One Big Beautiful Bill Act (OBBBA): Key Provisions and Tax Updates for 2025
As part of my commitment to keeping you informed, I want to highlight the key provisions of the recent One Big Beautiful Bill Act (“the Bill”), signed into law July 4, 2025. These changes carry meaningful impacts for a broad set of taxpayers, and some offer new planning opportunities.
Below is a summary of the most significant changes, effective for tax year 2025 (i.e. returns filed in 2026), along with some that are temporary and others that are permanent.
New Tax Benefits and Deductions Under the OBBBA (2025)
| Change | What It Means | Who Benefits |
|---|---|---|
| Permanent extension of the 2017 TCJA individual tax rates | The seven federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now made permanent (no scheduled sunset of those in 2025). | All individual taxpayers, especially those near bracket thresholds. |
| Higher standard deductions / unchanged higher thresholds | The standard deduction remains high—and adjusted for inflation. $31,500 for a married filing joint couple. | Those who do not itemize; simplifies filings for many. |
| Expanded SALT (State and Local Tax) deduction | The cap on deductions for state/local taxes is increased to $40,000 (from $10,000), through 2029. But for high-income filers (MAGI over certain thresholds), there is a phase-down; and starting in 2030 it reverts to $10,000. | Taxpayers in high tax states who itemize. |
| Child Tax Credit increase | The Child Tax Credit is increased to $2,200 per qualifying child; the refundable portion is also raised. | Families with children, especially those qualifying for refunds. |
| Trump Accounts | Starting in July of 2026, a new tax-deferred savings account with contributions annually up to $5000 for under 18 years old: Employer can contribute $2500 annually: Money grows tax free until withdrawn. $1,000 will be provided by Gov’t for children born between 2025-2029. | Those with newborns or children with unearned income. |
| New Deductions | Several new above-the-line (i.e. deductible whether you itemize or not, in many cases) deductions have been introduced through 2028:
• Qualified tips – up to $25,000; phases out at higher income. • Qualified overtime pay – up to $12,500 ($25,000 for married filing jointly) deduction for the “extra” portion of overtime. • Car loan interest for loans on qualified passenger vehicles, up to $10,000. • Additional deduction for seniors (65+) – an extra $6,000 deduction, subject to phase-outs. |
Service/tip industry workers; hourly workers putting in overtime; car buyers who meet vehicle eligibility; seniors with moderate income. |
| Business-related extensions / credits | • Qualified Business Income (QBI) deduction (20%) made permanent. • 100% bonus depreciation for certain property made permanent. • Section 179 thresholds increased. |
Business owners, real estate investors, people investing in capital assets. |
Tax Changes and Expiring Benefits Under the OBBBA
| Change / Expiry | What's Different | Things To Watch Out For |
|---|---|---|
| Green energy & efficiency credits | Many of the prior credits (for electric vehicles, solar panels, home energy improvements, etc.) are being scaled back or terminated earlier under this law. | If you planned to make energy-efficient home improvements or buy EVs, consider timing before expiration. |
| Phase-outs / income limitations | Several new deductions/benefits phase out above certain modified adjusted gross income (MAGI) thresholds. For example: seniors’ extra deduction; car loan interest deduction; SALT cap benefits, etc. | Be aware of where your income sits relative to thresholds—small differences can matter. |
| Reversion of SALT deduction after 2029 | The higher SALT cap is temporary; after 2029, it returns to $10,000. | Those in high-SALT states should plan ahead. |
| AMT is back - but more taxpayer friendly | Alternative Minimum Tax was designed to make high-income earners unable to avoid taxes through deductions. It’s now reinstated-but with higher income exemptions and thresholds. | AMT will less likely affect middle-income taxpayers and small business owners. |
| Some credits / deductions eliminated or reduced | • Some clean energy incentives are ending. • Limitations on itemized deductions for high-income filers (some new cap on how much benefit itemized deductions provide at the 37% bracket). |
If you were relying on those, consider accelerating or altering spending/timing. |
| Reversion of Mortgage Deduction and Mortgage Insurance Premiums | Starting in tax year, 2026 we revert back to the $750,000 combined mortgage debt and mortgage insurance premiums will be deductible again. | Those with higher mortgage interest and mortgage insurance premiums |
What the OBBBA Means for You — and How to Plan Ahead
We’re here to help you make the most of these changes with:
Tax Planning/Advising
Tax Preparation (Individual and Business)
Bookkeeping & Accounting
1:1 Tax and Business Consulting
P.S. This tax bill has a great deal of details which have been omitted. Please use this as a guidance only and reach out to us if you have any questions.