On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which the House approved in a 218-214 vote, after the Senate approved it by a 51-50 vote, with Vice President JD Vance casting the tie-breaking vote. The bill extends many of the expiring provisions from the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. It also addresses other tax priorities of the Trump administration, including providing deductions to eliminate income taxes on certain tips and overtime pay. There are a LOT of changes.  And while most of the changes are taxpayer friendly, the new law does terminate many clean energy incentives surrounding vehicle purchases and home improvements…many of which terminate as early as September 30, 2025. So please be on the lookout if you are considering spending money in this area.

• Permanent extension of lower tax rates and brackets: The bill makes permanent the individual income tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA). It also then adds an additional year of inflation adjustment for determining the dollar amounts at which any rate bracket higher than 12% ends and at which any rate bracket higher than 22% begins.
  
• Standard deduction: The nearly doubled standard deduction would be made permanent, for tax years beginning after 2024, the standard deduction increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married individuals filing jointly. The standard deduction will be adjusted for inflation after that.
  
• Itemized deduction / Pease Limitation repeal: The bill would permanently remove the Sec. 68 overall limitation on itemized deductions (known as the Pease limitation) and would implement a two-pronged reduction.
  
• Child Tax Credit: The bill increases the amount of the nonrefundable child tax credit to $2,200 per child beginning in 2025 and indexes the credit amount for inflation.
  
• Estate and gift tax exemption: The increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.
  
• SALT deduction cap: The state and local tax (SALT) deduction cap is increased to $40,000 per household and would be phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000. 
  
• Charitable deduction (cash only) for non-itemizers: The bill creates a charitable contribution deduction for taxpayers who do not elect to itemize, allowing nonitemizers to claim a deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for certain charitable contributions.
  
• Charitable deduction for itemizers: The bill imposes a 0.5% floor on the charitable contribution deduction: The amount of an individual’s charitable contributions for a tax year is reduced by 0.5% of the taxpayer’s contribution base for the tax year.
  
• No tax on tips and overtime: For 2025-2028 the bill provides a deduction of up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. It also provides an above-the-line deduction of up to $12,500 ($25,000 in the case of a joint return) for qualified overtime compensation received by an individual during a given tax year. BOTH deductions begin to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). 
  
• Enhanced deduction for seniors: For 2025–2028, a $6,000 deduction is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers).
  
• Car loan interest deduction: For 2025–2028, up to $10,000 of interest on loans for U.S. assembled passenger vehicles may be deducted, subject to income phaseouts.
  
• Dependent care assistance programs: The maximum annual amount excludable from income under a Sec. 129 dependent care assistance program increases from $5,000 to $7,500 under the bill.
  
• Trump accounts: The bill creates a new account for tax-free savings accounts for minors, called Trump accounts, and revises it to make them a form of individual retirement account (IRA). Under the bill, Trump accounts will be IRAs (but not Roth IRAs) for the exclusive benefit of individuals under 18 and cannot begin until a year after the date of enactment of the bill. Eligible investments in Trump accounts would generally be mutual funds and indexed ETFs. Contributions (other than qualified rollover contributions) will be capped at $5,000 a year (adjusted for inflation after 2027).
  
• Clean energy and IRS credits: The bill would terminate or phase out several clean energy credits from the Inflation Reduction Act (IRA).

Check out the videos below for a more in depth explanation.