of the proposed increase
1-3. Newly Established and Expanded Preferential Measures
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Limited to 2025–2028
Tax exemption for tips and overtime pay (up to $25,000 for tips and $12,500 for overtime, with a phase-out for individual annual incomes over $1.5 million)
Auto loan interest deduction (up to $10,000 for new car purchases, conditional on final assembly in the U.S., with income limits)
Revival of Opportunity Zone investments starting in 2027Opportunity Zone investments
Qualified Small Business Stock (QSBS) special provisions and revisions to itemized deductions
2. Urgent actions for individual investors to take
2-1. Donation strategy during 2025
OBBB sets a "floor" (limit) for charitable contribution deductions at 0.5% of income starting January 2026. If you are considering large donations, you can maximize the tax reduction effect by executing them in advance during 2025.
2-2. Reviewing education and retirement funding plans
Stricter limits on student loan borrowing capacity mean that if you are aiming for law school or medical school, you need to redesign your parents' financial support plan.
Risk of termination of Medicaid support for elderly family members should also be kept in mind, and you should simulate long-term care costs and inheritance measures.
3. Restructuring for business owners and small to medium-sized enterprises
3-1. Optimization of business structure
This is a prime opportunity to review your corporate structure (e.g., LLC to C-Corp) and reorganize into a system that can leverage QSBS benefits and 100% bonus depreciation. Early consideration and execution are recommended.
3-2. Cash flow and capital strategy
Maximize capital investment between 2025 and 2027 to enjoy depreciation benefits
Utilize the increased gift tax exemption limit to flexibly design incentives, such as gifting stock options to employees
4. Impact on the macroeconomy
4-1. Timing and scale of fiscal stimulus
OBBB net fiscal spending and tax cuts are concentrated mainly in 2026–2028. As a result, GDP growth is expected to be slightly boosted in 2026. On the other hand, increased import costs due to tariff hikes are an offsetting factor.
4-2. Tariff shock and shock absorbers
Entering 2025, the effective tariff rate is rising from approximately 3% to 8–9%. Since U.S. consumers and companies act as buffers through supply-demand dynamics and price pass-through power, it is considered highly likely that a recession will be avoided, even though a growth slowdown is expected for the full year of 2025.
5. Notable Investment Themes
5-1. Expansion of the AI Ecosystem
Surging demand for data centers, semiconductors, and power infrastructure and the resulting growth
Capital expenditure incentives such as 100% bonus depreciation are providing a tailwind for increased CapEx by hyperscalers and startups.
5-2. Revaluation of the Financial Sector
Deregulation leading to increased excess capital for banks → potential for earnings boosts through M&A, shareholder returns, and increased lending.
6. Building a Portfolio Shock Absorber
6-1. Core Fixed Income
To prepare for a potential economic slowdown, maintain a certain ratio of high-rated bonds and short-term bonds to mitigate market volatility.
6-2. Alternative Assets such as Gold
To address the risk of inflation spikes, incorporating gold or inflation-linked bonds into your portfolio is an effective strategy.
7. Long-term Perspective: Risks and Opportunities
7-1. Risk of Social Security Cuts
Budget cuts to SNAP and Medicaid could damage low-income households and potentially suppress a recovery in consumer spending.
7-2. Impact of Immigration Policy on Economic Growth
Stricter immigration regulations, which are key to labor force growth and innovation, raise concerns about downward pressure on long-term GDP growth.
7-3. Wealth Transfer and Inheritance Planning
Increased estate tax exemptions benefit individual investors; however, in an environment of rising asset prices, establishing early transfer and gifting schemes is crucial.
8. Summary and Action Recommendations
OBBB is a massive bill that integrates "immediate tax code permanence," "medium-term fiscal stimulus," and "long-term risk management." Individual investors should consider accelerating charitable donations and managing deduction floors; business owners should look into entity restructuring and utilizing capital investment incentives; and investors should focus on the AI/financial sectors while ensuring they have shock absorbers in place. Furthermore, with an eye on social risks such as Medicaid and immigration restrictions, we strongly recommend rebuilding your comprehensive asset plan in coordination with your tax advisor or wealth management experts at firms like J.P. Morgan.
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