On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. Many of the provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 were set to expire at the end of 2025. OBBBA makes these provisions permanent. These include:
• 10, 12, 22, 24, 32 and 35 percent tax brackets
• Elimination of personal exemptions
• Increased alternative minimum tax exemption and threshold amounts
• Lower limitation on the deduction of mortgage interest
• Limitation of casualty loss deduction
• Termination of the miscellaneous itemized deductions
One Big Beautiful Bill
The TCJA nearly doubled the standard deduction for tax years beginning after 2017. OBBBA permanently increases the amount of the standard deduction for 2025. Under the Act, the standard deduction amounts for 2025 are $31,500 for joint filers and $15,750 for single taxpayers.
SALT Deduction
Under OBBBA, the applicable limitation amount on an individual’s federal tax deduction for state and local taxes (SALT) is raised from $10,000 to $40,000. This deduction begins to phase out at $500,000 for all taxpayers. The Tax Foundation predicts that about 14.2% of taxpayers will itemize their deductions with the increased state and local deduction.[1]
Increased Estate and Lifetime Gift Exemption
The TCJA of 2017 increased the estate and lifetime gift tax exemption to approximately double the amount of $5.49 million. The current estate and lifetime gift tax exemption was set to expire after December 31, 2025. However, OBBBA permanently extends the estate and lifetime gift tax exemption amount to $15 million for single filers and $30 million for married couples filing jointly in 2026.
Deduction for Qualified Residence Interest
OBBBA permanently lowers the deduction for qualified residence interest to the first $750,000 in home mortgage acquisition debt. Interest on home equity loans remains nondeductible unless the funds are used to buy, build or substantially improve the home that secures the loan.
Child Tax Credit
The TCJA increased the amount of the child tax credit from $1,000 to $2,000 for tax years 2018 through 2025. It also significantly increased the phaseout thresholds to $400,000 for joint filers and $200,000 for all others. OBBBA makes the expiring child tax credit permanent with an increased maximum of $2,200 in 2025.
New Individual Provisions, Senior Deductions
President Trump campaigned on the promise to eliminate all income taxes on Social Security. However, OBBBA does not include this provision. Instead, OBBBA provides an additional separate deduction of $6,000 for individuals aged 65 and older from 2025 through 2028. It also makes it available to those individuals who itemize their deductions. However, this deduction begins to phase out at $75,000 for single filers and $150,000 for joint filers. It is fully phased out at $175,000 for single filers and $250,000 for joint filers.
Tips and Overtime
During his campaign, President Trump also proposed eliminating taxes on tips and overtime compensation. OBBBA does not exclude tips from income but provides a deduction from income for amounts received as tips. The deduction is capped at $25,000 for certain tip income. The deduction begins to phase out when the taxpayer’s modified adjusted gross income (MAGI) exceeds $150,000 for single filers and $300,000 for joint filers.
OBBBA provides a deduction for qualified overtime compensation received during the year and included on statements furnished to the individual. It is the amount in excess of the regular rate at which the individual is employed. It is limited to $12,500 for single-filers and $25,000 for joint filers. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 for single filers and $300,000 for joint filers.
Charitable Contribution Deduction
OBBBA provides a charitable contribution deduction for individual taxpayers who do not elect to itemize. Starting in 2026, individuals who do not itemize can deduct up to $1,000 for single filers and $2,000 for married taxpayers filing jointly for charitable contributions. Effective January 1, 2026, OBBBA imposes a 0.5% floor on the charitable contribution deduction for taxpayers who itemize.
Automobile Loan Interest
OBBBA includes a deduction of up to $10,000 for a qualified passenger vehicle loan in 2025 through 2028. The deduction phases out when a taxpayer’s MAGI exceeds $100,000 for single filers and $200,000 for joint filers. The deduction is allowable for both itemizers and non-itemizers. A qualified passenger vehicle includes a car, minivan, van, sport utility vehicle, pickup truck or motorcycle that is new, with the final assembly of the vehicle occurring in the United States.
Capital Gains
OBBBA did not affect the 2025 capital gains rates. The rates for long-term capital gains are 0%, 15% or 20 percent. The amount an individual pays on those capital gains depends upon their income and tax filing status. Married filing jointly taxpayers with taxable income up to $96,700 (single filers with income up to $48,350) pay 0% on long-term capital gains. The 20% long-term capital rate applies to married filing jointly taxpayers with income of more than $600,050 (single filers with income of more than $533,400).
If you or any other advisors have questions about the issues raised here, please contact your investment manager or one of us.
— William H. Darling, CPA – Chairman & CE
— Jeanne M. FitzGerald, CPA – Tax Manager