Big News: Congress Just Locked in Major Tax Changes—Here’s What You Need to Know
Back in 2017, Congress passed a huge tax reform package that changed the game for millions of Americans. Lower tax rates, bigger standard deductions, fewer itemized write-offs—it was a shake-up.
But here’s the catch: many of those benefits were temporary and set to expire in 2025.
That is, until Congress passed the One Big Beautiful Bill Act (OBBBA) this July 4th. Yep, it’s official—President Trump signed it into law, and it’s here to stay (and grow).
Let’s break down what this 870-page law means for you, your business, and your next tax return.
🧾 1. Tax Brackets Stay Low—for Good
The progressive income tax system sticks around with the same 7 brackets (10% to 37%). The two lowest brackets got slightly wider, meaning a little more income stays in those lower rates—good news for most taxpayers.
📉 2. Bigger Standard Deduction
The doubled standard deduction isn’t going anywhere. Starting in 2025:
- Married Filing Jointly: $31,500
- Head of Household: $23,625
- Single: $15,750
Plus, it will keep adjusting for inflation—and you can still skip itemizing if you prefer simplicity.
👵 3. Seniors Get a Break
From 2025 to 2028, seniors get a $6,000 tax deduction on top of everything else (phases out after $75K income). Whether you itemize or take the standard deduction—you qualify.
🌆 4. SALT Deduction Grows (Temporarily)
The cap on state & local tax deductions jumps to $40,000 until 2030. If your income hits $600K+, the cap drops back to $10,000.
💸 5. No Taxes on Tips & Overtime
- Tips: Deduct up to $25,000 (2025–2028)
- Overtime: Deduct up to $12,500 (or $25K for couples)
Applies mostly to hourly workers and phases out for high earners.
❤️ 6. Charitable Deduction for Everyone
You don’t need to itemize to deduct giving anymore! Starting in 2026, you can deduct up to $1,000 ($2,000 for couples). Higher earners may need to give more to qualify.
👶 7. Bigger Child Tax Credit
The child tax credit increases to $2,200 per child and adjusts for inflation yearly. At least one parent now needs a Social Security number to claim it.
🍼 8. Adoption Credit Goes Refundable
Now partially refundable (up to $5,000), so families adopting get a real boost—even if their tax bill is low.
🚗 9. Car Loan Interest Deductible (New Cars Only)
If you buy a brand-new, U.S.-assembled car, you may deduct up to $10K/year in loan interest. Phases out after $100K income. (Still not a fan of car loans—buy used with cash if you can.)
🌿 10. Clean Energy & EV Credits Are Ending
Rooftop solar, geothermal, and EV tax breaks vanish after 2025. So if you’re thinking of going green—do it now.
🏡 11. Estate Tax Exemption Raised
The exemption jumps to $15 million and adjusts yearly—great news for family businesses and generational wealth planning.
🧾 12. 20% Business Income Deduction is Permanent
Good news for LLCs, sole proprietors, S corps, and partnerships: the 20% QBI deduction sticks around for good.
💼 13. AMT Still Skips Most Households
The Alternative Minimum Tax exemption rules are locked in—but a few more people may get caught by new tweaks.
🏠 14. Mortgage Interest Deduction Capped
Interest deductible only on the first $750K of mortgage debt (no more 2nd homes), and home equity loan interest is only deductible if it improves your home.
🌪️ 15. Disaster Relief Deductions Expanded
Losses from federally (and now some state) declared disasters can still be written off—even if you don’t itemize.
🎯 Final Thoughts
This bill is a big one—and while it brings some tax breaks, it also adds complexity. If you’re not sure how it’ll impact your return, it’s a great time to start planning ahead.
🧮 Want help preparing? Let’s make a plan.
Looking for more business material to read?
🧾 Not sure if you should be an LLC, S corp, or sole proprietor?
Check out our blog on how to choose the right business entity—it breaks down your options in simple terms so you can make the best choice for your goals.
👉 Choosing the Right Business Entity: Tax Benefits and Implications
Thinking About Buying a Business?
💼 Before you make a big move, make sure you know what you’re really getting into.
Read our blog on what to look for when buying a business—so you can protect your investment and avoid common pitfalls.
👉 Buying a Business? Here’s How to Maximize Tax Benefits