As 2025 began, individual taxpayers faced uncertainty with several key provisions of the tax law that were set to expire at the end of the year. That changed on July 4, when President Trump signed the One, Big, Beautiful Bill Act (OBBBA) into law. The OBBBA not only makes many TCJA provisions permanent but also introduces several new benefits — although some other tax breaks have been removed. Below is a summary of eight areas with changes that may impact you and your family.

1. Child tax credit

Starting in 2025, the credit rises to $2,200 per qualifying child under 17 (up from $2,000). The refundable portion is set at $1,700 in 2025 and adjusted for inflation thereafter. Phaseouts begin at $200,000 for single taxpayers and $400,000 for joint filers.

A valid Social Security number for the child and at least one parent is required to claim the credit.

2. Credit for other dependents

The OBBBA retains the $500 credit for non-child dependents and makes it permanent. This applies to children who are too old to qualify for the child tax credit or elderly parents. This credit, also subject to the child tax credit phaseout rules, was set to expire after 2025.

3. Tax rates and brackets

The seven tax brackets introduced by the Tax Cuts and Jobs Act (TCJA) were set to expire after 2025. The OBBBA makes these rates — 10%, 12%, 22%, 24%, 32%, 35% and 37% — permanent, with inflation-adjusted bracket thresholds beginning in 2026.

There are no changes to long-term capital gains and qualified dividends. They’ll remain taxed at 0%, 15%, or 20%. Real estate depreciation-related gains will still be taxed at up to 25%, and long-term gains on collectibles will still be taxed at 28%.

4. Increased standard deduction

The TCJA nearly doubled standard deduction amounts, and the OBBBA solidifies these increases starting in 2025 for taxpayers filing as:

• Single, $15,750 (up from $15,000 before the law),
• Head of household, $23,625 (up from $22,500), and
• Married filing jointly, $31,500 (up from $30,000).

These figures will be adjusted for inflation from 2026 onward.

Additional deductions are still available for those age 65 or older or blind. They are $2,000 for single individuals and $1,600 per spouse for married couples filing jointly.

5. New senior deduction

For tax years 2025–2028, a new senior deduction of up to $6,000 is available to individuals age 65 or older, regardless of whether they itemize. The total deduction can be up to $12,000 for joint filers where both spouses are eligible.

The deduction begins to phase out when modified adjusted gross income (MAGI) exceeds $75,000 for singles or $150,000 for joint filers. It phases out completely at MAGI of $175,000 and $250,000, respectively.

6. SALT deduction cap

When MAGI exceeds $500,000 ($250,000 for separate filers), the cap is reduced by 30% of the amount by which MAGI exceeds the threshold — but not below $10,000. For 2026, the deduction limit rises to $40,400 and increases by one percent over the previous year’s amount in 2027–2029. The SALT deduction limit will return to $10,000 in 2030.

The deduction is phased out for higher-income taxpayers. The phaseout begins at MAGI of $500,000 for married couples filing jointly ($250,000 for singles and married individuals filing separately).

7. Estate and gift tax exemption

The lifetime estate and gift tax exemption, which is $13.99 million in 2025, will rise to $15 million in 2026 and be adjusted annually for inflation. For married couples, that’s an effective exemption of $30 million in 2026 and beyond.

8. Qualified passenger vehicle loan interest

For tax years 2025–2028, taxpayers can claim a new deduction of up to $10,000 for interest paid or accrued on a loan for the purchase of a qualified passenger vehicle for personal use. There are a number of requirements to claim the deduction, including that the final assembly of the vehicle must occur in the United States. The deduction begins to phase out when the taxpayer’s MAGI exceeds $100,000 ($200,000 for married couples filing jointly). The tax break is also available to individuals who don’t itemize deductions on their tax returns.

Wide-ranging impacts

These are just some of the provisions in the massive new tax law. It marks a substantial shift in tax policy, locking in many benefits from the TCJA while introducing some new tax breaks. However, keep in mind that some provisions — like the SALT deduction increase — are temporary and others contain income-based limitations. Contact us if you have questions about how these changes affect your personal situation.

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For some time, President Trump and the GOP have had their sights on repealing many of the tax incentives created or enhanced by the Inflation Reduction Act (IRA). With the enactment of the One, Big, Beautiful Bill Act (OBBBA), they’ve made progress toward accomplishing that goal. Here’s a closer look at some of the individual-related and business-related clean energy tax incentives that are being scaled back or eliminated by the OBBBA.

Clean energy tax breaks affecting individuals

The OBBBA eliminates several tax credits that have benefited eligible individual taxpayers. It provides short “grace periods” before they expire, though, giving taxpayers a window to take advantage of the credits.

For example, the Energy Efficient Home Improvement Credit (Section 25C) was scheduled to expire after 2032. It’s now available for eligible improvements put into service by December 31, 2025. The IRA increased the credit amount to 30% and offers limited credits for exterior windows, skylights, exterior doors, and home energy audits.

The Residential Clean Energy Credit (Sec. 25D) was scheduled to expire after 2034. It’s also now available only through December 31, 2025. The IRA boosted the credit to 30% for eligible clean energy improvements made between 2022 and 2025. The credit is available for installing solar panels or other equipment to harness renewable energy sources like wind, geothermal or biomass energy.

Clean energy tax breaks affecting businesses

The Alternative Fuel Vehicle Refueling Property Credit (Sec. 30C) for property that stores or dispenses clean-burning fuel or recharges electric vehicles will also become unavailable sooner than originally set by the IRA. The credit — worth up to $100,000 per item (each charging port, fuel dispenser or storage property) — had been scheduled to sunset after 2032. Under the OBBBA, property must be placed in service on or before June 30, 2026, to qualify for the credit.

The law also eliminates the Sec. 179D Energy Efficient Commercial Buildings Deduction for buildings or systems on which the construction begins after June 30, 2026. The deduction has been around since 2006, but the IRA substantially boosted the size of the potential deduction and expanded the pool of eligible taxpayers.

Wind and solar projects stand to take a big hit. The OBBBA eliminates the Clean Electricity Investment Credit (Sec. 48E) and the Clean Electricity Production Credit (Sec. 45Y) for wind and solar facilities placed in service after 2027, unless construction begins on or before July 4, 2026. Wind and solar projects begun after that date must be put in service by the end of 2027.

In addition, wind energy components won’t qualify for the Advanced Manufacturing Production Credit (Sec. 45X) after 2027. The law also modifies the credit in other ways. For example, it adds “metallurgical coal” suitable for the production of steel to the list of critical minerals. And, for critical materials other than metallurgical coal, the credit will now phase out from 2031 through 2033. The credit for metallurgical coal expires after 2029.

Note: The OBBBA permits taxpayers to transfer clean energy credits while the credits are still available (restrictions apply to transfers to “specified foreign entities”).

Clean vehicle credits

If you’ve been pondering the purchase of a new or used electric vehicle (EV), you’ll want to buy sooner rather than later to take advantage of available tax credits. The Clean Vehicle Credit (Sec. 30D) was scheduled to expire after 2032. Under the OBBBA, the credit is available only through September 30, 2025.

The IRA significantly expanded the credit for qualifying clean vehicles placed in service after April 17, 2023. For eligible taxpayers, it extended the credit to any “clean vehicle,” including EVs, hydrogen fuel cell cars and plug-in hybrids. The maximum credit for new vehicles is $7,500, based on meeting certain sourcing requirements for 1) critical minerals and 2) battery components. Clean vehicles that satisfy only one of the two requirements qualify for a $3,750 credit.

The IRA also created a new credit, Sec. 25E, for eligible taxpayers who buy used clean vehicles from dealers. The credit equals the lesser of $4,000 or 30% of the sale price. It also expires on September 30, 2025.

Additionally, the OBBBA targets the incentive for a business’s use of clean vehicles. The Qualified Commercial Clean Vehicle Credit (Sec. 45W) had been scheduled to expire after 2032. It’s now available only for vehicles acquired on or before September 30, 2025. Depending on vehicle weight, the maximum credit is up to $7,500 or $40,000.

Other limitations

The OBBBA also limits access to the remaining clean energy credits for projects involving “foreign entities of concern” and imposes tougher domestic content requirements. We can help you plan for accelerated expiration dates on repealed clean energy incentives and comply with the new restrictions going forward.

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The One, Big, Beautiful Bill Act (OBBBA) includes, among many other things, numerous provisions that can affect an individual’s taxes. The new law makes some changes to existing tax breaks that will be significant to many, but not all, taxpayers. It also creates new breaks that, again, will be significant to certain taxpayers. Finally, it makes permanent the tax rate reductions and most of the changes to deductions and credits made by the Tax Cuts and Jobs Act (TCJA), with occasional tweaks.

State and local tax deduction

The OBBBA increases the limit on the state and local tax (SALT) deduction through 2029. Beginning in 2025, eligible taxpayers can deduct up to $40,000 ($20,000 for married couples filing separately) of SALT, including property tax and either income tax or sales tax, with a 1% annual increase thereafter. However, in 2030, the previous limit of $10,000 ($5,000 for separate filers) will resume.

When modified adjusted gross income (MAGI) exceeds $500,000 ($250,000 for separate filers), the cap is reduced by 30% of the amount by which MAGI exceeds the threshold — but not below $10,000 ($5,000 for separate filers). If you expect to be near or over the threshold, taking steps to reduce your MAGI (for example, increasing retirement plan contributions or making IRA qualified charitable distributions) could help you secure the full SALT deduction.

Child Tax Credit

The $2,000 Child Tax Credit (CTC) for children under age 17 was slated to return to $1,000 per child after 2025, with the income phaseout levels subject to lower thresholds. Also, the $500 Credit for Other Dependents (COD) was scheduled to expire at that time. The COD is available for each qualifying dependent other than a qualifying child (such as a dependent child over the age limit or a dependent elderly parent).

The OBBBA makes the doubled CTC permanent, with an increase to $2,200 starting this year and annual inflation adjustments to follow. It also makes permanent the $1,400 refundable portion of the CTC, adjusted for inflation ($1,700 in 2025), and the $500 nonrefundable COD. And it makes permanent the income phaseout thresholds of $200,000, or $400,000 for joint filers.

Education-related breaks

The OBBBA expands the definition of qualified expenses that can be paid for with tax-free distributions from Section 529 plans. For example, tax-free distributions can now cover qualified post-secondary credentialing expenses. In addition, tax-free elementary and secondary school distributions are no longer limited to paying tuition; they can also pay for books and other instructional materials, online educational materials, tutoring or educational classes outside the home, and certain testing fees.

The OBBBA also increases the annual limit on tax-free distributions for qualified elementary and secondary school expenses from $10,000 to $20,000 beginning in 2026.

In addition, the law creates a tax credit of up to $1,700 for contributions to organizations that provide scholarships to elementary and secondary school students. Students who benefit from the scholarships must be part of a household with an income that doesn’t exceed 300% of the area’s median gross income and be eligible to enroll in a public elementary or secondary school.

The OBBBA also makes some tax law changes related to student loans:

Employer-paid student loan debt. If your employer pays some of your student loan debt, you may be eligible to exclude up to $5,250 from income. The OBBBA makes this break permanent, and the limit will be annually adjusted for inflation after 2026.

Forgiven student loan debt. Forgiven debt is typically treated as taxable income, but tax-free treatment is available for student loan debt forgiven after December 31, 2020, and before January 1, 2026. Under the OBBBA, beginning in 2026, only student loan debt that’s forgiven due to the death or total and permanent disability of the student will be excluded from income, but this exclusion is permanent. Warning: Some states may tax forgiven debt that’s excluded for federal tax purposes.

Charitable deductions

Generally, donations to qualified charities are fully deductible up to certain adjusted gross income (AGI)-based limits if you itemize deductions. The OBBBA creates a nonitemized charitable deduction of up to $1,000, or $2,000 for joint filers, which goes into effect in 2026.

Also beginning in 2026, a 0.5% floor will apply to itemized charitable deductions. This generally means that only charitable donations in excess of 0.5% of your AGI will be deductible if you itemize deductions. So, if your AGI is $100,000, your first $500 of charitable donations for the year won’t be deductible.

Qualified small business stock

Generally, taxpayers selling qualified small business (QSB) stock are allowed to exclude up to 100% of their gain if they’ve held the stock for more than five years. (The exclusion is less for stock acquired before September 28, 2010.) Under pre-OBBBA law, to be a QSB, a business must be engaged in an active trade or business and must not have assets that exceed $50 million, among other requirements.

The OBBBA provides new, but smaller exclusions for QSB stock held for shorter periods. Specifically, it provides a 75% exclusion for QSB stock held for four years and a 50% exclusion for QSB stock held for three years. These exclusions go into effect for QSB stock acquired after July 4, 2025. The law also increases the asset ceiling for QSBs to $75 million (adjusted for inflation after 2026) for stock issued after July 4, 2025.

Affordable Care Act’s Premium Tax Credits

The OBBBA imposes new requirements for Premium Tax Credit (PTC) recipients. For example, beginning in 2028, eligible individuals must annually verify information such as household income, immigration status and place of residence. Previously, many insureds were allowed to automatically re-enroll annually.

Beginning in 2026, individuals who receive excess advanced PTCs based on estimated annual income must return the entire excess unless actual income is less than 100% of the federal poverty limit. Currently, individuals with incomes below 400% of the limit are required to make only partial repayments.

Temporary tax deductions

On the campaign trail in 2024, President Trump promised to eliminate taxes on tips, overtime and Social Security benefits and to make auto loan interest deductible. The OBBBA makes a dent in these promises but doesn’t completely fulfill them. Instead, it creates partial deductions that apply for 2025 through 2028. They’re available to both itemizers and nonitemizers:

Tips. Employees and independent contractors generally can claim a deduction of up to $25,000 for qualified tips received if they’re in an occupation that customarily and regularly received tips before 2025. (The eligible occupations will be determined by the IRS and are expected to be released by October 2, 2025.) The tips must be reported on a Form W-2, Form 1099 or other specified statement furnished to the individual or reported directly by the individual on Form 4137. The deduction begins to phase out when a taxpayer’s MAGI exceeds $150,000, or $300,000 for joint filers.

Overtime. Qualified overtime pay generally is deductible up to $12,500, or $25,000 for joint filers. It includes only the excess over the regular pay rate. For example, if a taxpayer is normally paid $20 per hour and is paid “time and a half” for overtime, only the extra $10 per hour for overtime counts as qualified overtime pay. The overtime pay must be reported separately on a taxpayer’s W-2 form, Form 1099 or other specified statement furnished to the individual. This deduction also starts phasing out when MAGI exceeds $150,000, or $300,000 for joint filers.

Deductible tips and overtime pay remain subject to federal payroll taxes and any applicable state income and payroll taxes.

Auto loan interest. Interest on qualified passenger vehicle loans originated after December 31, 2024, generally is deductible up to $10,000, though few vehicles come with that much annual interest. Qualified vehicles include cars, minivans, vans, SUVs, pickup trucks and motorcycles with gross vehicle weight ratings of less than 14,000 pounds that undergo final assembly in the United States. The deduction begins to phase out when MAGI exceeds $100,000, or $200,000 for joint filers.

“Senior” deduction. While the OBBBA doesn’t eliminate taxes on Social Security benefits, it does include a new deduction of $6,000 for taxpayers age 65 or older by December 31 of the tax year — regardless of whether they’re receiving Social Security benefits. The deduction begins phasing out when MAGI exceeds $75,000, or $150,000 for joint filers. Social Security benefits, however, are still taxable to the extent that they were before the OBBBA.

Finally, be aware that additional rules and limits apply to these new tax breaks. In many cases, the IRS will be publishing additional guidance and will provide transition relief for 2025 to eligible taxpayers and those subject to information reporting requirements.

Trump Accounts

Beginning in 2026, Trump Accounts will provide families with a new way to build savings for children. An account can be set up for anyone under age 18 at the end of the tax year who has a Social Security number.

Annual contributions of up to $5,000 can be made until the year the beneficiary turns age 18. In addition, U.S. citizen children born after December 31, 2024, and before January 1, 2029, with at least one U.S. citizen parent can potentially qualify for an initial $1,000 government-funded deposit.

Contributions aren’t deductible, but earnings grow tax-deferred as long as they’re in the account. The account generally must be invested in exchange-traded funds or mutual funds that track the return of a qualified index and meet certain other requirements. Withdrawals generally can’t be taken until the child turns age 18.

TCJA provisions

The OBBBA also makes permanent many TCJA provisions that were scheduled to expire after 2025, including:

Reduced individual income tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%,
Higher standard deduction (for 2025, the OBBBA also slightly raises the deduction to $15,570 for singles, $23,625 for heads of households and $31,500 for joint filers),
The elimination of personal exemptions,
Higher alternative minimum tax exemptions,
The reduction of the limit on the mortgage debt deduction to the first $750,000 ($375,000 for separate filers) — but the law makes certain mortgage insurance premiums eligible for the deduction after 2025,
The elimination of the home equity interest deduction for debt that wouldn’t qualify for the home mortgage interest deduction, such as home equity debt used to pay off credit card debt,
The limit of the personal casualty deduction to losses resulting from federally declared disasters — but the OBBBA expands the limit to include certain state-declared disasters,
The elimination of miscellaneous itemized deductions (except for eligible unreimbursed educator expenses), and
The elimination of the moving expense deduction (except for members of the military and their families in certain circumstances and, beginning in 2026, certain employees or new appointees of the intelligence community).
The permanency of these provisions should provide some helpful clarity for tax planning. However, keep in mind that “permanent” simply means that the provisions have no expiration date. It’s still possible that lawmakers could make changes to them in the future.

Time to reassess

We’ve covered many of the most significant provisions affecting individual taxpayers, but there are other changes that also might affect you. For example, the OBBBA adds a new limitation on itemized deductions for taxpayers in the 37% tax bracket beginning in 2026. It also imposes a new limit on the deduction for gambling losses beginning next year. And sole proprietors and owners of pass-through businesses will also be directly affected by OBBBA tax law changes affecting businesses.

Given all of these and other tax law changes, now is a good time to review your tax situation and update your tax planning strategies. Turn to us to help you take full advantage of the new — or newly permanent — tax breaks.

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If you’re age 65 or older and enrolled in basic Medicare insurance, you may need to pay additional premiums to receive more comprehensive coverage. These extra premiums can be expensive, particularly for married couples, since both spouses incur the costs. However, there may be a silver lining: You could be eligible for a tax deduction for the premiums you pay.

Deducting medical expenses: What counts?

For purposes of claiming an itemized deduction for medical expenses on your tax return, you can combine premiums for Medicare health insurance with other eligible medical expenses. These include amounts for “Medigap” insurance and Medicare Advantage plans. Some people buy Medigap policies because Medicare Parts A and B don’t cover all their health care expenses. Coverage gaps include co-payments, coinsurance, deductibles and other costs. Medigap is private supplemental insurance that’s intended to cover some or all gaps.

Is itemizing required?

Qualifying for a medical expense deduction can be difficult for many people for several reasons. For 2025, you can deduct medical expenses only if you itemize deductions on Schedule A of Form 1040 and only to the extent that total qualifying expenses exceed 7.5% of adjusted gross income.

In recent years, many people haven’t been itemizing because their itemized deductions are less than their standard deductions. For 2025, the standard deduction amounts are $15,000 for single filers, $30,000 for married couples filing jointly and $22,500 for heads of household. (Under The One, Big, Beautiful Bill being considered by Congress, these amounts would increase. If the bill is enacted, the standard deduction will increase for 2025 through 2028 by an additional $1,000 for singles, $2,000 for married joint filers and $1,500 for heads of households.)

Note: Self-employed people and shareholder-employees of S corporations don’t need to itemize to get tax savings. They can generally claim an above-the-line deduction for their health insurance premiums, including Medicare premiums.

What other expenses qualify?

In addition to Medicare premiums, you can deduct various medical expenses, including those for dental treatments, doctor visits, ambulance services, dentures, eye exams, eyeglasses and contacts, hearing aids, hospital visits, lab tests, qualified long-term care services, prescription medicines and others.

There are also many other items that Medicare doesn’t cover that can be deducted for tax purposes if you qualify. And itemizers can deduct transportation expenses to get to and from medical appointments. If you go by car, you can deduct a flat 21 cents-per-mile rate in 2025, or you can keep track of your actual out-of-pocket expenses for gas, oil, maintenance and repairs.

Claim all eligible expenses

Contact us if you have any questions about whether you’re able to claim medical expense deductions on your tax return. We’ll help ensure you claim all the tax breaks you’re entitled to.

© 2025

The U.S. House of Representatives passed The One, Big, Beautiful Bill Act on May 22, 2025, introducing possible significant changes to individual tax provisions. While the bill is now being considered by the Senate, it’s important to understand how the proposals could alter key tax breaks.

Curious about how the bill might affect you? Here are seven current tax provisions and how they could change under the bill.

1. Standard deduction

The Tax Cuts and Jobs Act nearly doubled the standard deduction. For the 2025 tax year, the standard deduction has been adjusted for inflation as follows:

• $15,000 for single filers,
• $30,000 for married couples filing jointly, and
• $22,500 for heads of household.

Under current law, the increased standard deduction is set to expire after 2025. The One, Big, Beautiful Bill would make it permanent. Additionally, for tax years 2025 through 2028, it proposes an increase of $1,000 for single filers, $2,000 for married couples filing jointly and $1,500 for heads of households.

2. Child Tax Credit (CTC)

Currently, the CTC stands at $2,000 per qualifying child but it’s scheduled to drop to $1,000 after 2025. The bill increases the CTC to $2,500 for 2025 through 2028, after which it would revert to $2,000. In addition, the bill indexes the credit amount for inflation beginning in 2027 and requires the child and the taxpayer claiming the child to have Social Security numbers.

3. State and local tax (SALT) deduction cap

Under current law, the SALT deduction cap is set at $10,000 but the cap is scheduled to expire after 2025. The bill would raise this cap to $40,000 for taxpayers earning less than $500,000, starting in 2025. This change would be particularly beneficial for taxpayers in high-tax states, allowing them to deduct a larger portion of their state and local taxes.

4. Tax treatment of tips and overtime pay

Currently, tips and overtime pay are considered taxable income. The proposed legislation seeks to exempt all tip income from federal income tax through 2029, provided the income is from occupations that traditionally receive tips. Additionally, it proposes to exempt overtime pay from federal income tax, which could increase take-home pay for hourly workers.

These were both campaign promises made by President Trump. He also made a pledge during the campaign to exempt Social Security benefits from taxes. However, that isn’t in the bill. Instead, the bill contains a $4,000 deduction for eligible seniors (age 65 or older) for 2025 through 2028. To qualify, a single taxpayer would have to have modified adjusted gross income (MAGI) under $75,000 ($150,000 for married couples filing jointly).

5. Estate and gift tax exemption

As of 2025, the federal estate and gift tax exemption is $13.99 million per individual. The bill proposes to increase this exemption to $15 million per individual ($30 million per married couple) starting in 2026, with adjustments for inflation thereafter.

This change would allow individuals to transfer more wealth without incurring federal estate or gift taxes.

6. Auto loan interest

Currently, there’s no deduction for auto loan interest. Under the bill, an above-the-line deduction would be created for up to $10,000 of eligible vehicle loan interest paid during the taxable year. The deduction begins to phase out when a single taxpayer’s MAGI exceeds $100,000 ($200,000 for married couples filing jointly).

There are a number of rules to meet eligibility, including that the final assembly of the vehicle must occur in the United States. If enacted, the deduction is allowed for tax years 2025 through 2028.

7. Electric vehicles

Currently, eligible taxpayers can claim a tax credit of up to $7,500 for a new “clean vehicle.” There’s a separate credit of up to $4,000 for a used clean vehicle. Income and price limits apply as well as requirements for the battery. These credits were scheduled to expire in 2032. The bill would generally end the credits for purchases made after December 31, 2025.

Next steps

These are only some of the proposals being considered. While The One, Big, Beautiful Bill narrowly passed the House, it faces scrutiny and potential changes in the Senate. Taxpayers should stay informed about these developments, as the proposals could significantly impact individual tax liabilities in the coming years. Contact us with any questions about your situation.

© 2025