On July 4, 2025, President Trump signed a major tax reform bill—the One Big Beautiful Bill Act (OBBBA).
This nearly 900-page piece of legislation brings both opportunities and complexities. There is a lot to cover and individual needs should be considered alongside your tax advisor. That said, here is a brief overview of some of the items that may be most impactful to many of our clients. The full text of the Act can be found here.
For Individuals
- The current tax rates are now permanent, with the top bracket holding at 37%.
- The higher standard deduction remains. For 2025, it’s $15,750 (single) or $31,500 (married), and it will keep adjusting for inflation.
- New senior deduction means that if you’re 65 or older, you’ll get an extra $6,000 deduction per person—though this phases out at income of $90k (single) or $180k (joint).
The $2,000 per child tax credit is locked in and will rise with inflation in future years. - The introduction of new deductions for tips and overtime. Starting this year, you can deduct up to $25,000 in tip income and up to $12,500 (single) or $25,000 (joint) for overtime. These both phase out at higher incomes of ($150,000 single, $300,000 joint) and expire after 2028.
- You can deduct up to $10,000 in interest for buying U.S.-made vehicles with income limits ($100k single and $200k joint). This phases out in 2028.
- The state and local tax (SALT) deduction cap is raised to $40,000, but it gradually phases back down for high earners over $500k.
- Starting in 2026, non-itemizers can deduct up to $1,000 (single) or $2,000 (joint) in charitable giving. Itemizers will face a small floor on deductions.
- You can now use up to $15,000 per year from a 529 account for K-12 tuition and some licensing costs starting in 2026.
- Clean vehicle purchases must be made by September 30, 2025, and home energy improvements by December 31, 2025, in order to qualify for current tax breaks.
- The estate tax exemption is now permanently set at $15 million per person ($30 million per couple) starting in 2026 and will rise with inflation.
- Qualified Small Business Stock issued after 7/4/2025 have new holding period requirements incrementally up to 5 years and the exclusion amount was increased to $15 million.
For Business Owners
- Bonus depreciation is here to stay. Businesses can permanently expense 100% of the cost of new property purchased after January 19, 2025.
- Section 179 Deduction for qualified purchases is increased to $2.5 million, adjusted annually for inflation.
- Businesses can now permanently expense U.S.-based research and development costs, including software development.
- The 20% pass-through deduction for S corps, LLCs, and other qualifying businesses is here to stay, allowing the businesses to more easily pass through their tax liability to owners.
Like we mentioned, this is an initial summary of some of the points we think may be most relevant to our clients of a very large and complex piece of legislation. We encourage you to work with your wealth, planning and tax advisors to better understand how this Act will affect you and your family.