(OBBBA):What It Means for Your Taxes
🔷 Individual Income Tax Rates — Made Permanent
✅ The lower income tax rates from the 2017 TCJA, which were set to expire after 2025, are now permanent.
✅ The seven tax brackets remain: 10%, 12%, 22%, 24%, 32%, 35%, 37%.
✅ Inflation adjustments to the brackets continue.
✅ Standard deduction slightly increased for 2025:
Single: $15,750
Head of Household: $23,300
Married Filing Jointly: $31,500
📊 2025 Federal Income Tax Brackets
Rate | Single | Married Filing Jointly | Head of Household |
10% | Up to $11,925 | Up to $23,850 | Up to $16,275 |
12% | $11,926–$47,150 | $23,851–$94,300 | $16,276–$63,150 |
22% | $47,151–$100,525 | $94,301–$201,050 | $63,151–$100,500 |
24% | $100,526–$191,950 | $201,051–$383,900 | $100,501–$191,950 |
32% | $191,951–$243,725 | $383,901–$487,450 | $191,951–$243,700 |
35% | $243,726–$609,350 | $487,451–$731,200 | $243,701–$609,350 |
37% | Over $609,350 | Over $731,200 | Over $609,350 |
📌 Action: Review your withholding and estimated tax payments to reflect permanent brackets & updated deductions.
🔷 SALT Deduction — Increased for Many
✅ Cap increased to $40,000/year in 2025, rises ~1% annually through 2029, then reverts to $10,000 in 2030.
✅ AGI limits:
Married Filing Joint: $500,000
Single & HOH: $250,000
✅ Above thresholds, cap is reduced by 30% of excess AGI (but no less than $10,000).
📌 Action: Review your AGI and adjust if possible to maximize this deduction.
🔷 Child Tax Credit — Increased
✅ Increased to $2,200 per child under 17, with $1,700 refundable.
✅ Phases out at MAGI:
Married Filing Joint: $400,000
Single & HOH: $200,000
📌 Action: Make sure dependents are properly claimed and withholding adjusted.
🔷 Social Security Deduction & Senior Bonus — New
✅ Deduct up to $6,000/person of taxable Social Security benefits.
✅ Additional senior bonus deduction:
Single & HOH: $7,600
Married Filing Joint: $8,000
✅ Phase-out starts at MAGI:
Single & HOH: $75,000
Married Filing Joint: $150,000
📌 Action: Seniors should review income sources and plan withdrawals to stay under thresholds.
🔷 Trump Family Savings Accounts — New
✅ Parents can contribute up to $5,000/year per child; employers up to $2,500/year.
✅ One-time $1,000 federal deposit for children born 2025–2028.
✅ Grows tax-deferred; withdrawals taxed as long-term gains.
📌 Action: Parents should open these accounts early to maximize savings.
🔷 Auto Loan Interest Deduction — New
✅ Deduct interest (2025–2028) on loans for U.S.-made vehicles ≤14,000 lbs.
✅ Cap: $10,000/year.
✅ Phase-out starts at MAGI:
Single & HOH: $100,000 (fully phased out at $150,000)
Married Filing Joint: $200,000 (fully phased out at $250,000)
📌 Action: Buy U.S.-made vehicles and keep documentation.
🔷 Tips & Overtime Deduction — Expanded
✅ Deduct more tips & overtime (2025–2028):
Tips: up to $25,000/year
Overtime: up to $12,500/year
✅ Phase-out starts at MAGI:Single & HOH: $150,000
Married Filing Joint: $300,000
📌 Action: Keep detailed records of tips & overtime to claim the full benefit.
🔷 Adoption Credit — Partially Refundable
✅ Up to $5,000 refundable after 2025.
📌 Action: Families adopting should plan and document expenses.
🔷 Dependent Care Assistance — Increased
✅ Contribution limits:
Single, HOH & MFJ: $7,500
MFS: $3,750
📌 Action: Adjust contributions if eligible.
🔷 Mortgage Interest Deduction — Clarified
✅ Deductible up to:
Single, HOH & MFJ: $750,000
MFS: $375,000
✅ Includes mortgage insurance premiums.
✅ Home equity loan interest is only deductible if used to improve the home.
📌 Action: Track all mortgage-related interest and insurance for documentation.
🔷 Casualty Loss Deduction — Expanded
✅ Applies to losses from state- or federally-declared disasters.
✅ Must itemize and substantiate losses.
📌 Action: Retain disaster declarations & document all damages.
🔷 Pease Limitation — Repealed & Replaced
✅ The Pease limitation, which reduced itemized deductions for high earners by up to 80%, is permanently repealed after 2025.
✅ Replaced by a clear cap on itemized deductions for taxpayers in the 37% bracket:
Single & HOH: AGI > $609,350
Married Filing Joint: AGI > $731,200
🔷 What was the Pease Limitation?
It was a hidden tax for high earners — reducing itemized deductions as income rose above certain thresholds. Now replaced by a simpler, predictable cap.
📌 Action: High-income taxpayers should review their deductions & planning accordingly.
🔷 Gambling Losses — Limited
✅ Beginning in 2026, only 90% of gambling losses can be deducted, even if winnings exceed losses.
📌 Action: Keep thorough records of gambling activity.
🔷 Scholarship Granting Organization Credit — New
✅ Up to $1,700 credit for donations to qualifying scholarship organizations, with 5-year carryforward.
📌 Action: Factor this credit into charitable planning.
🔷 Energy Credit Terminations — Accelerated
✅ Credits expire earlier:
Clean Vehicle (New & Used): Sept. 30, 2025
Commercial Clean Vehicle: Sept. 30, 2025
Alt. Fuel Refueling: June 30, 2026
Energy Efficient Home Improvement: Dec. 31, 2025
Residential Clean Energy (Solar): Dec. 31, 2025
📌 Action: Complete energy-related projects before expiration dates.
🔷 Educator Expenses — Expanded
✅ Deduction remains available for unreimbursed classroom expenses, even if not itemizing.
✅ Starting in 2026, no dollar cap — all unreimbursed qualifying expenses & instructional mileage are deductible.
📋 Examples:
Supplies, technology, learning aids, art, furniture, mileage for instructional duties.
📌 Action: Save receipts & track expenses and mileage throughout the year.
🔷 Charitable Contribution Deductions — Updated & Expanded
✅ New above-the-line deduction for non-itemizers, starting 2026:
Single: up to $1,000
Married Filing Joint: up to $2,000
✅ For itemizers:
Must exceed 0.5% of AGI before claiming deduction; subject to AGI caps (e.g., 60% of AGI for cash gifts to public charities).
Carryforward of unused amounts allowed for 5 years.
✅ Corporations:
Must exceed 1% of taxable income, capped at 10%, with 5-year carryforward.
📌 Action: Review AGI & contribution levels to ensure deductions are maximized.
📅 What Should You Do Next?
Here are some action steps you can take now:
📄 Review withholding & adjust for new brackets & deductions.
🏠 Check AGI & plan to maximize the SALT deduction.
👶 Open and fund a Trump Account & claim $1,000 birth credit if applicable.
🚗 Plan car & EV purchases strategically.
💼 Track tips, overtime, QBI, educator, adoption & charitable expenses.
❤️ Seniors: ensure you’re claiming Social Security & bonus deductions.
📝 Business owners: plan around QBI enhancements, bonus depreciation & R&D changes.
Note: Some credits & deductions phase out at higher income levels. Many benefits have expiration dates. Planning ahead helps maximize your savings.
💌 Closing
I hope this guide helps you navigate the changes ahead and take advantage of the many opportunities the Big Beautiful Bill provides. As always, I’m here to support you — feel free to reach out with any questions!
I’ll also be creating separate newsletters on some of these categories to provide more detailed explanations and planning tips. Please keep an eye out for those updates — they may include important information that pertains specifically to you.
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