Important Tax Law Changes: The One Big Beautiful Bill Act
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), a reconciliation package that includes a broad array of tax provisions affecting individuals, businesses and international taxpayers.
We want to highlight the key provisions and offer preliminary insights into how they may affect your tax planning. We will continue to closely monitor any potential regulatory guidance as it's developed from the IRS and update you accordingly
Key Changes That May Benefit You
Permanent Tax Rate Extensions
The individual tax rates from the 2017 Tax Cuts and Jobs Act are now permanent, along with the nearly doubled standard deduction amounts:
Single filers: $15,750Married filing jointly: $31,500Head of household: $23,625
New Deductions for 2025-2028
Enhanced Deduction for Seniors (Age 65+) If you're 65 or older with income under $75,000 ($150,000 for married couples), you'll get an additional $6,000 standard deduction. For married couples where both spouses are over 65, that's a $12,000 boost to your standard deduction.
Car Loan Interest Deduction You can now deduct up to $10,000 of interest paid on loans for new, U.S.-assembled vehicles purchased after December 31, 2024. This is an above-the-line deduction, meaning you don't have to itemize to claim it.
Tips and Overtime Deductions
Tips: If you work in tip-receiving industries, you can deduct up to $25,000 in tips (subject to income limits)
Overtime: Overtime premium pay is deductible up to $12,500 for individuals ($25,000 for married couples)
Both deductions phase out once your income exceeds $75,000 ($150,000 for married couples).
Family Benefits
Child Tax Credit Increase The child tax credit increases to $2,200 per child in 2025 and will be indexed for inflation going forward.
Trump Savings Accounts For children born between January 1, 2025, and December 31, 2028, the federal government will deposit $1,000 into a "Trump Savings Account." Parents can contribute up to $5,000 annually starting in 2026, creating a Roth IRA-like benefit accessible at age 18.
Charitable Deduction Returns (Starting 2026) Non-itemizers can deduct up to $1,000 in charitable contributions ($2,000 for married couples) starting in 2026.
Other Permanent Changes
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 (not just federal declarations).
Other Deductions and Credits Several other deductions and credits are now permanent, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits.
State and Local Tax (SALT) Deduction
The SALT deduction cap increases from $10,000 to $40,000 for 2025-2029, though it phases out for high-income taxpayers (over $500,000 AGI). This change will particularly benefit taxpayers in high-tax states.
Business Owner Benefits
Qualified Business Income (QBI) Deduction The 20% QBI deduction is now permanent for qualifying businesses.
100% Bonus Depreciation Full expensing is restored for qualifying property placed in service after January 19, 2025.
Section 179 Expensing The maximum expensing amount increases to $2.5 million with a $4 million phaseout threshold.
1099 Reporting Relief The threshold for issuing 1099s increases to $2,000 (up from $600) effective for 2025 reporting in 2026, reducing administrative burden.
Clean Energy Credits Several clean energy credits from the Inflation Reduction Act are terminated, which may affect businesses that were planning renewable energy investments.
Planning Considerations
These changes create both opportunities and complexities. Some key considerations:
SALT deduction planning: Higher-income taxpayers may need to reconsider whether to have business entities pay state taxes directly or pass them through to personal returns
Timing strategies: Several provisions are temporary (2025-2028), requiring careful planning
State conformity: We're monitoring how states will handle these federal changes
Let's Talk
Tax planning is most effective when it's personalized to your situation. If you are currently not receiving tax planning and would like to hear how our services can help you develop strategies to maximize your benefits, please give us a call at 859.331.7755.