The One Big Beautiful Bill Act, signed into law on July 4, 2025, marks one of the most significant overhauls to U.S. tax policy since the Tax Cuts and Jobs Act of 2017 (TCJA). It locks in many of the TCJA’s popular provisions, adds new tax breaks for individuals and small businesses, and introduces unique benefits like a senior “bonus” and a new child savings account.
This guide breaks down key tax changes for individuals and businesses, how they affect you, and what to watch for in the years ahead.
1. Key Individual Tax Changes
🏦 Permanent TCJA Tax Rates & Brackets
- TCJA-era tax brackets are now permanent.
- Adds an extra year of inflation adjustments for higher brackets.
💰 Estate & Gift Tax Exemption
- From 2026: $15M exemption for individuals ($30M for married couples), indexed to inflation.
📈 Higher Standard Deduction
- From 2025:
- Single: $15,750
- Head of Household: $23,625
- Married Filing Jointly: $31,500
- Adjusted for inflation annually.
👴 Senior “Bonus” Deduction (2025–2028)
- Additional $6,000 deduction for those 65+.
- Income phaseouts: $75,000 (single) / $150,000 (joint).
🏠 SALT Deduction Boost
- Cap raised from $10,000 to $40,000 starting 2025.
- Phases out for income above $500,000; reverts in 2030 unless extended.
📉 Alternative Minimum Tax (AMT)
- Higher exemption amounts made permanent.
- Phaseout rate increased to 50%.
👨👩👧 Child Tax Credit
- Permanently raised to $2,200 (indexed for inflation).
- Higher refundable portion made permanent.
💵 Temporary Income Deductions (2025–2028)
- Tip Income Deduction: Up to $25,000 ($300K income limit joint).
- Overtime Pay Deduction: Up to $12,500 ($25,000 joint).
- Auto Loan Interest Deduction: Up to $10,000 (income limits apply; U.S.-assembled cars only).
🎓 Expanded 529 Plan Uses
- Covers K–12, homeschooling, tutoring, testing fees, and non-college credentials.
🍼 New Child Savings Account (2025–2028 Births)
- $1,000 federal deposit at birth.
- Parents: up to $5,000/year.
- Employers: up to $2,500/year (tax-free to employee).
- Growth is tax-deferred; withdrawals taxed as long-term capital gains.
❤️ Charitable Deductions (Starting 2026)
- Non-itemizers: Up to $1,000 single / $2,000 joint.
- Itemizers: Deduction only if contributions exceed 0.5% of AGI.
2. Changes for Small Businesses
🏢 Qualified Business Income (QBI) Deduction
- 20% pass-through deduction permanently extended.
⚙️ Increased Expensing Limits
- Cap raised to $2.5M for qualifying property, with higher phaseouts.
🏛️ Estate Tax Relief for Business Owners
- Higher exemption amounts aid succession planning.
🚜 Restored Bonus Depreciation
- 100% first-year deduction for new equipment and facilities reinstated.
3. What’s Temporary — and Why It Matters
While many provisions are permanent, most of the new deductions and credits expire after 2028. If Congress doesn’t extend them, taxpayers could lose:
- Senior “bonus”
- SALT cap increase
- Tip, overtime, and auto loan deductions
- Child savings account program
4. Takeaways & Tax Strategy Tips
- Permanent TCJA rates mean stability for long-term planning.
- Take advantage of temporary deductions while they last.
- Consider estate and gift planning with the new higher exemptions.
- Small businesses should review expensing and depreciation strategies.
- Coordinate with tax, legal, and financial professionals to maximize benefits.