OBBBA Tax Overhaul: New SALT Cap, Business Boosts, Maryland Impact

The “One Big Beautiful Bill Act” — or OBBBA — was signed into law on Friday, July 4, 2025, marking the first significant tax package of the president’s second term.

The newly enacted OBBBA rewrites significant sections of the federal tax code — locking in expiring provisions, tweaking others, and introducing a few new twists.

While most of the headlines have focused on national politics, Maryland counties should keep a close eye on what’s inside: expanded SALT deductions, changes to mortgage and charitable deductions, estate tax increases, and new business incentives that could shape local revenues and economic activity.

Here’s what you need to know.

Individual Taxpayers: Relief, Limits, and Long-Term Moves

Marginal Rates Stay Flat — But That’s Not the Whole Story

The TCJA’s tax rate structure is now permanent, maintaining the top marginal rate at 37% and capping the long-term capital gains rate at 20%. For many Marylanders, especially those in higher income brackets, that’s the headline. But other changes matter more in the long run.

Temporary SALT Cap Relief

The state and local tax (SALT) deduction cap has been bumped from $10,000 to $40,000 for joint filers — but only through 2029. The increase phases out after $500,000 in income, and the cap reverts to its original level in 2030.

While the increase could offer short-term relief for Maryland filers, it would narrow the State and county income tax base by encouraging more taxpayers to itemize, reducing federal AGI, and shrinking Maryland taxable income.

Read previous Conduit Street Coverage for more information: The New SALT Write-Off Applies This Year – Who Gets It?

Mortgage Deduction Locked In, With a Twist

OBBBA locks in the $750,000 mortgage interest deduction cap but expands “qualified residence interest” to include mortgage insurance premiums beginning in 2026. This is one of several provisions aimed at supporting middle-income homeowners while keeping the deduction limits from ballooning.

New Charitable Rules

Beginning in 2026, non-itemizers can take a limited above-the-line deduction for charitable giving, up to $1,000 (single) or $2,000 (joint). But for those who do itemize, donations under 0.5% of AGI won’t count at all.

High-income filers may also see their deductions capped at the 35% rate, even if they’re in the 37% bracket, further blunting the value of charitable contributions.

Estate and Gift Tax Exemption Grows

Starting in 2026, the lifetime estate and gift tax exemption rises to $15 million per person (or $30 million for couples) — a permanent shift indexed to inflation. That opens the door for long-term planning, especially for Maryland families with closely held businesses or intergenerational assets.

Business Provisions: Expanded Deductions and Investment Incentives

Pass-Through Deduction Made Permanent

The 20% deduction for Qualified Business Income — a favorite among sole proprietors, partnerships, and S corps — now has permanent status. The new law also raises the income thresholds for eligibility, giving some breathing room to growing firms and allowing a modest $400 minimum deduction for small businesses.

Bonus Depreciation Is Back

Capital investment incentives got a significant boost:

  • Reinstates 100% bonus depreciation for property acquired and placed in service after January 19, 2025.
  • The Section 179 expense limit increases to $2.5 million.
  • Immediate expensing for domestic R&D costs becomes permanent.
  • Small businesses with annual revenue of less than $31 million can apply the R&D expensing change retroactively to the 2022 tax year.

Interest Deduction Limit Shift Favors Borrowers

Beginning in 2025, the cap on business interest deductions reverts to an EBITDA-based test, instead of the tighter EBIT formula. The change aims to ease pressure on highly leveraged firms and allows broader deductibility of production-related interest. The law also clarifies how to apply capitalization rules before the deduction cap hits.

Other Notables

Remittance Tax Survives — But Barely

An early push for a broad 5% remittance tax ended in a pared-down provision: a 1% excise tax on physical-cash remittance transactions (like money orders or cashier’s checks).

The law carves out electronic bank and card-based transfers, but some Maryland families may still feel the impact — it all depends on how providers apply the rule in practice.

Opportunity Zones Get a New Lease on Life

The program gets a second life in 2027, with new 10-year designations. Future zones will face stricter eligibility requirements and targeted incentives for rural areas. These changes give Maryland communities a fresh chance to pursue OZ investment, especially in the areas that didn’t benefit from the first wave.

What It Means for Counties

The SALT deduction change takes center stage in Maryland, where local income taxes, high property values, and strong public services shape the state’s tax picture. Although the change is temporary, it is likely to influence taxpayer behavior and state and local budgets.

At the same time, changes to charitable deductions and estate planning rules could affect local nonprofit giving and land transfers. Business investment incentives may attract more activity in counties that can accommodate growth.

MACo will continue tracking federal tax updates and their implications for counties, residents, and businesses across Maryland.

Stay tuned to Conduit Street for more information.

Previous Conduit Street Coverage

The New SALT Write-Off Applies This Year – Who Gets It?

Deep Dive: US Senate Passes Sweeping Reconciliation Bill — State, Local Fallout Ahead

Medicaid, SNAP, SALT: Joint Committee Reviews Billions in Federal Budget Risks to Maryland