REG — Taxation & Regulation (Core)·Obbba Permanent Provisions

OBBBA — Permanent TCJA Provisions for REG and TCP

Exam: CPA — Certified Public Accountant Chapter: Chapter 10 — REG Tax Procedure, Ethics, and Business Law Law: One Big Beautiful Bill Act (OBBBA), signed July 4, 2025 Testable on REG and TCP: Starting July 1, 2026 exam window Last Updated: 2026-06-26

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Key Takeaways

  • The OBBBA made TCJA individual and estate tax provisions permanent — no 2026 sunset.
  • SALT cap raised: $40,000 MFJ (was $10,000 under TCJA for all filers).
  • Estate and gift tax exemption: $15,000,000 per person (2025), indexed to inflation.
  • QBI deduction (199A) is now permanent — will not expire.
  • Standard deduction amounts raised above original TCJA levels: $15,750 single / $31,500 MFJ.
  • OBBBA provisions are testable on REG and TCP starting July 1, 2026.

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    Background: Why This Matters

    The Tax Cuts and Jobs Act (TCJA, 2017) reduced individual tax rates, nearly doubled the standard deduction, created the QBI deduction, and elevated estate exemptions — but set most provisions to expire (sunset) on December 31, 2025.

    The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made these provisions permanent. There is no longer a 2026 sunset risk. Any CPA exam content describing these provisions as "temporary" or "expiring" is outdated.

    Exam Tip: REG and TCP questions that reference TCJA provisions should now be answered as if those provisions are permanent law, not temporary. Starting July 1, 2026, the exam will test OBBBA law.

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    Individual Tax Rates — Permanently Extended

    The seven-bracket structure from TCJA is now permanent:

    | Rate | Single (2025) | MFJ (2025) | |---|---|---| | 10% | Up to $11,925 | Up to $23,850 | | 12% | $11,926–$48,475 | $23,851–$96,950 | | 22% | $48,476–$103,350 | $96,951–$206,700 | | 24% | $103,351–$197,300 | $206,701–$394,600 | | 32% | $197,301–$250,525 | $394,601–$501,050 | | 35% | $250,526–$626,350 | $501,051–$751,600 | | 37% | Over $626,350 | Over $751,600 |

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    Standard Deduction — Permanently Elevated

    | Filing Status | 2025 Standard Deduction | |---|---| | Single | $15,750 | | Married Filing Jointly | $31,500 | | Head of Household | $23,625 | | Married Filing Separately | $15,750 |

    Senior bonus deduction (OBBBA, 2025–2028): Additional $6,000 per qualifying individual age 65+, phasing out above $75,000 single / $150,000 MFJ.

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    SALT Deduction Cap — Increased

    | Item | TCJA | OBBBA | |---|---|---| | SALT cap (MFJ) | $10,000 | $40,000 | | SALT cap (Single) | $10,000 | Confirm current figure per IRS guidance | | Effective date | 2018 | 2025 (testable July 1, 2026) |

    Exam Tip: The SALT cap increase is a significant planning change for high-income clients in high-tax states (CA, NY, NJ). TCP questions may ask for the optimal strategy given the higher SALT allowance.

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    Qualified Business Income Deduction (Section 199A) — Permanent

  • Pass-through businesses (sole proprietors, S corps, partnerships, qualifying REITs) may deduct up to 20% of QBI
  • Limitation rules still apply for high earners and specified service trades or businesses (SSTBs)
  • W-2 wage and UBIA limitations phase in above threshold income:
    • - Single: $197,300 (2025) - MFJ: $394,600 (2025)
  • Was scheduled to expire December 31, 2025; OBBBA made it permanent

    • Exam Tip: The permanency doesn't change the mechanics — you still need to know the W-2 wage test, UBIA, and SSTB rules. It just removes the expiration date.

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    Estate and Gift Tax Exemption — Raised and Indexed

    | Item | TCJA (2025 estimate) | OBBBA (2025) | |---|---|---| | Unified exemption per person | ~$13,990,000 | $15,000,000 | | Inflation indexing | Yes | Yes (continues) | | Top estate tax rate | 40% | 40% (unchanged) | | Annual gift exclusion | $19,000 (2025) | $19,000 (unchanged) | | Portability | Available | Available (unchanged) |

    Planning context: A married couple can now shelter $30,000,000 from estate tax using portability ($15M each). For 2025, gifts in excess of $15M per person are subject to gift tax.

    Exam Tip: The estate exemption is heavily tested on TCP (and lightly on REG Chapter 33). Know the $15M figure for 2025. Know that portability allows the surviving spouse to use the deceased spouse's unused exemption (DSUE) via Form 706 election.

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    Personal Exemption — Permanently Eliminated

  • Personal exemption = $0 (OBBBA permanently eliminated it)
  • Pre-TCJA amount was $4,050 per exemption
  • Had the TCJA sunsetted, the personal exemption might have returned — OBBBA closes that possibility permanently

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    Child Tax Credit — Permanently Extended

  • $2,000 per qualifying child under age 17
  • Refundable portion (Additional CTC): up to $1,700 per child (2025)
  • Phase-out begins: $400,000 MFJ / $200,000 all other filers

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    AMT Exemption — Permanently Elevated

  • AMT exemption: $137,000 single / $220,700 MFJ (2025, inflation-indexed)
  • AMT phase-out threshold: $1,000,000 MFJ (2025)
  • TCJA dramatically reduced AMT exposure by raising the exemption and phase-out threshold; OBBBA makes this permanent

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What OBBBA Did Not Change

| Item | Status | |---|---| | Capital gains rates (0/15/20%) | Unchanged | | Net Investment Income Tax (3.8%) | Unchanged | | Additional Medicare Tax (0.9%) | Unchanged | | Corporate tax rate (21%) | Unchanged | | Bonus depreciation phase-down schedule | Unchanged by OBBBA (100% bonus through 2022; phasing down) |

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Exam Tip Summary

| OBBBA Provision | REG Testable? | TCP Testable? | Starting When | |---|---|---|---| | TCJA rates permanent | Yes | Yes | July 1, 2026 | | Standard deduction | Yes | Yes | July 1, 2026 | | SALT cap $40K MFJ | Yes | Yes | July 1, 2026 | | Estate exemption $15M | Yes (Ch33) | Yes | July 1, 2026 | | QBI permanent | Yes | Yes | July 1, 2026 | | Senior bonus deduction | Yes | Yes | July 1, 2026 |

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Tags: #CPA #REG #TCP #chapter10 #OBBBA #TCJA #StandardDeduction #SALT #EstateTax #QBI #PermanentProvisions #2026Exam