The One Big Beautiful Bill Act was just signed into law, and it brings some of the most significant tax changes for individuals and families we’ve seen in years.
This new legislation makes many of the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent while introducing brand-new deductions and credits that could impact your bottom line—some starting as soon as the 2025 tax year.
Our team has reviewed the analysis from the Journal of Accountancy to break down what this new law might mean for you and your family, and critically, when these changes will happen.
Business owner? Be sure to see our breakdown for small businesses.
At a Glance: The Biggest Changes for Individuals and Families
| Provision | What’s Changing | Effective Dates |
| Standard Deduction | Permanently increased and adjusted for inflation. | 2025 & beyond |
| Tax-Free Tips | New deduction up to $25,000 for qualified tip income. | 2025 – 2028 |
| Tax-Free Overtime | New deduction up to $12,500 ($25,000 joint) for overtime. | 2025 – 2028 |
| SALT Deduction | Cap is temporarily raised from $10,000 to $40,000. | 2025 – 2029 |
| Child Tax Credit | Increased to $2,200 per child. | 2025 & beyond |
| Senior Deduction | New $6,000 deduction for taxpayers aged 65+. | 2025 – 2028 |
| Estate Tax Exemption | Permanently increased to $15 million per individual. | 2026 & beyond |
Key Tax Changes for Individuals and Families [Details]
Tax Rates & Standard Deduction (Permanent)
The lower tax rates established by the TCJA are now permanent. The standard deduction is also permanently increased, and has been set for 2025 at:
- Single: $15,750
- Married Filing Jointly: $31,500
- Head of Household: $23,625
New Breaks for Tipped and Overtime Workers (Temporary)
For tax years 2025 through 2028, the law introduces two major temporary deductions:
- Tax-Free Tips: You can deduct up to $25,000 in qualified tip income.
- Tax-Free Overtime: You can deduct up to $12,500 (or $25,000 for joint filers) in qualified overtime pay.
✅ Action Item: Keep Detailed Pay Records Tack your tips and overtime hours on every paystub. Detailed records are essential to ensure you can claim the maximum deduction you are entitled to during these years.
SALT Cap Increased (Temporary)
The State and Local Tax (SALT) deduction cap is temporarily raised from $10,000 to $40,000. This is in effect from 2025 through 2029 and is scheduled to revert to $10,000 in 2030.
✅ Action Item: Strategize State & Local Tax Payments If you live in a high-tax state, work with your tax advisor to plan your state and local tax payments. You may be able to time payments to maximize this temporarily larger deduction.
New and Expanded Breaks for Families (Permanent)
- Child Tax Credit: Starting in 2025, the credit increases to $2,200 per child.
- Dependent Care Assistance: The maximum amount you can exclude from income for dependent care programs (like a Dependent Care FSA) rises from $5,000 to $7,500 starting in 2025.
- “Trump Accounts“: The law introduces this new type of tax-advantaged savings account for minors. Contributions can begin 12 months after the date the bill was enacted.
✅ Action Item: Maximize Dependent Care Benefits During your next open enrollment period, consider increasing contributions to your dependent care assistance program to take full advantage of the new $7,500 tax-free limit.
New Deduction for Car Loan Interest (Temporary)
From 2025 through 2028, you can deduct up to $10,000 in interest paid on a car loan for a vehicle with final assembly in the United States.
✅ Action Item: Check the VIN Before You Buy If you’re car shopping, ask the dealer for proof of final assembly location or use an online VIN decoder. Choosing a U.S.-assembled vehicle could make your loan interest deductible.
New Charitable Giving Deduction for Non-Itemizers
Starting in the 2025 tax year, you can get a tax break for being charitable even if you don’t itemize. The law creates a new deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly.
✅ Action Item: Track All Donations You no longer need to itemize to get a tax benefit from your generosity. Keep receipts for all your charitable donations, no matter how small, to claim this new deduction.
Special Focus: What Retirees Need to Know
New $6,000 Deduction for Seniors (Temporary)
From 2025 through 2028, individuals aged 65 or older get a new $6,000 deduction. This is available for both itemizers and those who take the standard deduction, though it begins to phase out at higher income levels.
Higher Estate & Gift Tax Exemption (Permanent)
Beginning in 2026, the amount you can pass to heirs tax-free is permanently increased to $15 million for individuals ($30 million for couples), and it will be indexed for inflation thereafter.
✅ Action Item: Update Your Estate Plan This permanent, significant increase in the estate tax exemption is a major event. Schedule a meeting with your financial advisor or attorney to review your will and trust documents to ensure they align with the new law.
Permanent Fixes (Effective Immediately)
- “Pease” Limitation Repealed: The old overall limitation on itemized deductions is permanently gone.
- ABLE Account Improvements: The increased contribution limits for ABLE accounts are now permanent.
✅ Action Item: Maximize ABLE Contributions If you or a family member use an ABLE account, you can confidently contribute up to the higher, now-permanent limits to save for disability expenses without impacting government benefits.