Key Tax Provisions in the One Big Beautiful Bill Act Which may Affect your Future Tax Returns
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, introduces wide-ranging changes to the tax code, health coverage rules, and federal payment systems. Below are the key provisions most likely to affect you.
Individual & Family Tax Highlights
- Tax Rates Made Permanent – Current income tax brackets will continue beyond 2025.
- Standard Deduction (2025): $15,750 (single), $23,625 (head of household), $31,500 (married filing jointly). Indexed annually for inflation.
- Child Tax Credit: Increases to $2,200 per child in 2025 and indexed for inflation.
- Estate Tax Exemption: Rises to $15 million per individual in 2026, indexed for inflation.
- Senior Deduction (2025–2028): $6,000 per individual age 65 and older (phases out at $75,000 AGI; $150,000 for joint returns).
- Tip and Overtime Income (2025–2028): New deductions of up to $25,000 (tips) and $12,500 (overtime), with phaseouts beginning at $150,000 AGI ($300,000 joint).
- 529 Plans: Expanded uses for K–12 education, skilled trade programs, licensing exams, and continuing education. The annual K–12 limit doubles to $20,000 per child beginning in 2026.
- Car Loan Interest Deduction (2025–2028): Up to $10,000 for qualifying U.S.-assembled vehicles, with income phaseouts.
- Charitable Contributions (2026): Non-itemizers may deduct up to $1,000 ($2,000 for joint filers). For itemizers, a new 0.5% AGI floor applies.
- SALT Deduction: Cap raised to $40,000 for 2025, $40,400 for 2026, then indexed until reverting to $10,000 in 2030. Phased out for AGI above $500,000.
- Gambling Losses (2026+): Deductions limited to 90% of gambling losses, still capped at winnings.
Business Tax Highlights
- 100% Bonus Depreciation Restored: Full expensing of eligible assets placed in service after January 20, 2025.
- Immediate Deduction of Domestic R&D Costs: Effective January 1, 2025. Retroactive for small businesses beginning in 2022.
Energy-Related Tax Changes
- Electric Vehicle Credit ($7,500): Eliminated for vehicles purchased after September 30, 2025.
- Residential Clean Energy Credit: Ends December 31, 2025.
Health Care (ACA Premium Tax Credit)
- Enhanced premium credits are not extended.
- Special enrollment participants are ineligible for credits.
- Stricter verification required for eligibility.
- Repayment cap eliminated; all excess credits must be repaid.
- Impact: Premium costs are expected to rise; enrollment may decrease.
Federal Payments – Electronic Requirement
- Beginning September 30, 2025, nearly all federal payments and collections (including refunds and estimated tax payments) must be made electronically.
- Action: Please confirm we have your current bank account information for accurate deposits and withdrawals.
IRS Mailing Addresses for Estimated Payments (Form 1040-ES, 2025)
- AL, AZ, FL, GA, LA, MS, NM, NC, SC, TN, TX
Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300 - AK, CA, CO, HI, ID, KS, MI, MT, NE, NV, ND, OH, OR, PA, SD, UT, WA, WY
Internal Revenue Service
P.O. Box 802502
Cincinnati, OH 45280-2502 - AR, CT, DC, DE, IL, IN, IA, KY, MD, ME, MA, MN, MO, NH, NJ, NY, OK, RI, VA, VT, WV, WI
Internal Revenue Service
P.O. Box 931100
Louisville, KY 40293-1100 - International Filers, U.S. Territories, APO/FPO, dual-status aliens, non-permanent residents of Guam or U.S. Virgin Islands
Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303
Action Items
- Review your 2025 withholding and estimated payments under the new rules.
- Seniors should plan to claim the new $6,000 deduction if eligible.
- Families should consider 529 plan contributions to take advantage of expanded uses.
- Businesses should evaluate opportunities for bonus depreciation and immediate R&D expensing.
- Individuals in states with high taxes should plan around the temporary SALT cap increase.
- If you deduct gambling losses, be aware of the new 90% limitation beginning in 2026.
- Confirm your banking information for electronic tax payments and refunds.
Learn More in our OBBA Letter
We’re here to help
Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly. Please don’t hesitate to contact us with any questions or to schedule a consultation.