Breaking Down the One Big Beautiful Bill Act: What You Need to Know
When the Tax Cuts and Jobs Act of 2017 (TCJA) passed, it brought lower federal income tax brackets, bigger standard deductions, and higher gift and estate tax exemptions. But many of those provisions were set to expire at the end of 2025—a change that the Tax Foundation estimated could have raised taxes for more than 60% of Americans.
That uncertainty ended in July 2025, when a sweeping new law—nicknamed the One Big Beautiful Bill Act—was signed. This 887-page bill makes many TCJA provisions permanent, adds new tax benefits, and creates a handful of temporary breaks for individuals, families, and small businesses.
Here’s a breakdown of some of the most notable changes.
Key Changes for Individuals
1. Tax Rates & Brackets
TCJA’s reduced tax rates are now permanent.
Inflation adjustments apply to certain bracket thresholds starting in 2026.
2. Estate & Gift Tax Exemption
Permanently increased to $15M for individuals ($30M for married couples) beginning in 2026, indexed for inflation.
3. Standard Deduction
Permanently raised to:
$15,750 – Single
$23,625 – Head of Household
$31,500 – Married Filing Jointly
Retroactive to 2025 and indexed for inflation.
4. Senior “Bonus” Deduction (2025–2028)
Extra $6,000 deduction for taxpayers age 65+
Phases out above $75K income ($150K for joint filers).
5. State & Local Tax (SALT) Deduction
Cap temporarily increased to $40K starting in 2025.
Phases out above $500K income; reverts to $10K in 2030 unless extended.
6. Alternative Minimum Tax (AMT)
Higher exemption amounts made permanent, indexed for inflation.
Phaseout rate increased from 25% to 50%.
7. Child Tax Credit
Permanently raised to $2,200 per qualifying child starting in 2025, indexed for inflation.
Refundable portion also made permanent.
8. Temporary Deductions (2025–2028)
Tips – Deduct up to $25K in qualified tip income ($50K joint).
Overtime Pay – Deduct up to $12,500 ($25K joint).
Auto Loan Interest – Deduct up to $10K if the car is U.S.-assembled.
9. 529 Plan Expansions
Withdrawals can now cover tutoring, homeschooling costs, disability-related therapies, and licensing/certification programs.
10. New Child Savings Account
$1,000 one-time federal deposit for children born 2025–2028.
Parents can add up to $5K/year; employers up to $2.5K/year.
Growth is tax-deferred; withdrawals taxed as long-term capital gains.
11. Charitable Deduction for Non-Itemizers
Starting 2026: up to $1K deduction for singles ($2K joint) without itemizing.
Key Changes for Small Businesses
1. Qualified Business Income (QBI) Deduction
20% deduction for certain pass-through income is now permanent.
2. Increased Expensing Limits
Section 179 expensing cap increased from $1M to $2.5M, with inflation adjustments.
3. Estate Tax Relief for Small Business Owners
Higher exemption levels for passing a business to the next generation.
4. Restored 100% Bonus Depreciation
Businesses can again fully deduct the cost of new equipment immediately.
Points of Caution
While many provisions are permanent, several high-profile breaks expire in 2028, including the senior bonus, SALT cap increase, tip and overtime deductions, and auto loan interest deduction. If Congress doesn’t act, these benefits could disappear, reintroducing uncertainty.
Why It Matters for Your Financial Plan
Tax policy influences everything from retirement withdrawals to estate transfers. Understanding these changes—and how temporary rules may affect your future—is critical.
We can work alongside your tax advisor, estate attorney, and accountant to help ensure your financial strategy stays aligned with the evolving tax landscape.
Disclaimer: This material is for informational purposes only and not a substitute for personalized tax, legal, or accounting advice. Please consult your professional advisors before making decisions based on this information.
1 CNBC, June 18, 2024
2 CNBC, July 3, 2025
3 Journal of Accountancy, July 7, 2025
4 CNBC, July 4, 2025
5 The Wall Street Journal, June 13, 2025
6 Fidelity, July 2025
7 Fortune, July 2025
8 USA Today, July 1, 2025