🧾 What the New Tax Law Means for You
Key Highlights from the “Big Beautiful Bill” Signed July 4, 2025
Last week, a wide-ranging new tax and budget bill—officially titled the One Big Beautiful Bill Act—was signed into law. While the bill covers many areas, here are the most relevant and beneficial changes that may apply to you.
We’ve focused on practical, non-political impacts for individual households. This
summary does not cover changes to safety net programs like Medicaid and SNAP or green energy credits, which are also part of the bill.
✅ Lower Taxes Are Now Locked In
- The reduced tax brackets from 2017 (originally set to expire in 2026) are now permanent, providing continued lower federal income tax rates for most households.
- The higher standard deduction
remains in place, benefiting those who don’t itemize.
💵 Higher SALT Deduction Cap
- The cap on State and Local Tax (SALT) deductions increased from $10,000 to $40,000 per household through 2030.
- A meaningful benefit for households in high-tax states, especially for those who itemize.
👨👩👧 Enhanced Family &
Senior Benefits
- The child tax credit increased to $2,200 per child, with higher income thresholds before phaseout.
- New Family Savings Accounts allow contributions up to $5,000/year, tax-deferred, for education or first-time home purchases. Parents of newborns may receive a $1,000 "welcome contribution" if eligibility criteria are met.
- Beginning with 2025 tax
filings, taxpayers aged 65 and older can claim:
- An additional $6,000 standard deduction (individuals)
- $12,000 total for married couples (income phaseouts apply above $75,000 single / $150,000 joint)
💼 Tip & Overtime Deduction
- Up to $12,000 of W-2 income from tips and overtime may be deducted
from taxable income starting in 2025.
- Applies only to reported tips and W-2 wages, not to independent contractor (1099) income.
- Phases out for incomes above $150,000 (single) and $250,000 (joint).
📈 Investment & Planning Opportunities
- New auto loan interest deduction of up to $10,000, available through
2028.
- The Opportunity Zone program was extended—capital gains can still be deferred and future appreciation excluded after a 10-year hold.
🏛️ Increased Estate & Gift Tax Exemption
- The lifetime estate and gift tax exemption is now permanently set at $15 million per person (or $30 million per couple), starting in 2026,
and will adjust annually for inflation.
- This change eliminates the previously scheduled reduction in 2026 under the Tax Cuts and Jobs Act.
📊 Qualified Business Income (QBI) Deduction
- The 20% QBI deduction for pass-through income (S corps, partnerships, sole proprietors, certain REIT/BDC/Trust income) is now permanent.
- Income threshold for full eligibility increased to
$75,000 (single) and $150,000 (joint).
- A minimum floor deduction (approx. $400) was added for taxpayers with at least $1,000 in QBI.
🧠 Planning Implications
These changes present opportunities for tax savings and improved long-term planning. Consider:
- Adjusting withholding or estimated
taxes
- Using new family savings accounts
- Reviewing whether to itemize or take the standard deduction
- Revisiting your estate plan or gifting strategies
- Maximizing QBI deduction eligibility for business income
📌 Final Thoughts
This legislation introduces a
number of meaningful updates for individuals and families—especially around taxes, estate planning, and saving for major life goals. If you’d like to understand how these changes apply to your situation, we’re here to help.
📚 Sources:
- Kiplinger: 2025 Tax Deduction Change for Those Over Age 65
- Journal of Accountancy: Senate Budget Reconciliation Tax Bill Overview
- Frost Brown Todd: Estate
& Gift Tax Changes in the One Big Beautiful Bill
- Axios & AP: Bill Signing & Legislative Summary, July 4, 2025
- Investopedia: Tax Impacts of the One Big Beautiful Bill
- Ways & Means Committee: Section-by-Section Summary of the Bill
- CBS News & Time: Details on Family Savings and Newborn Account Provisions
