Overview of the Big Beautiful Bill Act

Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) brings significant updates to the U.S. tax code that will affect individuals, families, and businesses. Below is a detailed summary of the tax-related provisions in the bill and how they may impact your finances.

Key Tax Provisions

1. Permanent Extension of TCJA Provisions The 2017 Tax Cuts and Jobs Act (TCJA) introduced lower tax brackets, a higher standard deduction, and other individual tax benefits. The OBBBA makes these provisions permanent, locking in:

• Lower marginal tax rates

• Increased standard deduction

• Elimination of personal exemptions

2. Enhanced Deductions for Workers

• Tipped and Overtime Workers: You may now deduct up to $12,500 ($25,000 for married couples) of qualifying tip or overtime income.

• Car Loan Interest Deduction: A new deduction allows interest on qualified car loans for domestically assembled vehicles.

• Senior Deduction: Taxpayers aged 65 and older get an additional $6,000 deduction for tax years 2025–2027.

3. State and Local Tax (SALT) Deduction Expansion The SALT deduction cap is temporarily increased to $40,000, up from the previous $10,000. This cap phases out at incomes over $500,000.

4. Child Tax Credit (CTC) Expansion The Child Tax Credit increases to $2,500 per child through 2028. After that, it will revert to $2,000. The credit remains partially refundable and continues to phase out for higher-income households.

5. "Trump Accounts" for Children Parents of children born between 2025 and 2028 can contribute up to $5,000 annually into tax-deferred savings accounts, seeded with a $1,000 government contribution. These savings accounts grow tax-free until the child reaches age 18.

6. Immediate Expensing for Capital Investments Businesses can now immediately deduct 100% of qualifying capital expenditures, including equipment, technology, and software. This provision replaces bonus depreciation and encourages reinvestment.

7. Corporate Tax Provisions

• The 21% corporate tax rate is maintained.

• Enhanced credits for U.S.-based manufacturing and automation.

8. 1099-K Reporting Thresholds The bill maintains the reduced $600 reporting threshold for third-party payment processors but includes clearer definitions and de minimis exclusions for casual sellers.

Summary: What This Means for You

• Employees may benefit from new deductions and permanent lower tax rates.

• Parents can take advantage of increased child tax credits and long-term savings via Trump Accounts.

• Seniors receive an additional deduction for the next three years.

• Small Businesses can reduce their tax burden through immediate expensing and existing lower corporate rates.

Stay Informed and Prepared

With these changes taking effect for the 2025 tax year, it’s critical to begin planning now. Contact our office today to schedule a consultation and ensure you’re positioned to maximize deductions, credits, and tax-saving strategies under the new law.