Written by: Mike Gorman

It’s been said there are two certainties in life: death and changes in the tax code.

The latest 897-page tax law legislation, One Big Beautiful Bill Act, was signed into law on July 4th, making the Tax Cuts and Jobs Act provisions permanent, eliminating the 2026 sunset, when tax brackets and several other provisions were set to revert to pre-2017 levels. There are several new deductions and changes, many of which are temporary.

Below summarizes a few of the key items for individuals.

  • Individual tax brackets The reduced federal individual income tax rates from the 2017 Tax Cuts and Jobs Act are now permanent, allowing continued access to lower tax brackets. In other words, they will remain intact, rather than reverting to pre-2017 levels.
  • Higher standard deductions increases to $15,750 (single), $23,625 (head of household), and $31,500 (married filing jointly). The deductions are indexed to inflation, increasing annually.
  • The child tax credit increases from $2,000 to $2,200 per child under age 17. The credit is indexed for inflation. The income phaseouts ($200,000 single, $400,000 married filing jointly) remain the same. The $500 credit for qualifying dependents who don’t fit the child credit remains unchanged.
  • The estate and gift tax exemption increases from $13.99 million to $15 million (single) and $27.98 million (married filing jointly) and is indexed for inflation.
  • The Qualified Business Income (QBI) Deduction for certain small business owners remains intact at 20% and becomes permanent.

The bill introduces several new deductions through 2028 or 2029 with income phaseouts.

  • Expanded SALT (state and local tax) deduction for itemizers – lifts the cap from $10,000 to $40,000 through 2029, with the deduction limit increasing by 1% each year. There is a phaseout beginning when income exceeds $500,000. The SALT deduction is reduced by 30% of the amount by which income exceeds the $500k threshold — but never below the original $10,000 limit. Beginning in 2030, the SALT cap will revert to the original $10,000 limit.
  • Effective 2025 – Introduction of a $6,000 Enhanced Senior Deduction: Individuals age 65 and older will be eligible for an additional $6,000 tax deduction per person. This deduction begins to phase out for incomes above $75,000 for single filers and $150,000 for married couples filing jointly. Although, this provision is part of legislation focused on Social Security taxation, it does not change how Social Security benefits are taxed, and you do not need to be receiving Social Security to qualify for the deduction.
  • Introduction of a new savings accounts, or Trump accounts, for children with a one-time deposit of $1,000 from the federal government for those born in 2025 through 2028. The funds can be used for future education expenses, down payment on a first home, or as capital to start a new business. Parents can contribute up to $5,000 a year and the balance will be invested in a diversified fund tracking a U.S. stock index. Earnings grow tax-deferred and qualified withdrawals are taxed at the long-term capital gains rate.

There are several new “above the line” deductions through tax year 2028, meaning taxpayers qualify for the deduction without needing to itemize deductions:

  • Auto loan interest up to $10,000 becomes deductible from 2025 – 2028. However, cars must be assembled in the U.S. The income phase-out begins when income exceeds $100,000 (single) or $200,000 (married filing jointly).
  • Tip income of up to $25,000 is deductible for those in occupations that typically receive tips becomes tax deductible from 2025 – 2028, beginning to phase out when income exceeds $150,000 (single) or $300,000 (married filing jointly).
  • Overtime pay deduction of up to $12,500 (single) or $25,000 (married filing jointly) from 2025 – 2028, beginning to phase out when income exceeds $150,000 (single) or $300,000 (married filing jointly).
  • Charitable cash donations up to $1,000 (single) or $2,000 (married filing jointly) are now deductible for non-itemizers. This deduction is permanent and is not subject to sunset provisions. It applies to cash contributions only and starts in 2026.

The legislation ends the $7,500 electric vehicle credit effective September 30, 2025. Energy-efficiency credits are eliminated after December 31, 2025.

These are just a few of the changes highlighting the more impactful items to individuals.

 

Information provided should not be relied upon for tax, legal, or accounting advice, as it is intended for informational purposes only. You should consult your own tax, legal, and accounting professionals before engaging in any transactions.