On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) into law. There were changes from the original bill that was presented by the Senate Finance Committee on June 16th, but the essence of the bill, continuing the tax benefits of the 2017 Tax Cuts and Jobs Act (TCJA), remains the same. The Tax Foundation summarizes the provisions of the OBBB1 and here are some that could directly impact you and your tax planning:
OBBB Makes Some TCJA Changes Permanent:
- Bracket changes for the 10, 12, and 22 percent brackets
- The higher standard deduction ($31,500 for joint filers, $23,625 for head of household, and $15,750 for all other files in 2025)
- The elimination of the personal exemption
- The child tax credit ($2,200 in 2026)
- $750,000 limit for home mortgage interest deduction
- Limitations on other itemized deductions, property casualty losses, the termination of the miscellaneous itemized deductions (except educator expenses), Pease limitation on itemized deductions and certain moving expenses
- The increase in the AMT exemption ($500k for single and $1MM for joint returns)
- Increases the estate and lifetime gift exemption to $15 million for single and $30 million for joint filers beginning in 2026.
- For businesses, restores the 100% bonus depreciation for short-lived investments.
OBBB Makes Some New Tax Law Changes:
- Limits the value of itemized deductions to 35 cents on the dollar for taxpayers in the top bracket
- Creates a new 0.5% floor on charitable contributions
- Creates a permanent $1,000/$2,000 (single/joint) above-the-line deduction for charitable contributions
- Repeals green energy tax credits that include electric vehicle and energy efficiency credits after 2025 or within a year of the law’s enactment
OBBB Makes Some Temporary Tax Law Changes:
- Adds a senior deduction of $6,000 for each qualifying individual for 2025-2028 but it phases out when modified adjusted gross income exceeds $75,000
- Increases the cap for state and local tax deductions (SALT) to $40,000 for 2025-2029, increasing by 1% each year through 2029, subject to phaseout for incomes above $500,000
- Makes up to $25,000 of tip income and $12,500 ($25,000 for joint filers) of the premium for overtime compensation deductible for tax years 2025-2028, phasing out for incomes of $150,000 for individuals and $300,000 for joint filers
- Makes up to $10,000 of loan interest on new cars assembled in the U.S. deductible for 2025-2028, phasing out at $100k for single and $200k for joint filers.
This landmark legislation creates planning opportunities and considerations, which could affect your personal and business finances for years to come. As part of our ongoing True Planning Cycle, we actively monitor these and other changes that could impact your finances to help inform your decisions and adjust as necessary. We encourage you to also discuss the changes with your tax professional to help ensure you’re capturing available benefits while avoiding costly mistakes. If you’d like to learn more about aligning these changes with your long-term strategy, please contact us for personalized guidance; we’re happy to help.