This past Fourth of July, President Trump observed the national holiday by signing a historic piece of legislation: the One Big Beautiful Bill Act. This new law introduces significant changes to federal taxes, credits, and deductions. Its mix of short-term and long-term provisions will affect how Americans file 2025 taxes and beyond.
We understand that major changes like this can feel overwhelming. As your trusted financial partner, you can count on us to fill you in on the details so you can stay one step ahead when it’s time to file.
anchor
How Will the One Big Beautiful Bill Act Change Tax Laws?
Public Law 119-21, also known as the One Big Beautiful Bill, OBBB, and OB3, makes several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent. The TCJA made significant changes to the tax code by reducing rates for corporations, businesses, and individuals. The law also nearly doubled the standard deduction and capped the state and local tax deduction at $10,000. These provisions, among many others, were set to expire in 2025 and return to their 2017 status.
But that’s where the OBBB comes in.
This new legislation prevents most TCJA provisions from expiring while adding new updates intended to benefit working Americans and seniors. Many provisions take effect on January 1, 2026, but a couple are retroactive and could impact how you file your 2025 tax return.
anchor
Which TCJA Provisions Have Been Extended?
The OBBB extends and locks in several key provisions of the 2017 TCJA, including:
- Lower Tax Brackets – TCJA lowered individual tax brackets to 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These tax brackets will remain (but are subject to changes enacted by future Congress).
- Increased Standard Deduction – The standard deduction amounts for the 2024 tax year were $14,600 for single filers and $29,200 for married couples filing jointly. For 2025, the amounts are increasing to $15,750 for single filers and $31,500 for married couples filing jointly. These amounts will be adjusted for inflation in future years.
- Higher State and Local Tax (SALT) Deduction Limit – The SALT deduction has increased to $40,000 (adjusted annually) for 2026 through 2029.
- Increased Child Tax Credit – The TCJA raised the child tax credit from $2,000 to $2,200 per qualifying child, which will be adjusted for inflation annually.
Taxpayers should review the latest IRS forms and instructions to ensure they are using the correct documents when claiming these deductions and credits.
anchor
What Are the New OBBB Provisions for the 2025 Tax Year?
In addition to updating existing provisions, the OBBB adds many new individual tax changes. Some of the tax deductions that will affect the most common 2025 tax returns for working Americans and seniors are:
- No Tax on Tips – Workers in eligible occupations listed by the IRS may deduct up to $25,000 in qualified tips. This deduction phases out for Modified Adjusted Gross Income (MAGI) above $150,000 ($300,000 for those Married Filing Jointly).
- No Tax on Overtime – Overtime pay exceeding regular wages can be deducted up to $12,500 per taxpayer with phaseout for MAGI over $150,000 ($300,000 for joint filers).
- No Tax on Car Loan Interest – Taxpayers may deduct up to $10,000 in qualified vehicle loan interest with phaseout for MAGI over $100,000 ($200,000 for joint filers).
- Deduction for Seniors – Eligible taxpayers who are 65 or older may claim an additional deduction of $6,000 with phaseout for MAGI over $75,000 ($150,000 for joint filers).
anchor
What Are the New OBBB Provisions for 2026 and Beyond?
2025 is only the beginning. The OBBB includes several new tax changes that begin in 2026 and future years, affecting families, homeowners, and individuals nationwide. Some of those include:
- Trump Child Savings Accounts – A new tax-deferred savings account for children under 18. Parents can contribute up to $5,000 per year (adjusted for inflation), and employers may add up to $2,500. The federal government will make a one-time contribution of $1,000 per child to an account for U.S. citizens born between 2025 and 2028.
- Child and Dependent Care Credit Expansion – Families can claim up to 50% of qualifying childcare expenses, with higher income limits that make the credit available to more households.
- Education and Student Loan Benefits – Employers can contribute up to $5,250 annually toward employees’ student loans tax-free, and student loan debt canceled due to death or disability remains non-taxable.
- Mortgage Interest Rules – The $750,000 mortgage interest cap is now permanent, and private mortgage insurance (PMI) may be treated as deductible interest.
The One Big Beautiful Bill might’ve changed the tax landscape, but with our help, you can take control of tax season with confidence!
This blog is not intended to provide any tax, legal, financial planning, insurance, accounting, investment, or any other kind of professional advice or services. To make sure that any information or suggestions in this blog fit your particular circumstances, you should consult with an appropriate tax or legal professional before taking action based on any suggestions or information that we provide.
Sources
- Text - H.R.1 - 119th Congress (2025-2026): One Big Beautiful Bill Act | Congress.gov | Library of Congress
- Text - H.R.1 - 115th Congress (2017-2018): An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018. | Congress.gov | Library of Congress
- Economic Effects of the Tax Cuts and Jobs Act | Congress.gov | Library of Congress
- Tax Laws and Tax Brackets 2025 | U.S. Bank
- One, Big, Beautiful Bill Act: Tax deductions for working Americans and seniors | Internal Revenue Service
- Treasury, IRS issue guidance listing occupations where workers customarily and regularly receive tips under the One, Big, Beautiful Bill | Internal Revenue Service
- Modified adjusted gross income | Internal Revenue Service