Tina Barrett, executive director of the Nebraska Farm Business Inc., recently gave a tutorial on the tax implications of the One Big Beautiful Bill Act, which was signed into law July 4.
Nebraska Farm Business, Inc. started in 1976 as part of Cooperative Extension at the University of Nebraska-Lincoln, and the webinar was hosted by the university. In addition to her duties at NFBI, Barrett teaches accounting at UNL
Glennis McClure, an Extension educator and Farm and Ranch Management Analyst for the Agricultural Economics department on campus and a farm wife herself, introduced Barrett. McClure said the OBBB is “packed with tax changes that will affect your bottom line.”
She’s right. There were far too many topics covered to list them all here. Some are specific to farming, while others affect everyone but are of special interest to farmers. The best thing to do is to consult a tax professional.
But before you do, viewing Barrett’s entire presentation yourself at https://events.unl.edu/UNL_FBLA/2025/08/14/191517/ can definitely inform you.
Below are some important highlights of Barrett’s presentation:
- The OBBB contains some of the biggest tax changes since the Tax Reform Act of 1986. Barrett began by warning that effective dates for when the OBBB changes kick in “are all over the map,” with some taking effect immediately and others having different effective dates. She also noted that even though some of the changes were called permanent, “‘permanent’ means until Congress changes the laws again.”
- The OBBB extended tax cuts originally included in the Tax Cuts and Jobs Act of 2017, from Trump’s first term. They were set to sunset unless the OBBB had been passed, and that pressure was a major driver of urgency. The standard deduction increased to $15,750 for single filers, and $31,500 for married joint filers, thus reducing the amount of record-keeping necessary for some expenses. This deduction income level is indexed to inflation.
- An addition to Section 1062 of the tax code gave tax relief to farmers. This provision allows qualified sellers to defer capital gains taxes from the sale of farmland—and pay them in four equal installments over four years, instead of as one lump sum in the year of sale. There are conditions: the sale must be to a qualified farmer (an individual actively engaged in farming). The farmland must have been used for farming for at least 10 years before the sale and must remain in farmland use for at least 10 years after the sale. These conditions are typically enforced via covenants or restrictions.
- The cap on deductions for state and local taxes (SALT) was raised from $10,000 to $40,000 from 2025 through 2029; it reverts back to $10,000 in 2030. The “phase-out” of deductions begins at an income level of $500,000 and drops back to $10,000 for incomes over $600,000. The calculation of SALT includes general sales taxes, taxes on residences and motor vehicle taxes—but only up to the vehicle’s value.
- After the end of the year, green energy credits are disappearing—that includes tax credits for energy-efficient windows, doors, and HVAC systems. Generally, credits for energy-efficient buildings disappear after June 30, 2026.
- Fulfilling a campaign promise, OBBB creates a federal income-tax deduction for tips. However, they are still subject to withholding for Social Security and Medicare taxes.
- The deduction for people 65 and older was increased by $6,000 per person and $12,000 per qualifying couple. The new $6,000 deduction per eligible senior runs from 2025–2028 and is added on top of the regular additional standard deduction, but it phases out at higher incomes.
- The law raises the Child Tax Credit from $2,000 to $2,500 per qualifying child for 2025–2028 (with other tweaks).
- The lifetime estate and gift tax exemption—a provision strongly supported by farmers and ag interests—increased to $15 million per person or $30 million per couple. The top estate / gift tax rate remained at 40%, and the annual gift exclusion stayed at $19,000 per year.
- The OBBB restores 100% bonuses for asset depreciation, for all assets—including farm equipment—purchased after Jan. 19, 2025. This applies to tangible MACRS property with a recovery period of 20 years or less.
- The OBBB introduces “Trump accounts,” tax-advantaged savings accounts for children. These are one-time accounts for every U.S. child born between January 19, 2025, and December 31, 2028. They are eligible for one-time federal contributions of $1,000 per qualifying child. Anyone—parents or relatives, for example—may contribute up to $5,000 per year, with employer contributions capped at $2,500. Funds must be invested in low-cost diversified stock index funds (e.g., S&P 500), with expense ratios capped at 0.1%. No withdrawals or rollovers are allowed until the child turns 18, except in the case of a qualified disability (then rollover into an ABLE account at age 17). Once the child reaches 18, the account converts to a traditional IRA, meaning distributions follow regular IRA tax rules.
David Murray can be reached at [email protected].
