"One Big Beautiful Bill Act"

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, and will affect Americans in many ways. In this guide, we want to highlight the most pertinent tax-related provisions in the bill.

While there are a few new tax deductions, the bill primarily made permanent some of the tax structures from the Tax Cuts and Jobs Act (TCJA) in 2017 that were set to expire in 2026.

Please note: The information provided here is our best understanding of the bill’s tax provisions, but it is not an exhaustive list. It is subject to change as additional information and guidance is provided by the IRS. We are happy to answer questions, but also recommend connecting with your CPA or tax professional for questions specific to your circumstances. As always, we are happy to join in those conversations if desired.

Continuation of Current Tax Rates 

The OBBBA will make permanent the current 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets on ordinary income, which were set to expire in 2026. The income limits for each bracket will continue to be adjusted for inflation annually. The 2025 tax brackets are as follows.

Increased Standard Deduction 

The bill raised the standard deduction, starting retroactively in 2025: $15,750 for single filers, $23,625 for heads of household, and $31,500 for married individuals filing jointly. The amounts will be adjusted for inflation annually. 

New Additional Deduction for Individuals age 65+

For 2025-2028 tax years, there is a new additional $6,000 deduction for individuals who are age 65 and older. This deduction begins to phase out when a taxpayer’s modified adjusted gross income (MAGI) exceeds $75,000 ($150,000 in the case of a joint return). 

Higher State & Local Taxes (SALT) Cap 

The OBBBA provides a temporary increase in the limit of the federal deduction for state and local taxes (the "SALT" cap) from $10,000 to $40,000, starting in 2025. The limit will increase to $40,400 in 2026 and will be adjusted for inflation by 1% annually through 2029. In 2030, the limit will revert to $10,000. The deduction phases down for taxpayers who are single, head of household, and married filing jointly with a modified adjusted gross income (MAGI) over $500,000 in 2025 (this amount will be adjusted for inflation annually).

Increased Estate and Gift Tax Exemption 

The bill permanently increased the estate tax exemption and lifetime gift tax exemption to $15 million for single filers and $30 million for married filing jointly in 2026 (up from $13.99 million). The exemption amount will be adjusted annually for inflation starting in 2027.

Higher Child Tax Credit 

The OBBBA increases the Child Tax Credit to $2,200 per eligible child in 2025, up from $2,000 per child. This credit still phases out over the same modified adjusted gross income (MAGI) range, which starts at $200,000 for single filers and $400,000 for married filing jointly.

Charitable Donation Floor 

Starting in 2026, there will be a floor of 0.5% of AGI for itemized charitable contribution deductions.

Mortgage Interest Deduction Made Permanent

The bill made permanent the limit of tax-deductible interest on a primary residence to the first $750,000 of home mortgage debt. It also made permanent that home equity line of credit (HELOC) debt is excluded from the definition of qualified residence interest.  

Car Loan Interest Deduction 

Starting in 2025, taxpayers will be able to deduct up to $10,000 of interest on new car purchases of cars assembled in the United States. This credit is phased out for taxpayers with MAGI in excess of $100,000 ($200,000 for married filing jointly). Tax credits for purchases of electric vehicles (EV), which ranged up to $7,500 and had been scheduled to last through 2032, will now end after September 2025.

Trump Accounts 

In this three-year pilot program, the federal government will contribute $1,000 to a “Trump Account” for U.S. citizens born between 2025 and 2028. These accounts are a type of IRA for minors under age 18. Once the account holder turns 18, the account converts into a traditional IRA and follows the same rules as any other IRA. Trump Accounts have an annual contribution limit of $5,000 per year, which will be adjusted for inflation. Employers may contribute up to $2,500 per year to a Trump Account for an employee who is under 18, or for an employee’s dependent. Employer contributions count toward the $5,000 total annual contribution limit, but the $1,000 government deposit does not. Contributions are not tax-deductible, but accounts grow tax deferred as with regular IRAs, and distributions are taxed.

Funds in a Trump Account can only be invested in funds that track the S&P 500 or a similar index of primarily of U.S. companies, and must have an expense ratio of 0.1% (10 basis points) or less. Once the account holder turns 18, the Trump Account becomes a regular IRA, and the investment restrictions no longer apply.