The Twelve Days of Tax-mas: A Countdown to the One Big Beautiful Bill’s Gifts in the New Year

As the festive season approaches, US taxpayers will have more than Christmas Dinner to look forward to. The One Big Beautiful Bill Act (OBBBA), signed into law by President Trump this past July, is set to deliver a sleigh-full of fiscal modifications when the clock strikes midnight on 31 December.

For the inbound investor and the domestic business owner alike, the OBBBA is a stocking stuffed with both sweets and the proverbial lumps of coal. In the spirit of the season, here is a countdown of the twelve changes that will impact the tax landscape come 01 January 2026.

🎄 On the first day of Tax-mas, the Big Bill gave to thee: removal of downward attribution for controlled foreign corporation (CFC) testing purposes. This gift should be well-received by US  persons with overseas investments who found themselves subject to onerous US reporting with respect to foreign corporations when the US person did not actually exercise control over the company.

🎄On the second day of Tax-mas, the Big Bill gave to thee: a reinvention of the global intangible low-taxed income (GILTI) CFC regime, soon to be renamed the net CFC tested income (NCTI) regime. The changes bring simplicity with a few lumps of coal. The removal of the qualified business asset investment (QBAI) deduction (effectively a deduction for tangible personal property) brings simplicity to the calculation as in a lot of instances the QBAI deduction was more trouble than it was worth. The existing 10.5% tax rate on GILTI income increases to 12.6% (for corporate taxpayers and individuals that make a Section 962 election), though it was previously scheduled to increase to 13.125% under the old regime.

🎄On the third day of Tax-mas, the Big Bill gave to individuals: an expansion of the qualified small business stock (QSBS) exclusion. Before the OBBBA, the 100% exclusion for gain on the sale of QSBS was capped at $10m and only applied after a five-year holding period. The OBBBA gifted small business owners and entrepreneurs accelerated access to higher gain exclusions with relief granted beginning after three years and an increased cap to $15m.

🎄On the fourth day of Tax-mas, the Big Bill gave to individuals: a $40,000 state and local tax (SALT) deduction cap. President Trump’s 2018 comprehensive tax reform bill had capped the SALT deduction to a miserly $10,000. Residents of high-tax states like New York and California were given a gift with the increase, provided they earn under the phase-out thresholds.

🎄On the fifth day of Tax-mas, the Big Bill gave to US estates: a locked in US federal estate tax exemption at $15m per individual, indexed for inflation. The “death tax” has effectively been relegated to a concern solely for the ultra-wealthy.

🎄On the sixth day of Tax-mas, the Big Bill gave to small businesses: first-year bonus deprecation for tangible personal property (effectively 100% bonus depreciation) as well as additional bonus depreciation for qualified production property (QPP). QPP is the portion of non-residential real property used for manufacturing, production or refining of tangible personal property (assuming all the requirements are met).

🎄On the seventh day of Tax-mas, the Big Bill gave to thee: the export incentive formerly known as foreign-derived intangible income (FDII) is rebranded as foreign-derived deduction eligible income (FDDEI). The rate ticks up to 14%, and like its NCTI sibling, it loses the tangible asset carve-out. Export income remains tax-advantaged, but the benefit is reduced.

🎄On the eighth day of Tax-mas, the Big Bill gave to thee: additional modifications to the CFC rules. These include a permanent extension of CFC look-through rule and modifications to the pro rata share rules. These gifts bring some uncertainty as it’s not clear from the statutes how certain calculations will be made. For 2026, tax advisors will look forward to regulatory guidance to provide clarity.

🎄On the ninth day of Tax-mas, the Big Bill gave to thee: another lump of coal in the form of the 100% disallowance of deductions for employer-provided meals. The era of the tax-deductible client lunch is officially over. If you wish to dine, you shall do so entirely on your own post-tax dime.

🎄On the tenth day of Tax-mas, the Big Bill gave to individuals: an increased standard deduction, set at $15,750 for individuals and $31,500 for joint filers in 2025, indexed for inflation.

🎄On the eleventh day of Tax-mas, the Big Bill gave to thee: an increased reporting threshold for Forms 1099-NEC and 1099-MISC to $2,000, finally burying the absurd $600 trigger that threatened to drown the gig economy in paper.

🎄On the twelfth day of Tax-mas, the Big Bill gave to charities: the return of the charitable deduction for individual taxpayers claiming a standard deduction.

The OBBBA is a complex list of the naughty and the nice, particularly for those navigating the new international acronyms of NCTI and FDDEI. If you are wondering whether you or your business will be impacted by any the provisions in the New Year, we are available to help US-connected businesses and individuals navigate the increasingly complex US tax landscape.