What the One Big Beautiful Bill Act Means for Mobile Employees and Employers

On July 4, 2025, President Trump signed into law, H.R. 1, referred to as the One Big Beautiful Bill Act (OBBBA or simply “the Act”), a sweeping overhaul of the US tax code. While OBBBA affects all US taxpayers, it is important for companies and their mobile employees to consider key areas of impact.

This article summarizes key provisions of OBBBA that impact individual taxpayers, with special emphasis on what it means for mobile employees and their employers. From updated tax brackets and deduction changes to newly introduced savings plans and remittance taxes, understanding the implications of this new law is essential for employers looking to manage cost, risk, and employee satisfaction.

Key individual tax provisions and the impact on mobile employees

H.R. 1 represents a $3.4 trillion fiscal package that both extends and expands the 2017 Tax Cuts and Jobs Act passed during President Trump’s first term. OBBBA is a complex piece of legislation, with many of its provisions still requiring clarification from the Treasury Department. Because of the complexity, its ultimate impact on any given taxpayer will depend on factors such as income level, how the income is earned, type of job, location of residence, and citizenship.

The following section provides a summary of selected OBBBA provisions impacting tax rates, deductions and credits, and savings accounts.

Tax rates

Under OBBBA, the income tax rates for individuals are made permanent for tax years beginning after 2025. The permanent tax rates for individuals are: 10, 12, 22, 24, 32, 35, and 37 percent. As before, an individual’s filing status (e.g., single, married filing joint (MFJ)) will determine the levels of compensation that apply to the specific tax rates.

These changes are indexed for inflation and apply globally to all US taxpayers. As before, certain married nonresidents may not qualify for preferential tax brackets under the “married filing joint” filing status, without meeting the criteria to allow for special residency elections.

Tax deductions and credits

OBBBA increases the standard deduction for 2025 to:

• $31,500 for joint filers
• $23,625 for heads of household
• $15,750 for single filers and married taxpayers filing separately

These amounts will be indexed for inflation in subsequent years.

As before, US citizens and residents can use the standard deduction if not electing to itemize their deductions, or if not filing separately from a spouse who has elected to itemize their deductions. Nonresident taxpayers, however, generally cannot use the standard deduction.

State and Local Tax deduction limit for individuals

For tax years beginning after 2017 and before 2026, individuals could generally claim an itemized deduction for state and local taxes (SALT) of up to $10,000 ($5,000 if married filing separately (MFS)). SALT taxes for this purpose include state and local income taxes, general sale taxes in lieu of income taxes, real property taxes, and personal property taxes. The limitation on the itemized deduction of SALT by an individual is temporarily increased for tax years beginning in 2025 through 2029, subject to a phaseout based on adjusted gross income (AGI), that reduces the limit by 30% of the amount by which the taxpayer’s modified AGI exceeds the threshold amount.

The deduction limits and beginning phase-out thresholds by year are as follows:

Taxpayers in states with higher income tax rates may benefit from this temporary increase in the SALT deduction limits, if it is beneficial to itemize their deductions. As noted, nonresident taxpayers cannot use the standard deduction, so will benefit from this change if the state and local income tax is effectively connected with a trade or business in the US.

In addition to residency status, taxpayers choosing between the standard deduction and election to itemize their deductions will need to consider several factors, including the:

• OBBBA’s return of the limitation on itemized deductions for taxpayers in the 37% tax bracket (effective after 2025)
• Impact of the alternative minimum tax (AMT), resulting from itemizing deductions
  • note that OBBBBA did extend higher AMT exemption amounts, but also increased the rate at which the exemption phases-out for higher income taxpayers
  • state and local tax is not allowed as a deduction for AMT purposes, potentially impacting the decision on using the standard deduction
• Spouse’s filing position, if married and filing separate returns

Charitable contributions

For tax years beginning after 2025, an individual who does not itemize deductions can deduct up to $1,000 ($2,000 in the case of a joint return) in charitable contributions made in cash during the tax year. The deduction is claimed in calculating taxable income and not as an “above-the-line” deduction in calculating AGI. Also, a 0.5-percent floor on charitable deductions applies to individuals who itemize deductions beginning in 2026.

This change may result in tax savings for US citizens, residents, and even nonresident taxpayers, regardless of whether the taxpayer has elected to itemize their deductions or is using the standard deduction for their filing status. As before, contributions must be made to qualified organizations, subject to limitations.

Child Tax Credit

The Child Tax Credit (CTC) is increased to $2,200 per qualifying child under the age of 17. After 2025, the credit will be adjusted for inflation. Both the $500 “other dependent child” (ODC) credit and the $400,000/$200,000 modified AGI phase-out thresholds are made permanent. The $1,400 maximum limit (indexed for inflation) for the refundable additional child tax credit (ACTC) and the $3,000 earned income threshold for the ACTC are also made permanent.

It is important to note that for tax years beginning after 2024, a taxpayer may not claim the child tax credit with respect to any qualifying child unless the taxpayer’s return includes the social security number (SSN) of the qualifying child and the taxpayer (or the SSN of at least one spouse in the case of a joint return). The SSN must be issued to a US citizen or person lawfully admitted into the US for employment prior to the due date of the return.

Savings accounts

Trump Accounts for newborns

The bill introduces tax advantaged, custodial accounts for eligible children, called “Trump Accounts.” These accounts are treated in the same manner as individual retirement accounts, except that eligibility will generally be limited to people who are under 18 at the end of the calendar year in which the election to establish the account is made and who have been issued an SSN prior to the election.

Under a pilot program, accounts will be opened automatically for children that are US citizens at birth and born between January 1, 2025, and January 1, 2029 (upon issuance of an SSN). The eligible accounts opened during this period will be seeded with $1,000 from the federal government.

Annual contributions are capped at $5,000, and employers will be able to make tax-free contributions of up to $2,500 to Trump Accounts for dependents of their employees. These contribution limits will be indexed for inflation starting in 2028. Tax implications for distributions will depend on factors such as:

• Timing of distribution
• Use of funds
• Mix of after-tax contributions, other contributions (e.g., seed money, employer contributions), and investment earnings in the account.

Remittance excise tax

A new 1% excise tax applies to cash-based remittances from the US to foreign recipients abroad after 2025. The tax is paid by the sender at the time of the transfer and is collected by the remittance transfer provider, which must also remit the tax quarterly to the Treasury Secretary. The remittance transfer providers have secondary liability for any tax that is not collected from the sender at the time of the transfer.

To consider the impact, it’s important to define the terms:

• A remittance transfer is generally an electronic transfer of funds by a sender in the United States to a recipient in a foreign country, initiated by a remittance transfer provider.
• A sender is a consumer who requests a remittance provider to send a remittance transfer for the consumer to a recipient in a foreign country.
• A remittance transfer provider is any person or financial institution that provides remittance transfers for a consumer in the normal course of its business.

The remittance tax applies only to cash transfers or their equivalent. Transfers of funds withdrawn from qualifying financial institutions (e.g., US bank account) as well as transfers funded with a debit or credit card issued in the United States are excluded. 

Special considerations for mobility programs

Moving expense deduction and reimbursement exclusion

Despite industry lobbying efforts, H.R. 1 permanently suspends the deduction for moving expenses and exclusion of moving expense reimbursements for nonmilitary employees and self-employed individuals. The deduction and exclusion apply only to active-duty members of the US Armed Forces, members of the intelligence community, and their spouses and children.

Impact on tax equalization costs

As noted, OBBBA is a massive bill, with significant complexity. Given the significant changes to deductions, credits, and other areas of the tax code, it will be important to revisit hypothetical tax calculations for any tax equalized employees and to adjust related tax accruals related to your assignees.

In addition, it will be important to work with your tax provider to communicate tax law changes, especially for provisions of OBBBA that will be impacted by your tax equalization policy.

Global planning remains critical

Taxpayers with non-US filing obligations will need to consider tax planning on a global basis, as any reduction in US income tax may not necessarily result in an overall reduction in global tax burden.

Next steps for employers and mobile employees

OBBBA introduces a wide range of changes, from adjustments to tax brackets and deductions to the introduction of new account types and a remittance excise tax. While some provisions may provide relief, others may increase complexity, especially for companies with tax-equalized employees or mobile workers operating across borders.

To effectively navigate the evolving landscape, companies should revisit existing tax equalization policies, update hypothetical tax calculations, and proactively communicate changes to impacted employees. In a complex and shifting environment, planning ahead is critical to minimize surprises and uncover new opportunities.

Looking for guidance on what this means for your mobile workforce? Our team is here to help you interpret OBBBA’s impact and adjust your mobility program accordingly. Schedule a call to discuss how the OBBBA may affect your globally mobile employees.