The “One Big Beautiful Bill Act,” signed into law on July 4, includes a range of updates that may impact individual taxpayers, families, seniors, and business owners beginning in 2025. From extending tax rates originally set by the 2017 Tax Cuts and Jobs Act to introducing new deductions for overtime and tips, the bill brings notable changes to the federal tax landscape. This high-level overview highlights some of the most talked-about provisions, offering a starting point for those looking to better understand the updates. 

We hope this overview helps you better understand some of the key changes introduced in the One Big Beautiful Bill Act. While it highlights several noteworthy provisions, it is not a comprehensive summary of the full legislation. These updates may affect individuals and families differently depending on their specific circumstances.

As always, before making any tax-related decisions, consider speaking with a qualified tax professional who can help you understand how the new rules may apply to your financial strategy. Staying informed and proactive can support more confident financial planning in the years ahead.

One key feature in the One Big Beautiful Bill Act is the extension and revision of some of the tax laws that were part of the 2017 Tax Cuts and Jobs Act (TCJA). Here’s a quick summary of three notable changes:

Extension of Tax Rates 
The bill extends the current tax rates of 12 percent, 22 percent, 24 percent, 32 percent and 37 percent, respectively. If the TCJA expired, the rates were scheduled to revert back to 15, 25, 28, 33 and 39.6 percent. 

Standard Deduction
In addition, the standard deduction increases to $15,750 for single filers and $31,500 for those filing jointly for 2025. Both represent a modest increase over the current amounts. The standard deduction will continue to be adjusted for inflation starting next year.

State and Local Tax Deduction (SALT) 
Another notable revision involves the SALT deduction. Beginning in 2025, the SALT cap increases to $40,000 and will grow by 1 percent annually until 2030. However, in 2030, the cap will revert to $10,000. It’s important to note that SALT includes a $500,000 income threshold for both single and married filers.

Another area receiving attention is the new “bonus” deduction for older Americans. This provision is designed to offer additional tax relief to seniors starting in 2025.

Bonus Deduction 
Starting in 2025, the bill provides a $6,000 bonus deduction for filers 65 and up in addition to the standard deduction available to all taxpayers. The new amount will be $7,600, and $8,000 for unmarried/non-surviving spouses. This provision is set to expire in 2028.

Phase Out 
The deduction begins to phase out for individuals with income starting at $75,000, or $150,000 for joint filers. It phases out entirely at $175,000 for individuals and $250,000 for couples filing jointly.

Families will want to take note of several child-related tax updates included in the bill. These provisions aim to provide increased financial support for those raising children.

Child Tax Credit
Beginning in 2025, the child tax credit will increase from $2,000 to $2,200. This credit also now includes a cost-of-living adjustment (COLA), which may impact future years.

Dependent Care
Looking ahead to 2026, the dependent care flexible spending account limit will increase to $7,500, up from the current $5,000. Additionally, the maximum percentage of qualified expenses eligible for the credit will rise from 35 percent to 50 percent.

American Family Account
A new provision introduces a one-time $1,000 government contribution into a special account for children born between 2025 and 2028. Parents may contribute up to $5,000 per year to the account, although no withdrawals will be permitted before the child turns 18.

529 Expansion
The bill also broadens the use of 529 plans. The plans can now cover non-tuition expenses associated with elementary or secondary school attendance. Starting in 2026, the tuition-related cap will increase from $10,000 to $20,000.

Automobile-related tax rules were also revised under the new law. These updates may influence vehicle purchases or financing strategies in the coming years.

New Car Loans
From 2025 to 2028, a $10,000 deduction will be available on interest paid for new car loans. To qualify, the vehicle must be brand-new and assembled in the United States. The deduction is reduced by $200 if gross income exceeds $100,000 for individuals or $200,000 for married couples.

Termination of EV Subsidies
Electric vehicle (EV) credits for both new and used cars will expire after September 30, 2025. Related residential energy credits, such as those for solar panels or energy-efficient windows, will also end after December 31, 2025.

The One Big Beautiful Bill Act also introduces changes that affect small businesses. These updates cover deductions, expensing rules, and reporting thresholds.

Small Business Deduction
The bill permanently enacts the 20 percent deduction for qualified business income for sole proprietorships, partnerships, and S-Corporations.

100 Percent Expensing of Capital and Factory Investments
Restoring a previous rule, businesses can once again expense 100 percent of capital investments made on or after January 19, 2025. Some limitations may still apply depending on the type of investment.

1099-K
New reporting thresholds for third-party payment platforms take effect in 2025. The law now requires reporting only for users with $20,000 or more in payments and at least 200 transactions. This rolls back the lower $600 threshold that was introduced under the American Rescue Plan.

Two of the most widely discussed provisions in the new legislation offer tax relief for tipped employees and those who work overtime.

No Tax on Tips
Starting in 2025 and ending in 2028, a new $25,000 deduction is available for income earned in tips. The deduction is reduced for individuals with gross income above $150,000 and couples with income above $300,000. This deduction is available even if you take the standard deduction.

No Tax on Overtime
A similar deduction was created for overtime income. Single filers may claim up to $12,500 and married couples filing jointly may claim up to $25,000 between 2025 and 2028. As with the tips deduction, income phaseouts apply.

As these rules are new and add complexity to the existing tax code, further guidance from the IRS is expected in late 2025.

The bill also addresses estate and charitable contribution regulations, providing both new opportunities and clarifications for taxpayers.

Charitable Contribution Recordkeeping
Taxpayers may now deduct charitable contributions of up to $1,000 for individual filers and $2,000 for married couples filing jointly, even if they do not itemize deductions.

Estate And Gift Tax Exemption
Starting in 2026, the estate and gift tax exemption will increase to $15 million for single filers and $30 million for those filing jointly. This is an increase from the 2025 caps of $13.99 million and $27.98 million, respectively. The exemption amount will continue to adjust with inflation.