On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law — a landmark tax package designed to extend and enhance many of the provisions from the 2017 Tax Cuts and Jobs Act. Below is a summary of the most impactful changes that may affect your tax planning:

Individual income tax provisions

  • Permanent extension of lower tax rates and brackets: The OBBBA generally makes the tax rates enacted in 2017 in the Tax Cuts and Jobs Act (TCJA) permanent. These brackets were set to expire after 2025.
  • Standard deduction: The nearly doubled standard deduction would be made permanent.  Effective for 2025, the amounts are as follows:

                  Single & Married Filing Separately (MFS): $15,750

Head of Household (HoH): $23,625

Married Filing Jointly (MFJ): $31,500

The deduction amounts will continue to rise with inflation.

  • Child Tax Credit: For families with children under age 17 in 2025, the nonrefundable child tax credit increases to $2,200 per child. The credit amount is indexed for inflation.
  • Estate and gift tax exemption: The increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation. The exemption for 2025 is $13.99 million.
  • SALT deduction cap: The state and local tax (SALT) deduction cap is increased from $10,000 to $40,000 per household and would be phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000. In 2030, the deduction will revert to $10,000.
  • Charitable deduction for non-itemizers: Starting in 2026, an above-the-line deduction is added for charitable contributions ($1,000 for single filers, $2,000 for joint filers).
  • No tax on tips and overtime: For 2025–2028, new above-the-line deductions allow taxpayers to deduct up to $25,000 in tips (for certain qualified occupations) and $12,500 in overtime compensation. The deduction phases out at $150,000 (single) or $300,000 (joint) MAGI. Note that eligibility for this deduction will be assessed at the time of your annual tax return filing since qualification is based on your annual MAGI.
  • Enhanced deduction for seniors: For 2025–2028, a $6,000 deduction is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers). We have already fielded many questions on this deduction. Note that this is not a credit, it is a deduction. Your taxable income will be reduced by $6,000 before your tax liability is calculated.
  • Car loan interest deduction: For 2025–2028, up to $10,000 of interest on loans for U.S.-assembled passenger vehicles may be deducted, subject to income phaseouts. Keep in mind that this deduction is allowable for cars loans taken out in 2025-2028. To qualify for this deduction you must meet several very specific criteria. Please check with the dealership or with your tax professional to determine if your purchase qualifies.
  • Moving expense deduction: The deduction is permanently terminated except for those in the Armed Forces.
  • Home mortgage interest and insurance premiums: The $750,000 limit on the treatment of mortgage insurance premiums as qualified residence interest is made permanent. The exclusion of home-equity indebtedness from the definition of qualified residence interest is also now permanent.
  • Casualty loss deduction for personal casualties: The limitation on personal casualty loss deductions is made permanent, however a provision is added to include state-declared disasters.
  • Other deductions and credits: Several other deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits are made permanent.
  • Clean energy and IRS credits: Several clean energy credits from the Inflation Reduction Act (IRA) are terminated.

 

Business tax provisions

  • QBI deduction: The qualified business income (QBI) deduction is made permanent and the deductible amount for each qualified business would remain at 20%.
  • Bonus depreciation: 100% expensing (bonus depreciation) for qualified property is restored for property placed in service after Jan. 19, 2025.
  • Sec. 179 expensing: The maximum amount a business may expense for qualifying expenses is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.
  • R&E expenditures: Immediate deduction of domestic research or experimental expenses paid or incurred in 2025 is allowed. However, research or experimental expenses attributable to research that is conducted outside the United States will continue to be capitalized and amortized over 15 years.
  • Third-party network transaction reporting threshold: Form 1099-K, Payment Card and Third Party Network Transactions, reporting reverts back to previous rules where reporting is required if transactions exceed $20,000 and the aggregate number of transactions exceeds 200.
  • Form 1099 reporting threshold: In 2026, the information reporting threshold for payments for services increases to $2,000 in a calendar year (up from $600), and the threshold amount will be indexed annually for inflation starting in 2027.

Tax planning considerations and next steps

The One Big Beautiful Bill Act heralds a significant shift in the federal tax landscape. The Bill is very broad and complex. We are expecting further clarification and guidance as we approach year-end.

We’re here to help

Our team of tax professionals can assist you in determining how the Act may provide opportunities for you. If you have questions please reach out to schedule a consultation appointment.