Highlights to Love About the One Big Beautiful Bill Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law, making a significant update to the tax code that will impact many Americans. This Act permanently extends most of the TCJA (Tax Cuts and Jobs Act), modifies some items and adds new provisions to the tax code. Some changes are effective as of 2025, and other will start in 2026.

While there are many new key items to consider, I chose to highlight the few that I believe will benefit the majority of my clients.

Standard Deduction Increases (beginning in 2025)

• Married Filing Joint (MFJ)/Surviving Spouse has increased to $31,500 from $30,000

• Head of Household (HOH) has increased to $23,625 from $22,500

• Single/Married Filing Separate (MFS) has increased to $15,750 from $15,000

Personal Exemption deduction for Seniors

• Allows for a below the line deduction of up to $6,000 for seniors (age 65 and up) for 2025 through 2028 tax years

• Be aware there is a phase out when the taxpayer’s modified Adjusted Gross Income (AGI) exceeds $75,000 ($150,000 MFJ)

• This deduction is in addition to the additional standard deduction for age 65+ and/or blind.

Increase to the SALT (State and Local Tax) deduction for Itemizers

• SALT deduction increased up to $40,000 from $10,000 for 2025

• This deduction will increase by 1% through the 2029 tax year

• Notice I stated up to. There is a phase down for most filing statuses if income is above $500k ($250k for MFS). This means that someone with higher income may not get the full deduction. However, they could still be eligible to deduct a minimum of $10,000 ($5,000 MFS)

Charitable Contribution deduction beginning in 2026

• Allows non-itemizers to claim charitable deductions of up to $1,000 ($2,000 MFJ) as a below the line deduction. I am excited about this one!

• For those who itemize, there will be a new floor of 0.5% before the charitable deduction can be taken on the Schedule A.

529 plan Expansion

• Expands the list of qualified 529 expenses to include a broader range of workforce training and credentialing costs. You can confirm if your program by checking the WEAMS database and search for WIOA eligible training providers in your state before enrolling or budgeting.

• Increases annual tax free withdrawals to $20,000 from $10,000 for K-12 curriculum, books, online resources, tutoring, or educational therapies for students with disabilities.

Child Tax Credit

• Increases from $2,000 to $2,200 per qualifying child for 2025

• Indexed to inflation beginning in 2026

Conclusion

Understanding how many of theses changes can impact your taxes is essential. One of the services I offer is tax planning. In a tax planning session, I can estimate the impact of these changes on your future tax return to ensure your withholdings are correct or suggest other strategic changes to optimize your situation. You can review other tax planning opportunities that I can assist you with or schedule a free consultation.