Breaking Down the "One Big Beautiful Bill"

​As you likely know, the “One Big Beautiful Bill” (OBBB) has passed. While there are numerous provisions in this bill, our intention is to provide those updates related specifically to income taxes…

Several extensions have been made from the 2017 Tax Cuts and Jobs Act (TCJA), with some items becoming permanent. The bill also makes several changes and additions to existing tax laws. While most provisions won’t impact your 2025 tax return, below are a few highlights of current interpretation of the bill. We’ll continue to provide updates as more clear information is released…
 
Tax Brackets
The current lower individual tax rates have been made permanent (10%, 12%, 22%, 24%, etc.) with inflation adjustments for bracket limits.
 
SALT Cap
The itemized deduction for State and Local Taxes (SALT) has temporarily been increased from $10,000 up to $40,000 for 2025, with a 1% increase from that level through 2029. The cap then reverts back to $10,000 thereafter. Taxpayers with incomes above $500,000 are subject to a phaseout.
 
Standard Deduction
The current larger standard deduction is sticking around now, starting in 2025 at $31,500 for joint filers, $23,625 for head of household, and $15,750 for all other filers, with inflation adjustments thereafter. The personal exemption elimination has been made permanent.
 
Child Tax Credit
TCJA’s child tax credit is now permanent and has an increased maximum of $2,200 per child in 2026, with inflation adjustments thereafter (up from current $2,000 amount).
 
Mortgage Interest Deduction
The $750,000 principal limit for home mortgage interest deduction has been made permanent.
 
Tip Income Deduction
The OBBB temporarily makes up to $25,000 of tip income deductible for individuals in traditionally and customarily tipped industries for tax years 2025 through 2028. The deduction phases out at a 10% rate when adjusted gross income (AGI) exceeds $150,000 ($300,000 for joint filers).
 
Overtime Compensation Deduction
Up to $12,500 ($25,000 for joint filers) of the premium portion of overtime compensation is made deductible for tax years 2025 through 2028 with a 10% phaseout rate when AGI exceeds $150,000 ($300,000 for joint filers).
 
Auto Loan Interest Deduction
OBBB adds a temporary auto loan interest deduction for new autos with final assembly in the U.S. for tax years 2025 through 2028. The deduction is limited to $10,000 and phases out at a 20% rate once income hits $100,000 for single filers and $200,000 for joint filers.
 
Charitable Deductions
Starting in 2026, single filers can take up to a $1,000 “above-the-line” deduction, meaning this can be deducted even for folks who don’t itemize. Married joint filers can deduct up to $2,000 in donations, even if they take the standard deduction. Those who itemize have a .5% floor on charitable contributions, meaning someone making $100,000 would not deduct the first $500 in donations. However, these folks can utilize the above-the-line deduction mentioned.
 
QBI Deduction
Business owners and freelancers will see the 20% qualified business income (QBI) deduction has been made permanent.
 
Estate & Gift Tax Exemption
Permanently increases the estate and lifetime gift tax exemption to $15 million for single filers and $30 million for joint filers, beginning in 2026, with inflation adjustments thereafter.
 
Senior Deduction
The bill includes a temporary (2025 through 2028) senior deduction of $6,000 for each qualifying individual, with a phaseout at $75,000.
 
Green Energy Tax Credits
The OBBB repeals several credits like the solar and electric vehicle credits, after 2025.
 
As you can see, there are numerous impactful items with this bill. And while it complicates the already-confusing tax code, we’re here to guide you through it!