What the “One Big Beautiful Bill” Means for Your Taxes

Posted on by Rock Fusco Connelly LLCJuly 15, 2025Tax Law

On July 4, 2025, the federal government passed a major new bill known as the “One Big Beautiful Bill” (OBBB). This legislation extends many parts of the 2017 Tax Cuts and Jobs Act and introduces several new tax rules that could impact individuals, families, and business owners for years to come.

Temporary Tax Cuts Are Now Permanent

Many tax breaks that were set to expire will now remain in place:

  • Federal Income Tax Brackets: The current 10%, 12%, and 22% tax brackets will stay the same, with adjustments each year for inflation.
  • Standard Deduction (starting 2025):
    • $31,500 for married couples filing jointly
    • $23,625 for heads of household
    • $15,750 for single filers
  • Child Tax Credit: Increases to $2,200 per child beginning in 2026.
  • Mortgage Interest Deduction: Remains limited to interest on mortgages up to $750,000 (or $375,000 if married filing separately).
  • State and Local Tax (SALT) Deduction: Increases to $40,000 with inflation adjustments through 2029, then returns to $10,000 in 2030. A phaseout applies for high-income households.
  • Alternative Minimum Tax (AMT): The higher exemption amount is now permanent.
  • Estate Tax: The exemption will increase to $15 million per person in 2026, adjusted annually for inflation.
  • Business Tax Breaks: The bill makes permanent the full expensing of research and development, 100% bonus depreciation, and 20% deduction for pass-through businesses (Section 199A).

New Tax Benefits for Seniors, Families, Students, and Workers

  • Seniors’ Deduction: Taxpayers age 65 and older with income under $75,000 ($150,000 for couples) can deduct up to $6,000 between 2025 and 2028. The deduction phases out at $175,000 for individuals or $250,000 for couples.
  • Trump Savings Account: Families with children born between 2025 and 2028 can contribute up to $5,000 annually per child, plus receive a one-time $1,000 federal match.
  • Student Loans: Income-based repayment plans are being replaced with standardized repayment options. Some graduate-level aid will be limited.
  • Tip Income Deduction: Workers who receive tips can deduct up to $25,000 of that income for tax years 2025 through 2028. The deduction phases out at $150,000 for individuals or $300,000 for couples.
  • Overtime Deduction: Overtime earnings up to $12,500 (or $15,000 for married couples) may be deducted from federal income for 2025 through 2028, also subject to income limits.

Other Tax Updates 

  • Charitable Giving:
    • Starting in 2026, taxpayers who don’t itemize can still deduct donations—up to $1,000 for individuals and $2,000 for couples.
    • Those who do itemize must donate at least 0.5% of their adjusted gross income before the deduction applies.
  • Scholarship Tax Credit: A new credit of up to $1,700 is available for donations to approved scholarship funds. Starting in 2027, scholarships awarded to your dependents from those funds will not be counted as taxable income.
  • Green Tax Credits Ending:
    • Electric vehicle credits will expire for cars purchased after September 30, 2025.
    • Credits for energy-efficient home improvements will expire for projects installed after December 31, 2025.
  • Car Loan Interest: From 2025 to 2028, individuals earning under $100,000 can deduct interest on car loans (up to $10,000 of the financed amount) for new U.S.-made vehicles.

What This Means for You

The new law makes many existing tax benefits permanent while introducing new deductions and credits that could impact your personal and business tax planning. Some changes begin immediately, while others phase in over the next few years.

If you have any questions or concerns regarding the “One Big Beautiful Bill”, don’t hesitate to reach out to the qualified attorneys at Rock Fusco & Connelly, LLC.

 

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