On July 4th, the One Big Beautiful Bill Act of 2025 was signed into law. It’s the biggest tax overhaul since 2017 – and it touches nearly everything from your W-2 income and car loan interest to business deductions and estate planning.
Here’s what changed – in plain English.
1. Personal Taxes: Rates stay lower, deductions go up, and some income gets excluded.
- Tax rates from the 2017 Tax Cuts and Jobs Act (TCJA) are now permanent.
That means the current tax brackets, including the top rate of 37%, are locked in and won’t expire like they were supposed to in 2026. - The standard deduction is higher.
It’s now $31,500 for married couples, $23,625 for heads of household, and $15,750 for single filers. You subtract this from your income before taxes are calculated – so you get taxed on less. - The SALT deduction cap is raised – partially.
SALT stands for State and Local Taxes. If your income is under $500,000, you can now deduct up to $40,000 in SALT. That deduction shrinks as your income goes up between $500K and $600K, and disappears completely above $600K. - Overtime and tip income gets special treatment.
Starting in 2026, you can exclude up to $25,000 in overtime and tip income from taxes if your income is under $150K (or $300K for married couples). That benefit phases out above those levels. - New deduction for seniors.
If you’re over 65, you can exclude up to $6,000 in income ($12,000 if filing jointly). But this benefit also phases out – completely gone if your income is over $250K (joint) or $175K (single). - Car loan interest is now deductible.
You can deduct up to $10,000 in interest if you buy a new car. Yes, really. - Charitable deductions: more for some, harder for others.
If you take the standard deduction, you can now deduct $1,000 in charitable donations ($2,000 if married). But if you itemize, you can only deduct donations that are more than 0.5% of your income. Small donations no longer count unless you give more.
2. Business Taxes: Major deductions extended, thresholds raised, and R&D gets a boost.
- You can still expense 100% of business equipment immediately.
This rule, known as “bonus depreciation,” now lasts through 2029. If you’re making big purchases, the timing could be valuable. - The 20% deduction for pass-through income is now permanent.
If you own an LLC or S-Corp, this keeps more income tax-free. - R&D expenses are fully deductible again.
This is retroactive to 2022, which means you may want to amend prior returns. - No change to the corporate tax rate.
It’s still a flat 21%. - 1099 reporting threshold raised.
You now only need to issue 1099s if you pay someone $2,000 or more, up from the old $600 limit. - Startup stock rules (QSBS) get tweaked.
More reason to hang on before cashing out. You can now exclude:
50% of your gain if you hold shares for 3 years
- 75% if you hold for 4 years
- 100% if you hold for 5+ years
- 75% if you hold for 4 years
3. Credits and Education: Bigger child credit, new kid savings account, and student loan relief.
- Child Tax Credit goes up.
It’s now $2,200 per child through 2028. - New “Trump Savings Account”
You can make a one-time $1,000 contribution per child, starting in 2026. - Student loan interest deduction expanded.
It’s a small increase, but could matter if you’re still paying off loans.
4. Estate Planning: Higher exemption = more wealth passed tax-free.
- Estate tax exemption raised to $15M per person.
This becomes permanent in 2026. If estate planning wasn’t already on your radar, it probably should be now.
What You Should Do Now:
- If you’re planning capital purchases, do it before 2029.
- If you’re gifting or planning a trust, act while the higher exemption lasts.
- If you do R&D, look back to 2022 – there may be money on the table.
- Revisit your charitable giving strategy
Every change is an opportunity – or a trap in disguise. Whether it’s reassessing your estate plan, or capturing R&D benefits, the time to plan is now.
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