One Big Beautiful Bill Act

What You Need to Know About the One Big Beautiful Bill Act

On July 4, 2025, the President signed the new 2025 Tax Bill, known as the One Big Beautiful Bill Act or OBBB. There are tons of rumors going around about what changes and what doesn’t, but here is the correct information that will affect you and most Americans.

1. Deductions, Brackets and Rates

No change in tax rates for 2025. Despite rumors, the income tax rates, and capital gains rates remain unchanged from 2024.

Tax brackets, however, have increased slightly. This means you can earn a bit more before moving into the next tax bracket.

2. Standard vs. Itemized Deductions

In 2025, the standard deduction increased:

Single filers: $15,750
Married filing jointly: $31,500

If your qualified itemized deductions exceed these amounts, you may benefit from itemizing.

The five main categories of allowable itemized deductions are:

Medical Expenses
Still must be substantial to be deductible. No changes from 2024.
State and Local Taxes (SALT)
The cap has increased from $10,000 to $40,000. This category includes property taxes and state/local income taxes as well as vehicle excise tax.
Mortgage Interest
No changes from 2024.
Charitable Contributions
Still deductible under the same rules as 2024.
Miscellaneous Itemized Deductions
Still limited. Gambling losses remain the primary allowable deduction.

3. New Deduction for Seniors (65+)

Seniors receive an additional $6,000 deduction per filer who turns 65 by December 31, 2025.

That is up to $12,000 extra for couples where both are 65+.
This is in addition to the standard senior deduction.
The deduction phases out for seniors making more than $75,000 (Single) or $150,000 (Joint)
Social Security may still be taxable if income exceeds certain limits.

4. New Deductions (No Itemizing Required)

Car Loan Interest Deduction

For new (not used) cars purchased in 2025–2028 and assembled in the U.S.
Deduction cap at $10,000.
Phases out at $100,000 (single) or $200,000 (joint).

Tip Income Deduction

Deduct the lesser of tip income on your W-2 or $25,000.
Phases out at $150,000 (single) or $300,000 (joint).

Overtime Deduction

Deduct the lesser of overtime income on W-2 or $12,500 per person.
Phases out at $150,000 (single) or $300,000 (joint).

5. Tax Credits

Child Tax Credit

Increased from $2,000 to $2,200 per child dependent

Energy Efficiency Credits

Electric vehicle credit ends September 30, 2025
Credits for home energy improvements (e.g., insulation, storm windows, furnaces, solar, geothermal, wind) expire December 31, 2025

Final Tips

Review your income thresholds to plan for any phaseouts.
Consider bundling deductions or accelerating expenses if nearing a phaseout limit.
Keep documentation for all deductions and credits claimed.

Next Steps

There are a number of individual changes that go into effect in 2026, but this brief summary addresses 2025 individual tax changes.

We can help you plan for any major tax events such as these law changes, retirement, home sales, inheritance, and many other tax matters.

Please do not hesitate to reach out via phone or e-mail Jennifer at Jennifer@nsocpa.com to schedule an appointment.