What the Big Beautiful Bill Means for Banks, Credit Unions, & Their Leadership Teams

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The One Big Beautiful Bill (OBBB), enacted July 4, 2025, introduces several compelling tax, regulatory, and consumer finance changes that directly impact financial institutions. Here’s what you need to know—and act on.

1. Mortgage Lending: Permanent $750,000 Cap

The bill makes permanent the $750,000 cap on home mortgage indebtedness for individuals. While not as headline-grabbing as new deductions, this stability in the mortgage interest deduction should inform lending strategies and client communication moving forward.

Suggested Actions:

  • Review mortgage product offerings to ensure alignment with the permanent cap.
  • Update marketing materials to highlight long-term tax stability for borrowers.
  • Train lending teams on how to position this change with clients.

2. Agricultural Real Estate Lending: 25% Interest Income Exclusion

OBBB adds Section 139L to the Internal Revenue Code, enabling qualified lenders to exclude 25% of interest income earned on new loans secured by rural or agricultural real estate, originated after July 4, 2025. This exclusion can create a meaningful pricing advantage in rural and ag markets.

Suggested Actions:

  • Implement tracking systems for qualified ag loans in origination software.
  • Consider lowering rates up to win competitive rural/ag deals.
  • Educate loan officers and relationship managers on qualification criteria.

3. Qualified Business Income (QBI) Deduction Made Permanent

The bill permanently codifies the Qualified Business Income deduction of 20% for pass-through entities, greatly benefitting business-owner clients.

Suggested Actions:

  • Develop targeted campaigns for business-owner clients highlighting tax savings.
  • Collaborate with tax advisors to bundle financing and advisory offerings.
  • Host educational webinars or events for pass-through business owners. 

4. “Trump Accounts” (Assumed Tax-Advantaged Accounts)

If OBBB introduced new tax-advantaged savings or investment vehicles—informally referred to as ‘Trump Accounts’—these may present novel product and advisory opportunities for institutions.

Suggested Actions:

  • Monitor regulatory guidance closely to define compliant offerings.
  • Plan pilot programs to test consumer interest and product fit.
  • Integrate these accounts into broader wealth and savings strategies.

5. Bonus Depreciation & Section 179 Enhancements

OBBB permanently reinstates 100% bonus depreciation and raises the Section 179 expensing limit to $2.5 million. These incentives boost demand for equipment financing, particularly in capex-heavy industries.

Suggested Actions:

  • Target commercial clients in manufacturing, agriculture, and construction.
  • Create financing packages specifically tailored to asset acquisition timing.
  • Train commercial lenders on tax-advantaged financing conversations.

6. Regulatory Relief for Mid‑Sized Institutions

The bill eases call‑report cycles, stress-testing thresholds, and capital treatment of some tax-advantaged assets for banks under $20 billion in assets. Specifically: 1) Slashed CFPB Funding Cap from 12% to approximately 5-6.5% – implying a trend towards more deregulation; and 2) postponed the implementation of the Small Business Lending Data Rule (Section 1071), which required detailed collection and reporting of small business lending data, significantly reducing the compliance burden on financial institutions.

Suggested Actions:

  • Reassess compliance workflows to capitalize on new efficiencies.
  • Explore reinvesting freed-up resources into lending or tech upgrades.
  • Review capital planning in light of simplified treatment rules.

7. Green & Community Reinvestment (CRA/ESG) Enhancements

OBBB expands CRA eligibility for energy-efficient and affordable housing in federally designated green corridors, providing enhanced CRA credit.

Suggested Actions:

  • Identify local projects eligible for enhanced CRA credit.
  • Partner with municipalities and developers to co-lend on green projects.
  • Adjust internal tracking to capture and report qualifying activity.

8. Expanded Lending Incentives

One of the most immediate impacts of the OBBB is the consumer interest deduction on auto and home improvement loans (up to $10,000 annually), available from 2025 through 2028. This provision is designed to stimulate domestic consumption and has clear implications for bank and credit union lending programs.

Suggested Action:

  • Institutions should consider how to reposition their consumer loan marketing and underwriting criteria to capture increased demand—especially for U.S.-manufactured products and housing upgrades.