Big Tax Changes Are Here: What the One Big Beautiful Bill Means for You
Jul 16
2 min read
0
1
0
On July 4, the President signed into law H.R. 1, the One Big Beautiful Bill Act (OBBB)—a major federal tax bill. We’ve outlined the most important updates below:
For Individuals & Families
Child Tax Credit: The credit was expanded to $2,200 per qualifying child and kept at $500 for other dependents.
State and Local Tax Deduction Cap: Raised to $40,000 in 2025 (phased down for incomes over $500,000; but not below $10,000). This resets to $10,000 in 2030.
Elimination of Miscellaneous Itemized Deductions: Investment expenses and unreimbursed job costs are no longer deductible.
Overtime Income Deduction: Up to $12,500 (single) or $25,000 (joint).
Tip Income Deduction: Up to $25,000.
Vehicle Loan Interest Deduction: Up to $10,000.
Charitable Deduction for Non-Itemizers: Up to $1,000 (single) or $2,000 (joint) starting in 2026
Social Security taxes remain, but those age 65+ may qualify for new temporary deductions through 2028.
The “Trump Account” (Starting 2026)
A new child-focused retirement account:
Up to $5,000 in non-deductible contributions.
$1,000 federal contribution for children born 2025–2028.
Restricted investment options, no withdrawals until age 18.
Converts to a Traditional IRA at 18.
Consider this for children without earned income or as a complement to a Roth IRA.
For Business Owners
The 20% deduction for qualified business income is permanently extended.
New minimum deduction of $400 for individuals earning at least $1,000 in qualified business income. Higher phase-in thresholds make this deduction more accessible for small business owners.
The bill reinstates the 100% “bonus” depreciation deduction for qualifying assets placed in service after January 19, 2025, offering significant up-front savings on capital investments.
What You Can Do Now:
Update your tax strategy to reflect new deductions, credits, and planning opportunities.
Reassess your estate and charitable giving plans in light of the extended exemptions.
Evaluate business purchases for 2025 to maximize depreciation benefits.
Explore Trump accounts or Roth IRAs for children and teens.