On July 4, 2025, President Trump signed what is known as the One Big Beautiful Bill Act (OBBA). The act has significant impact on personal and business taxes for the 2025 tax year.
Here, we’re summarizing the impact of the bill on individual tax payers. Click here for a more detailed explanation from the AICPA and CIMA.
To learn how businesses are affected, click here for the AICPA/CIMA document and scroll to page 6.
For more details, click here to download an executive summary from Thomson Reuters™.
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Individual Income Tax Rates will remain as is with a maximum rate of 37%.
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Standard Deductions (for those not itemizing their deductions) will increase to $15,750 for single taxpayers, $23,625 for Heads of Households, and $31,500 for Married filing Jointly.
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Personal Exemptions had been suspended for years 2018-2025 and have been permanently terminated.
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Child Tax Credit has been increased to $2,200 per child.
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Estate & Gift Tax Exemption has been increased to $15 million from $13.9 million.
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Mortgage Interest Deduction limited to $750,000.
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Home Equity Debt Interest is not deductible unless considered home acquisition debt (then considered part of mortgage interest limit).
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Casualty Loss Deduction limited to federal declared disaster areas.
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Miscellaneous Itemized Deductions have been permanently terminated.
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Moving Expense Deductions have been permanently terminated (except for Armed Forces).
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Wagering Losses are now limited to 90%, only to the extent of winnings.
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Charitable Deductions for Non-Itemizers are allowed beginning in 2026 with a maximum of $1,000 for single taxpayers and $2,000 for married filing jointly.
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No Tax on Tips, limited to $25,000, but is phased out beginning when adjusted gross income exceeds $150,000. Expires at end of 2028.
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No Tax on Overtime, limited to $12,500 for single taxpayers and $25,000 for married filing jointly, but is phased out at higher income levels. Expires at end of 2028.
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Enhanced Deduction for Seniors adds $6,000 as a deduction, phased out a higher income level. Expires at end of 2028.
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Car Loan Interest is deductible up to $10,000 per year for a new US assembled auto. Expires at end of 2028.
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529 Plan Account qualified expenses now include homeschool expenses and post-secondary credentialing expenses.
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“Trump Account” would be funded with $1,000 paid by the government for each child born in 2025 – 2028.
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State and Local Tax Deduction is increased to $40,000 from $10,000.000 for single taxpayers and $2,000 for married filing jointly.
Clients should contact us for more information about how the changes apply to their personal situation.