One Big Beautiful Bill

The One Big Beautiful Bill Act was signed into law on July 4, 2025. The details are nuanced, creating both complexity and opportunity for taxpayers. While the Act is too large to cover comprehensively here, this summary of key provisions should equip you with enough insight to ask us the right questions later.

Permanent Extension of TCJA Rate Cuts – The income tax rate reductions from the Tax Cuts and Jobs Act of 2017 are now permanent. This is a tax reduction across all income levels.

Higher Standard Deduction – In 2025, the standard deduction will increase to $15,750 (Single), $23,625 (Head of Household), and $31,500 (Married Filing Jointly). Beginning in 2026, these amounts will be indexed annually for inflation.

Temporary Senior Bonus Deduction – Taxpayers aged 65 or older may claim an additional $6,000 deduction, on top of both the standard deduction and the existing age-based deduction. Income phaseouts apply. This provision expires after the 2028 tax year.

Social Security Taxation Unchanged – Federal taxes on Social Security remain in place, though the senior bonus deduction could indirectly reduce taxes for some recipients.

Increased State and Local Tax (SALT) Deduction – The Act increases the SALT limitation from $10,000 to $40,000 starting in 2025 through 2029. This will have the biggest impact on those who itemize in high income tax states. About 88%-90% of Americans take the Standard Deduction and will not be impacted.

Several tax changes for businesses, including: bonus depreciation, qualified business income, research and development expensing, section 179 small business expensing, and section 1202 small business stock exclusion.

Child Tax Credit Increase – The credit rises from $2,000 to $2,200 in 2025 and will then be indexed for inflation.

Trump Savings Accounts – Children born between January 1, 2025, and December 31, 2028, will receive a $1,000 government seed deposit in a Trump Savings Account. While the free contribution is a benefit, these accounts may not be ideal for additional savings.

Termination of Clean Energy Credits – Federal tax credits for electric vehicles, solar, and other clean energy investments will end in 2025.

Tip Income Deduction – Through 2028, taxpayers may deduct up to $25,000 in qualified tips “above the line” if below phaseouts. The Tax Policy Center estimates average annual tax savings of about $1,370 for eligible taxpayers.

Overtime Pay Deduction – Also through 2028, taxpayers can deduct overtime earnings up to $12,500 (Single) or $25,000 (MFJ) if below phaseouts. Estimated average annual tax savings: $1,440 for those who qualify.

American-Made Auto Loan Interest Deduction – Taxpayers may deduct up to $10,000 annually on qualifying interest for American-made vehicle loans through 2028. Income phaseouts apply. J.P. Morgan estimates this equates to roughly $20 per month in tax benefit for eligible filers.

Projected Fiscal Impact – The bill is projected to add between $3.3 and $4.5 trillion to the national debt, and put increased financial pressure on lower income brackets while providing significant tax savings for the top 10%.