The 2025 Act
The Kentucky Derby is described as the fastest two minutes in sports. By comparison, this is the fastest 300-word summary of sweeping tax change. Hold on, here we go!
The One Big Beautiful Bill, signed in July 2025, delivers sweeping tax relief and new opportunities for individuals. Here’s what you need to know to make the most of it.
Permanent Tax Cuts
The bill locks in the 2017 Tax Cuts and Jobs Act rates (10-37%), avoiding the scheduled increase after 2025. The higher standard deduction remains: $15,750 for singles, $31,500 for joint filers, and $23,625 for heads of household.
Expanded Deductions
Workers benefit from two new deductions through 2028:
- Tips: Deduct up to $25,000 annually (phasing out above $150K AGI).
- Overtime: Deduct half of overtime pay, capped at $12,500 ($25K joint).
Seniors aged 65+ can claim an extra $6,000 per person, subject to income limits. Additionally, the SALT cap rises to $40,000 for households earning under $500K.
Boosted Credits
The Child Tax Credit increases to $2,200 per child, with adoption and dependent care credits also enhanced.
New Savings Opportunity
Families with children born between 2025 and 2028 can open “Trump Accounts,” tax-deferred savings seeded with $1,000 from the government and capped at $5,000 annual contributions.
Other Perks
Auto loan interest becomes deductible, and self-employed individuals retain the 20% Qualified Business Income deduction permanently.
Plan Ahead
While tax breaks are generous, the bill reduces funding for Medicaid, ACA subsidies, and SNAP, potentially impacting healthcare and food assistance. Review coverage options early to avoid gaps.
The Bottom Line
This legislation offers significant tax savings and new incentives for families, seniors, and workers. By leveraging deductions, credits, and savings programs, individuals can maximize benefits while preparing for changes in social safety nets.
Author: Rick Ruffin, Tax Law Attorney & CPA
The McIntosh Law Firm
(704) 892-1612