On July 4, the President signed the One Big Beautiful Bill Act (OBBBA) into law—a sweeping piece of tax legislation set to impact virtually every type of taxpayer. While some provisions stretch into future years, 2025 will be the first major testing ground.
Whether you’re a high-net-worth individual, a small business owner, a nonprofit director, or a government contractor, these changes could alter your tax strategy in significant ways. And here’s the kicker: many of the most lucrative credits vanish this year. If you want in, you’ll need to act fast.
This guide breaks down the 20 biggest changes taking effect in 2025, explains what they mean for your bottom line, and highlights where quick action might save you thousands.
1. Bigger Standard Deductions
Starting in 2025, standard deductions jump to:
- $15,750 (Single / Married Filing Separately)
- $23,625 (Head of Household)
- $31,500 (Married Filing Jointly)
These will adjust annually for inflation.
Why it matters: For many, this simplifies filing and reduces taxable income—especially if you don’t itemize.
2. New Senior Deduction
If you’re 65+ and under certain income thresholds ($75k single / $150k joint), you can deduct an extra $6,000—or $12,000 if both spouses qualify—on top of existing senior deductions. Applies 2025–2028.
3. Child Tax Credit Boost
The nonrefundable Child Tax Credit increases to $2,200 per child, with income phaseouts starting at $400k (joint) and $200k (others).
4. Tiered QSBS Exclusion
For Qualified Small Business Stock acquired after July 4, 2025, the capital gains exclusion phases in:
- 50% after 3 years
- 75% after 4 years
- 100% after 5 years
For qualifying C Corporations only.
5–7. Worker-Friendly Deductions (Through 2028)
- Tip Income Deduction: Up to $25,000 for eligible tipped workers, with income phaseouts.
- Overtime Deduction: Exclude overtime pay above your regular rate from taxable income.
- Car Loan Interest Deduction: Up to $10,000 for interest on U.S.-assembled vehicles, with VIN reporting required.
8. Adoption Credit Goes Partially Refundable
Up to $5,000 can be refunded for adoption-related expenses, 2025–2028.
9. Expanded 529 Plan Uses
The annual K–12/home school expense cap doubles to $20,000 and now covers certain postsecondary credential programs.
10–11. Big Wins for Business Investment
- 100% Bonus Depreciation made permanent for qualifying business property acquired after Jan 19, 2025.
- Qualified Production Property can be fully deducted if placed in service by Jan 1, 2031.
12. Higher 1099-K Reporting Threshold
Returns to the pre-2021 level—reporting required only if payments exceed $20,000 and 200+ transactions.
13–18. Environmental Credits on the Clock
All set to expire in 2025—some as soon as Sept 30:
- Used Clean Vehicle Credit
- New Clean Vehicle Credit
- Commercial Clean Vehicle Credit
- Alternative Fuel Refueling Property Credit
- Energy Efficient Home Improvement Credit
- Residential Solar Energy Credit
If you’ve been eyeing solar panels, an EV, or an energy upgrade—this is your last full year.
19. Immediate Deduction for Domestic R&D
Businesses can fully deduct qualifying U.S.-based research expenses starting in 2025.
20. SALT Deduction Increase
Cap rises from $10k to $40k in 2025, with gradual increases until 2029—unless your MAGI tops $500k, where the benefit phases out.
Why This Matters for JS Morlu Clients
At JS Morlu, we work with diverse industries—from high-net-worth individuals protecting generational wealth, to small businesses navigating complex deductions, to nonprofits maximizing grant efficiency. This legislation touches every one of those sectors.
Here’s how we can help:
- Tax Strategy Adjustments: Optimize deductions and credits before they expire.
- Business Investment Planning: Leverage 100% depreciation while balancing cash flow.
- Year-End Action Plans: Prioritize high-value moves like clean energy investments or stock acquisitions before sunset dates.
- Proactive Compliance: Ensure new deduction claims are documented correctly to avoid IRS pushback.
Three Moves to Make Now
- Review 2025 Purchase Plans – If a major expense qualifies for a soon-to-end credit, fast-track it.
- Check Income Thresholds – Many new deductions phase out; tax bracket management is key.
- Schedule a Mid-Year Tax Review – Don’t wait until December; we’ll map opportunities against deadlines.
Final Word
The OBBBA isn’t just a tax update—it’s a roadmap for potential savings and a warning about vanishing benefits. The most successful taxpayers in 2025 will be the ones who prepare early, act decisively, and have the right guidance.
At JS Morlu, we combine deep tax code expertise with proactive planning to ensure our clients—from McLean executives to D.C. nonprofits—get every advantage the law allows.
📞 Contact us today for a personalized tax strategy session and ensure you’re ready to make 2025 your most tax-efficient year yet.