The One Big Beautiful Bill Act: Bigger Debt Isn’t Beautiful

The One Big Beautiful Bill Act (OBBBA) was passed this summer, and its tax implications are broad and deep. This feature looks at the OBBBA from both a bird’s-eye economic view (debt and deficit), while also providing some new details to help prepare you for the questions coming your way in tax season.

There is so much data available about the 2025 tax legislation – also known as the One Big Beautiful Bill Act (OBBBA) – that you can get lost while attempting to understand what it all means, short term and long term. This feature will put the impact of the OBBBA into broad economic context, identify some important nuggets in the data, and hopefully prepare you for the onslaught of questions coming your way in tax season.

Setting the Stage

First, let’s look at the financial statements of the U.S. government as of fiscal year ending Sept. 30, 2024. As this feature was being written, there was a federal government shutdown, so getting the numbers for year-end Sept. 30, 2025, was not going to happen. A quick reminder: the auditors of the 2024 statements disclaimed an opinion due to material deficiencies in several agencies’ systems of internal controls. The fact that the U.S. government lacks accountability for a tremendous amount of resources is certainly a topic for further discussion at another time.

Here are the highlights of the U.S. Government Balance Sheet as of Sept. 30, 2024.¹

Table 1: US Government Balance Sheet

The deficit equity position of nearly $40 trillion should be startling. Our government is insolvent by a huge number. On Oct. 7, 2025, the United States had 342,623,198 people.² That means each person in the United States is under water by more than $116,000. That’s not the whole story, though. The present value of social programs – Social Security, Medicare, Medicaid, etc. – is not included as a liability on the balance sheet.

The present value of the excess of future expenditures over revenues for the social insurances is $78.3 trillion.³ Add that to our balance sheet deficit position and you have a liability of $120,157,106,911,096, or $334,938 per man, woman, and child. Let’s update that info with the best available data from the Treasury Department as of Oct. 8, 2025: the deficit for the year ended Sept. 30, 2025, is $1.97 trillion.⁴ Ignoring any change in the social insurance net present value liability, that brings the per person liability to more than $350,000. The total wealth in the hands of U.S. households was $162.65 trillion as of June 30, 2025.⁵ From one perspective, it could be argued that the federal government has spent 74% of all of the wealth of U.S. households.

Those numbers are exceedingly large – even if some argue the magnitude does not matter. If the debt or deficit as a percentage of another number, such as gross domestic product (GDP), is within a certain range, some suggest the ratio means we can sustain the debt structure. I’ll call this the debt-to-asset multiple. Regardless of what you name it, though, no business would be viable at this level of debt financing.

The publicly held debt and interest presented above should be updated as well. According to the Federal Reserve, the debt alone (no interest) as of June 30, 2025, was $36,211,469,000,000.⁶ Using an average interest rate of 4% on that debt,⁷ the interest cost is $1,448,458,760,000 per year. Just a 1% increase in interest rates on that amount of debt is a staggering $362.1 billion per year. Interest is already an enormous percentage of the annual U.S. budget that limits spending on everything else, and that level of deficit position and interest rate risk represents a strategic hazard that may limit the country’s ability to remain militarily competitive.

This is the ecosystem and context through which we should interpret any new federal tax or spending legislation.

The OBBBA

One of the duties of the Congressional Budget Office (CBO) is to estimate the effects of tax and spending legislation on the deficit. Note, Congress has used different baselines in their analyses. One reflects “Current Law,” which means the baseline is today’s tax law reflecting the expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA). The second baseline is today’s tax law without reflecting the expiring provisions of the TCJA. That report indicates the OBBBA will cause a revenue reduction of $4.49 trillion over the 10-year scoring period from 2025 through 2034, and the OBBBA will reduce spending during the same period by $1.1 trillion.⁸ The resulting difference between these two points (or deficit) is $3.39 trillion. When there is a deficit, the government needs to borrow more money. Let’s hope we can borrow that money at 4% or less because, as stated above, each percentage point adds $362.1 billion to the budget on top of the existing debt payments.

The Joint Committee on Taxation of the U.S. Congress (Joint Committee) is charged with scoring the revenue effect of legislation. The Joint Committee estimates the OBBBA will reduce revenue by $4.47 trillion, which reflects some differences in calculations or timing from the CBO’s work.⁹ The Joint Committee scores each provision of the OBBBA over the 10-year scoring window from 2025 through 2034. This feature uses the “Current Law” baseline report.

Here is the quick outline of Subtitle A of the bill:

• Chapter 1, Providing Permanent Tax Relief for Middle Class Families and Workers.
• Chapter 2, Delivering on Presidential Priorities to Provide New Middle Class Tax Relief.
• Chapter 3, Establishing Certainty and Competitiveness for American Job Creators.
• Chapter 4, Investing in American Families, Communities, and Small Businesses.
• Chapter 5, Ending Green New Deal Spending, Promoting America First Energy and Other Reforms.
• Chapter 6, Enhancing Deduction and Income Tax Credit Guardrails, and Other Reforms.

Subtitle B identifies changes with respect to Medicare, Medicaid, and health taxes. Subtitle C addresses an increase in the statutory debt ceiling by $5 trillion to $41.1 trillion.¹⁰

The charts below show the bigger pieces of the OBBBA. Positive amounts are increases in government tax revenues and negative amounts are decreases in government tax revenues.

Table 2: 

Chapter 2 of the bill (below) is interesting because the benefits are all front loaded into fiscal years 2025-2029, which incidentally correspond with the next two election cycles.

Table 3: 

Chapter 4 of the OBBBA provides many family and investment tax benefits. The larger ones are in the chart below.

Table 4: 

Chapter 5 revokes many clean energy provisions, resulting in $499.1 billion in tax revenue increases. Chapter 6 also delivers revenue increases on provisions such as excess business losses of noncorporate taxpayers, payments from partnerships to partners for property or services, and certain excess employee compensation, among other items. All told, they total tax revenue increases of $58.8 billion.

Subtitle B addresses health care provisions, representing a rollback of premium tax credits among other items. This will increase tax revenues by $174.1 billion.

All these provisions affect households in different ways. So, the Joint Committee analyzes the distribution of the effect of tax bills by income class. Its recent report projects the impact every other year for 2027, 2029, 2031, and 2033.¹¹ The chart below is a summary of that distribution.

Table 5: 

Get Ready

All of the provided economic data is wonderful for understanding the context of the bill, but what do the changes mean in tax and personal financial planning practice? Many of our clients are going to have lower taxes continued from the TCJA’s ordinary income tax brackets, enhancements to standard deductions (including the enhanced senior citizen deduction), above-the-line charitable deductions, enhanced child tax credit, no tax on tips, and no tax on overtime. Some of the effects will impact 2025; others will affect 2026 and beyond. That means a tax forecast will be needed by many more clients to make sure withholdings and estimated payments are appropriate. Hopefully, some short-term planning activities will have already been done by the time you read this article.

Tax practitioners may benefit from membership in AICPA’s Personal Financial Planning (PFP) Division and the Tax Division due to annual tax season resources and financial planning tools. One great tool is a Form 1040 checklist to identify planning and tax opportunities so you can be thorough in providing services to clients with all of the OBBBA changes. Those tools will be useful when clients have a lot of moving parts in their returns.

Payroll systems hopefully will all be updated to correctly report tips and overtime and withhold tax accordingly. Some operating procedures for splitting tips and tip jars will likely need to be revised by clients. Routines for identifying qualifying cars for the auto loan interest deduction hopefully will also be in place.

In addition to AICPA return review checklists, tax research services also have client-letter and checklist tools to help catch all the changes in your clients’ returns. Chartbuilder tools can help you create state and local charts to identify how your clients’ states are reacting to the OBBBA so you can advise multistate clients appropriately and modify the tax return preparation processes accordingly. Check out the tax research services’ roadmap tools to help explain the new provisions to clients by displaying a comparison of the old law versus the OBBBA.

Planning for research and experimentation (R&E) expensing is a welcome change for business clients. Making EBITDA a permanent part of the business interest deduction is also a big help. Corporate clients will need some help with business tax provisions such as enhanced capital asset expensing and R&E expensing, but corporations that calculate tax provisions will likely have to adjust their provisions for changes in the tax law, if they didn’t already modify their provision in the third quarter of 2025.

Some companies may need to modify their tax return provisions and determinations of substantial authority for tax return positions due to the Loper Bright case and the loss of the Chevron doctrine. Those changes may also affect reporting of uncertain tax return positions.

Moving to midterm and long-range planning, entrepreneurs will need some extra help checking out enhancements to Opportunity Zone and small-business stock provisions in addition to general business provisions.

For estate tax clients, the new law provides permanence to the estate and gift unified exclusion, raising the threshold to an indexed $15 million per person ($30 million for married couples).

International and multinational clients are already adjusting transfer pricing documents under Loper Bright and evaluating reshoring due to tariff impacts on their value chain. Those clients are likely busy with Pillar 2 taxes. The OBBBA includes a number of international provisions to consider. GILTI is out and tested income is in. Tested income, FDII rates, and foreign tax credit changes are all included in the OBBBA. There are a number of other highly technical international provisions that were changed in this year’s tax law.

Summing Up

The OBBBA passed with a lengthy list of tax law changes that significantly lower government receipts at a time when the U.S. government is sinking into greater debt. A creeping insolvency and higher leverage creates significantly more economic, business, and strategic risk.

Some tax provisions in the act were made permanent, reducing taxpayer uncertainty. Some tax provisions are temporary, resulting in enhanced tax benefits for targeted demographic groups in the near term. As with any tax law changes, there is more work and more risk for CPAs who provide tax services. Tools from the AICPA and tax services, however, can help firms be more efficient in managing changes in planning and return preparation, updating systems of quality control, and managing risks associated with those changes.

¹ Financial Statements of the United States Government for the Fiscal Years Ended September 30, 2024, and 2023, page 65.
² United States Census U.S. and World Population Clock (10:07 p.m., Oct. 7, 2025).
³ Financial Statements of the United States Government for the Fiscal Years Ended September 30, 2024, and 2023, page 69.
⁴ U.S. Treasury Department Fiscal Data (Oct. 7, 2025).
⁵ Federal Reserve Bank of St. Louis “FRED” site (Oct. 7, 2025).
⁶ Ibid.
7 Board of Governors of the Federal Reserve System Selected Interest Rates (Oct. 7, 2025).
⁸ Congressional Budget Office, H.R.1.
⁹ Joint Committee on Taxation JCX-35-24, July 1, 2025.
¹⁰ “Federal Debt and the Debt Limit in 2025,” Congressional Research Service.
¹¹ Joint Committee on Taxation JCX-37-25, July 29, 2025.

Edward R. Jenkins Jr., CPA, CGMA, is professor of practice in accounting for Pennsylvania State University in University Park, managing member of Jenkins & Co. LLC in Lemont, and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at erj2@psu.edu.