The One Big Beautiful Bill & What It Means for You
If you've heard the buzz about the One Big Beautiful Bill, you might be wondering what it means for you. Signed into law on July 4, 2025, this new domestic policy package extends key parts of the 2017 Tax Cuts and Jobs Act (TCJA) and introduces several new tax rules that could affect individuals, families, and small businesses in the years ahead.
While some changes take effect right away, others will roll out in 2026 or later. A few are even temporary. So, now's a great time to connect with your tax, legal, or accounting professional to see how these updates might shape your financial picture.
Let's take a look at some of the highlights of this bill that could impact most taxpayers.
Key Tax Updates for Individuals
Tax Rates Stay (Mostly) the Same
The current tax brackets aren't changing under the One Big Beautiful Bill. The bill extends the current 12%, 22%, 24%, 32%, and 37% tax rates, which were originally set to expire. Without this extension, rates would have reverted back to higher pre-2017 levels at 15%, 25%, 28%, 33%, and 39.6%. The sixth tax bracket remains unchanged at 35%.1,2
This means a bit more predictability as you plan your finances for the next few years.
Bigger Standard Deduction
Starting in 2025, the standard deduction increased slightly to $15,750 for single filers and $31,500 for joint filers. Starting in 2026, it will adjust automatically for inflation each year, which might be a helpful cushion for most taxpayers.1,2
State and Local Tax Deduction (SALT) Increase
If you've been keeping an eye on the State and Local Tax (SALT) deduction, there's an update:
- It increases to $40,000 in 2025 and will increase 1% each year until 2030.
- However, in 2030, it's scheduled to revert to the $10,000 cap.
This change could offer short-term relief for taxpayers in higher-tax states.
Note: SALT has a $50,000 threshold for single and married filers.1,2
A Bonus Deduction for Older Americans
The new "bonus" deduction for older Americans has received a lot of attention since the One Big Beautiful Bill Act became law. Here's what's changing for seniors with the new bill.
Beginning in 2025, the bill provides a $6,000 bonus deduction for Americans aged 65 and older, in addition to the standard deduction available to all taxpayers. The new rule will also affect unmarried/non-surviving spouses. The deduction begins to phase out for individuals with incomes starting at $75,000 a year, or joint filers earning $150,000 a year. It phases out entirely for individuals earning more than $175,000 a year, and couples earning $250,000 a year.
Note: This bonus deduction is temporary and is set to expire in 2028.1,2
Family and Child Benefits
Child Tax Credit
Starting in 2025, the Child Tax Credit increases from $2,000 to $2,200 a will now include cost-of-living adjustments to help offset inflation.
Dependent Care
Coming in 2026, families can save more with an expanded Dependent Care Flexible Spending Account limit, increasing from $5,000 to $7,500. The maximum percentage of qualified dependent care expenses also jumps from 35% to 50%.1,2
American Family Account
A new initiative introduces a one-time $1,000 deposit for every baby born between 2025 and 2028. Parents can contribute up to $5,000 annually, but funds can't be withdrawn until the child turns 18.1,2
Education & Vehicle Updates
Expanded 529 Plans
Starting in 2026, 529 education savings plans can cover non-tuition expenses for elementary and secondary school, and that annual tuition cap doubles from $10,000 to $20,000.1,2
New Car Loans
Between 2025 and 2028, taxpayers can deduct up to $10,000 in new car loan interest, but only for brand-new vehicles first assembled in the United States1,2. This deduction phases out for individuals earning above $100,000 a year, or couples earning above $200,000 a year.
Electric Vehicle (EV) and Energy Credits
Some energy-efficient home improvement credits (like adding solar to your home) and EV tax credits will end after December 31, 2025. Additionally, EV credits for new and used cars end after September 30, 2025, so plan accordingly if you're considering home upgrades or electric vehicle purchases.1,2
Business Benefits
Small Business Deductions
The One Big Beautiful Bill makes permeant the up to 20% Qualified Business Income (QBI) deduction for sole proprietorships, partnerships, and S corporations.1,2
Equipment Expensing
Businesses can once again fully expense 100% of capital and factory investments made on or after January 19, 2025. This is intended to help fuel reinvestment and growth; however, some limitations may apply.1,2
Other Noteworthy Updates
- 1099-K Reporting: Starting in 2025, payment platforms will only report income if you earn over $20,000 and have 200+ transactions; rolling back the previous $600 threshold.1,2
- No Tax on Tips: Temporary deductions for tips (up to $25,000) are part of the new law, starting in 2025 and running through 2028. The deduction is reduced if your gross income exceeds $150,000 for single filers, or $300,000 if you are married and filing jointly. Note: The tax on tips provision is allowed, even if you take the standard deduction.1,2
- No Tax on Overtime: New overtime deductions started in 2025 and will be run through 2028. These consist of a $12,500 deduction for single filers and a $25,000 deduction for married joint filers. Similar to the No Tax on Tips deduction, the deduction reduces if your gross income exceeds $150,000 for those filing single, and $300,000 for those married, filing jointly.1,2
- Charitable Contributions: You can now deduct donations up to $1,000 for individual filers or $2,000 for married couples filing jointly, without itemizing your deductions.1,2
- Estate and Gift Tax: Starting in 2026, the exemption increases from $13.99 million to $15 million for single filers, and from $27.98 million to $30 million for those married, filing jointly. Note, the exemption will increase with inflation.1,2
Planning Ahead
Tax law changes can feel overwhelming, and this new legislation adds a lot of moving parts. While some updates may simplify your filing, others could create new planning opportunities or challenges.
Your best approach is to be proactive. Schedule an appointment to talk with your tax, legal, or accounting professional before making any financial decisions. They can help you take advantage of new deductions, credits, and benefits under the One Big Beautiful Bill.
As always, Logix is here to help you stay informed and confident in your financial journey.
>> Connect with our team today to learn more!
1. CNBC.com, July 3, 2025.
2. Congress.gov, August 21, 2025.
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