On July 4, President Trump signed the One Big Beautiful Bill Act into law. The Act includes a number of tax changes, including permanent and limited modification of many soon-to-expire tax provisions, elimination or modification of most green energy provisions, and dozens of other changes affecting individuals and businesses.

This tax briefing is not intended to comprehensively cover all provisions proposed in the approximately 400-page tax portion of the Act, but rather the highlights.

Extended Individual Provisions

Individual Extenders

Many provisions of the TCJA applicable to individuals are among those scheduled to expire at the end of 2025. These include:

• 10, 12, 22, 24, 32, 35, and 37 percent brackets applicable since 2018;
• Elimination of personal exemptions;
• Increased alternative minimum tax exemption and threshold amounts;
• Lower limitation on the deduction of mortgage interest;
• Limitation on the casualty loss deduction;
• Termination of the miscellaneous itemized deduction; and
• Allowance of rollovers from qualified tuition programs to ABLE accounts.

The Act makes all of these provisions permanent, but does make some modifications. The Act permanently treats mortgage insurance premiums as qualified residence interest for which a deduction could be claimed and allows for unreimbursed educator expenses to be deducted as a miscellaneous itemized deduction. The Act also removes the last seven years of inflation adjustments from the AMT exemption phase-out threshold for joint filers, reverting the threshold to the 2018 amount.

Also, the Act does permanently eliminate the personal exemption amount, but provides a $6,000 deduction amount for seniors age 65 and older after 2024 and before 2029. This deduction would phase out for individuals whose modified adjusted gross income exceeds $75,000 ($150,000 for joint filers).

Standard Deduction

The Act increases the amount of the standard deduction for tax years beginning in 2025 and subject to inflation thereafter. Under the Act, the standard deduction amounts for 2025 are $31,500 for joint filers, $23,625 for heads of households, and $15,750 for single taxpayers and married taxpayers filing separately.

SALT Deduction

One of the most controversial provisions of the TCJA was the imposition of a $10,000 cap on the deduction for state and local taxes. Before the ink was dry on the 2017 legislation, lawmakers in higher tax states on both sides of the aisle (the so-called “SALT Caucus”) were introducing legislation intended to increase or outright repeal the cap.

The Act increases the cap to $40,000 for 2025, with a one percent increase in the cap each year through 2029 before returning to the $10,000 limit in 2030. The cap is reduced by 30% of the amount by which the taxpayer’s modified adjusted gross income exceeds a threshold amount. That threshold amount is generally $500,000 for 2025, with a one percent increase each year through 2029.

Child Tax Credit

The Act permanently increases the base amount of the credit to $2,200, subject to annual inflation increases. The post‑2017 base amount of the refundable portion of the child tax credit (the “additional child tax credit”) remains at $1,400, and continues to be indexed for inflation ($1,700 for 2025).

Estate Taxes

The estate tax basic exclusion amount, which the TCJA doubled for decedents dying through 2025 (inflation adjusted to $13.99 million in 2025) would revert back to 2017 amounts if the TCJA is allowed to expire.

Under the Act, the basic exclusion amount is increased again to a base amount of $15 million for decedents dying in 2026, adjusted for inflation thereafter.

New Individual Provisions

No Tax on Tips

One of the big talking points for President Trump during the campaign was the elimination of tax on tip income. Historically, tip income was not subject to tax until the early 1980’s when legislation passed during the Reagan administration treated it like regular income.

The Act does not provide an exclusion from income for tips; but rather provides a deduction from income for amounts received as tips. Under the Act, taxpayers are not required to itemize deductions to claim the deduction, but a Social Security number is required to claim the deduction. The deduction is capped at $25,000, and the deduction begins to phase out when the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 for joint filers). The deduction is not allowed for tax years beginning after 2028.

The Act also extends the employer credit for Social Security taxes on employee cash tips to the beauty service industry (the credit currently only applies to the food and beverage industry).

No Tax on Overtime

Under the Act, taxpayers are able to claim a deduction for the amount of overtime pay received as required under section 7 of the Fair Labor Standards Act of 1938. Like the deduction for tip income, taxpayers do not have to itemize deductions to claim the deduction, but are required to provide a Social Security number. The deduction is capped at $12,500 ($25,000 for joint filers), and the deduction begins to phase out once the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 for joint filers). The deduction is not allowed for tax years beginning after 2028.

Itemized Deduction Limitation

Prior to the TCJA, the itemized deduction limitation was subject to a phaseout at higher incomes (the “Pease” limitation). The Act includes a return of the limitation on itemized deductions for taxpayers in the 37 percent income tax bracket, effective after 2025.

Automobile Loan Interest

Previously, interest on an individual’s automobile loan was treated as nondeductible personal interest. The Act includes a deduction of up to $10,000 for interest paid on an automobile loan in 2025 through 2028 for a car purchased after 2024. The deduction is available for both itemizers and non-itemizers.

Charitable Deduction for Non-itemizers (cash deductions only)

The bill creates a charitable contribution deduction of $1,000 for single filers or $2,000 for MFJ, for certain charitable contributions. The deduction is permanent; however, it starts after 2025.

Trump Accounts

The Act also includes provisions for the creation of tax‑favored accounts for newborn children, called “Trump Accounts.” These accounts are seeded with $1,000 for newborn children.

Business Provisions

Bonus Depreciation

The TCJA provided for 100 percent expensing of certain business property through 2022, with a 20 percent stepdown each year after before reaching 0 percent in 2027 (currently set at 40% in 2025). The Act makes 100 percent bonus depreciation permanent for property acquired after January 19, 2025.

Qualified Business Income Deduction

The TCJA’s qualified business income deduction under Code Sec. 199A is set to expire for tax years beginning after 2025.

Under the Act, the qualified business income deduction is made permanent. Additional changes expand qualification for the deduction.

Additional Provisions

The Act also includes:

• An increase in the 179 deduction limitations after 2024;
• An exclusion of interest received by qualified lenders secured by rural or agricultural real property;
• Modifications to the low‑income housing credit.

If you have any questions about the recent changes and how they may affect your personal situation, please feel free to contact us - we’d be happy to schedule a meeting to discuss with you.

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