In July 2025, a sweeping new tax law — the One Big Beautiful Bill Act (OBBBA) — was signed into law, reshaping the landscape for individuals, families, and business owners for years to come. While some provisions feel familiar, others introduce brand-new planning opportunities (and a few new pitfalls) that will affect how you file, save, and invest.
Below is a clear breakdown of the key changes, what they might mean for you, and where proactive planning could make a real difference.
1. Key Changes for Individual Taxpayers
- Lower individual income tax brackets compared with pre-2017 law
- Larger standard deduction amounts, simplifying filing for many taxpayers
- An increased Child Tax Credit, which continues to support families with qualifying children
- A higher estate tax exclusion, allowing more wealth to pass to heirs tax-free
These changes solidify a framework taxpayers have been living with for several years, removing some uncertainty about what would happen after 2025.
Temporary New Deductions: 2025–2028
In addition to making earlier rules permanent, OBBBA creates several temporary deductions available only for tax years 2025 through 2028. If you fall into one of these categories, these provisions could lower your tax bill:
- $6,000 deduction for qualifying seniors
Eligible seniors may claim an additional deduction on top of their standard or itemized deductions. - Exclusion of reported tip income up to $25,000
Workers who earn tips and properly report them can exclude up to $25,000 of that income from taxation. - Deduction for qualified overtime compensation
- Up to $12,500 per individual, or
- Up to $25,000 if married filing jointly, for eligible overtime pay.
- Deduction for car loan interest on qualifying vehicles
Up to $10,000 of interest on car loans for new qualifying vehicles assembled in the U.S. may be deductible.
These deductions are time-limited. If you qualify, careful planning between 2025 and 2028 could meaningfully reduce your taxable income.
Expanded SALT Deduction — With a Sunset
For taxpayers who itemize deductions, there is a major change to the state and local taxes (SALT) deduction:
- Beginning in tax year 2025, the SALT deduction cap increases from $10,000 to $40,000, subject to certain income limits.
- However, this is not permanent. Starting in 2030, the cap is scheduled to drop back down to $10,000.
If you live in a high-tax state or have substantial property and income taxes, these years could offer a valuable window to maximize itemized deductions.
Above-the-line Charitable Deduction for Non-Itemizers
Starting in 2026, individuals who do not itemize will be able to claim a limited deduction for charitable contributions. This brings back, in a new form, a concept briefly available in prior years and may encourage more taxpayers to give to qualified charities even if they benefit more from the standard deduction than from itemizing.
2. New Opportunities for Families and Education Planning
OBBBA introduces several changes designed to support families, education, and long-term financial planning for children.
New Tax-Advantaged Investment Account for Children
Beginning in 2026, parents and others will be able to establish a new type of tax-advantaged investment account for children. While the finer details will be clarified through IRS guidance, the intent is to allow family members to invest on behalf of minors in a way that offers tax benefits and supports long-term wealth building.
Expanded Uses for 529 Plans
The law also expands the list of qualified expenses for 529 education savings plans:
- Workforce credentialing programs now qualify, supporting non-traditional education and career shifts.
- Up to $20,000 per year for K–12 expenses can be treated as qualified withdrawals.
This flexibility makes 529 plans more attractive for families who want options beyond traditional four-year college paths.
New Student Loan Rules
OBBBA also reshapes the student loan environment:
- New borrowing caps are imposed on federal parent and student loans for college, potentially limiting how much debt families can take on.
- The law creates two new student loan repayment plans, designed to provide more structured repayment options for borrowers.
For families with college-bound children or existing student loans, it will be critical to understand how these changes affect borrowing decisions, monthly payments, and long-term repayment strategies.
3. Major Benefits for Business Owners
Business owners receive several powerful incentives under the new legislation, many of which are designed to encourage investment and expansion.
Permanent 100% Bonus Depreciation
One headline provision is permanent 100% bonus depreciation. This allows eligible businesses to immediately expense the full cost of qualifying property and equipment in the year it is placed in service, rather than depreciating it over several years. The result:
- Lower taxable income in the year of purchase
- Stronger cash flow to reinvest in the business
Increased Section 179 Expensing Limit
In addition, OBBBA increases the Section 179 expensing limit, further enhancing the ability of small and mid-sized businesses to fully expense qualifying property in the year of acquisition. This is particularly valuable for businesses investing in technology, machinery, and certain improvements.
Higher Estate and Gift Tax Exclusion for Business Owners
Beginning in 2026, the estate and gift tax exclusion amount increases to $15 million per individual. For closely held business owners, this offers a significant opportunity to:
- Transfer ownership interests to heirs
- Implement or refine succession plans
- Reduce potential estate tax exposure
These changes make now an important time to revisit buy-sell agreements, family business transitions, and long-term wealth transfer strategies.
4. Energy-Related Tax Incentives Rolled Back
Not all changes in OBBBA are taxpayer-friendly. The law substantially rolls back and phases out multiple energy-related tax incentives, including:
- Credits for the purchase of electric vehicles (EVs)
- Credits for energy-efficient home improvements, such as certain insulation, windows, or HVAC upgrades
If you were considering an EV purchase or significant energy-efficiency upgrades primarily for the tax benefits, it is important to understand that those incentives are now more limited and, in some cases, disappearing over time.
5. What Should You Do Next?
The One Big Beautiful Bill Act brings a mix of permanent rules, temporary opportunities, and phased-out benefits. The implications will vary widely depending on your situation:
- Individuals and families may benefit from higher standard deductions, expanded child-related benefits, new charitable rules for non-itemizers, and enhanced education and child investment options.
- Workers in tipping, overtime-heavy roles, or those nearing retirement age may gain from targeted deductions available from 2025 to 2028.
- Business owners have access to powerful expensing tools and a more generous estate and gift tax framework that can reshape long-term planning.
- Homeowners and environmentally focused taxpayers should be aware that some familiar energy credits are being scaled back or eliminated.
Because many of these changes interact with each other — and several are time-limited — a one-size-fits-all approach does not work. The best strategy is to review your situation with a qualified tax advisor, model different scenarios, and create a multi-year plan that aligns with your financial goals.
Important Disclaimer
The information in this article is a general summary of selected provisions of the One Big Beautiful Bill Act. It is not specific to any individual’s personal circumstances and is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed under applicable law.
Tax law is complex and subject to change. Before making any decisions, you should seek independent, professional advice from a qualified tax professional who can review your specific situation, objectives, and risk profile.