Tax law changes as they relate to the One Big Beautiful Bill that was passed in July 2025.

Individuals

Standard Deduction

For the 2025 tax year, the federal standard deduction increases to:

• $31,500 for Married Filing Jointly
• $23,625 for Head of Household
• $15,750 for Single or Married Filing Separately

The IRS also increases the age/blindness add‑on amounts for 2025:

• $2,000 for Single or Head of Household age 65+ or blind
• $1,600 for Married Filing Jointly or Surviving Spouse age 65+ or blind

Child Tax Credit

For tax year 2025, the Child Tax Credit (CTC) gets bigger and more refundable. The maximum credit rises to $2,200 per child, and the refundable portion increases to $1,700 for qualifying children under 17. The credit is now permanently set at the higher level.

The higher income limits introduced under the Tax Cuts and Jobs Act remain in place:

• Phaseout begins at:
  • $200,000 for Single/HOH
  • $400,000 for Married Filing Jointly

The CTC goes to zero once your income rises above the phase-out thresholds. The credit is reduced by $50 for every $1000 of income above the threshold. Some higher income families will continue to qualify for the credits due to unchanged phaseout thresholds.

Senior Tax Deduction

For the 2025 tax year, seniors age 65 and older can claim a new additional $6,000 deduction on top of their regular standard deduction or itemized deductions. It is currently available for tax years 2025 – 2028.

There is a phaseout based on modified adjusted gross income. For couples filing jointly, the deduction starts to be reduced at $150,000 and is completely phased out at $250,000. For individuals, the deduction is gradually reduced at $75,000 and is completely phased out at $175,000. The most an individual filer can deduct is $6,000, and joint filers can deduct up to $12,000. If your income is below the threshold, you get the full deduction. If your income is above it, you still get some of the deduction until it fully phases out at higher levels.

Charitable Contributions

The biggest charitable‑giving tax changes for 2025 come from the federal One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. The law adds a new deduction for non‑itemizers.

Single filers can deduct up to $1,000, and taxpayers filing married filing joint can deduct up to $2,000. There is no income-based phaseout or income cap for this deduction.

Please note that this only applies to cash gifts to public charities. It does not apply to donor-advised funds or private donations.

No Tax on Tips

Workers in nearly 70 tipped occupations may deduct up to $25,000 of “qualified tips” from federal taxable income for tax years 2025 – 2028. The occupations that qualify are those that customarily and regularly receive tips. Some examples being bartenders, hairdressers, taxi and rideshare workers, and some hotel staff.

Unfortunately, the deduction is not unlimited. There is an income phase-out. The deduction phases out once income exceeds $150,000 (single) and $300,000 (married filing jointly). The amount is reduced by a 10% rate when the income exceeds the thresholds. At very high incomes, the deduction can phase down to $0.

Also, Social Security and Medicare taxes still apply to all your tips. The deduction only applies to federal income tax.

No Tax on Overtime

The “No Tax on Overtime” deduction began on January 1, 2025. Your 2025 paychecks will still show normal withholding, but the deduction reduces your federal taxable income at tax time. Social Security and Medicare taxes are not waived from the overtime.

To take advantage of this deduction, you must be a non-exempt W-2 employee and overtime must meet federal labor standards (time-and-a-half rules)

Single filers can deduct up to $12,500 and married filing jointly can deduct up to $25,000.

There is an income phase-out. The deduction begins to phase out at $150,000 for single filers and $300,000 for those that file married filing jointly.

This year determining the overtime amounts may be challenging. You may see it on your W-2 or on a separate report that your employer will supply for you.

 No Tax on Car Loan Interest

No tax on car loans is a new federal tax deduction that lets you deduct the interest you pay on a qualifying new car loan starting in tax year 2025 and going through 2028. This is a big change, because personal car loan interest has never been deductible before.

The maximum amount that can be deducted is $10,000. This deduction can be taken whether you itemize or take the standard deduction.

There are very specific rules as to what a qualifying new car loan is.

• The car must be new (not used)
• The car must be made in America
• It needs to be a passenger vehicle
• Purchased for personal use
• Secured by a first-lien car loan

The new federal car‑loan‑interest deduction does have income limits. The deduction begins to phase out once your income exceeds $100,000 (single) or $200,000 (married filing jointly). If your income is high enough, the deduction can be phased out all the way to zero.

Energy Credits

There are Federal energy tax credits available for items purchased and installed by December 31, 2025.

You can take a combined total of $3,200 total per year of the Energy Efficient Home Improvement Credit (think heat pumps, central air conditioners, windows, etc.). The unused balance cannot be carried forward to the next tax year. The unused balance of the Residential Clean Energy Credit (solar, wind, etc.) can carry forward to the next year.

Basically, home upgrades (windows, insulation, heat pumps) – use it or lose it. The unused balance of solar, geothermal, and battery storage will be carried forward.

Trump Accounts – These are new.

The Working Families Tax Cuts, enacted as part of the One Big Beautiful Bill Act (OBBBA), allows parents, guardians, and other authorized individuals to establish a new tax-advantaged account for children called a Trump Account. These accounts may be opened for a child who has not reached age 18 by the end of the year of election and who has a valid Social Security Number, but contributions cannot be made until after July 4, 2026. Once available, Trump Accounts will allow after-tax contributions of up to $5,000 per year until the child turns 18, with earnings growing tax-free; withdrawals are generally prohibited before age 18, at which point the account must be converted to an IRA, with future withdrawals typically taxed at the beneficiary’s income tax rate. The law also establishes a pilot $1,000 federal contribution for children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a valid Social Security Number, with additional administrative guidance expected.

Changes for Taxpayers That Itemize

SALT (State And Local Tax)

For 2025, the SALT deduction cap (which includes real estate taxes) temporarily increases from $10,000 to $40,000. This applies to all filing statuses and all taxpayers who can itemize with income less than $500,000.

Taxpayers who earn over $500,000 will lose part of the $40,000 deduction due to an income-based phase-out. Your SALT deduction is reduced as income rises above the $500,000 threshold. The $40,000 SALT deduction is reduced to $10,000 when your income reaches $600,000.

The cap does not drop back to $10,000 until 2030, and that applies to everyone regardless

of income.

Charitable Contributions – 2026

2026 will bring additional limitations to charitable contributions with the addition of a new .5% Adjusted Gross Income floor for charitable contributions.  This means that only the charitable contributions that exceed .5% of your adjusted gross income will be allowed as a charitable contribution.

In addition, taxpayers in the highest income bracket (37%) will be capped at a 35% tax rate versus the 37% that has been allowed in the past.  While this affects few taxpayers, it will limit the allowable tax savings by 2% on charitable contributions, in addition to the .5% AGI floor that has been added.

Business Tax Law Changes Per the OBBB

QBI

The Qualified Business Income (QBI) deduction is a valuable tax benefit for many small-business owners and self-employed individuals. Originally introduced as part of the 2017 Tax Cuts and Jobs Act, this deduction allows eligible taxpayers to deduct up to 20% of qualified business income on their personal tax returns. Prior to recent legislation, the QBI deduction was scheduled to expire after December 31, 2025. The One Big Beautiful Bill Act (OBBBA) eliminated that expiration date, making the QBI deduction a permanent part of the tax code.

This change provides long-term certainty for business owners and allows for more effective tax planning beyond just the current tax year.

Bonus Depreciation and 100% Write-offs

The One Big Beautiful Bill Act (OBBBA) restores and makes 100% bonus depreciation permanent, reversing the scheduled phase-out and giving businesses the ability to fully expense qualifying assets in the year they are placed in service.

This change is designed to encourage business investment by allowing immediate tax deductions instead of spreading depreciation over several years. Unlike prior bonus depreciation rules, this is not a temporary provision. Making 100% bonus depreciation permanent provides long-term certainty and allows business owners to confidently plan capital investments without worrying about future phase-outs.

What Changed

Under prior law, bonus depreciation had been gradually decreasing each year and was scheduled to phase out entirely. The OBBBA eliminates that phase-out and permanently reinstates full, first-year expensing for most qualifying business property.

The new rules apply to assets acquired and placed in service on or after January 20, 2025.

What This Means for Your Business

Businesses can once again deduct 100% of the cost of most qualifying new and used assets in the year of purchase, including:

• Equipment and machinery
• Computers and technology
• Furniture and office equipment
• Certain business vehicles

Instead of depreciating these assets over several years, the full deduction is available immediately.

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