President Trump Signs Sweeping Tax Overhaul
On July 4, President Trump signed the One Big Beautiful Bill Act (OBBBA), which has the most significant tax changes since the Tax Cuts and Jobs Act of 2017 was passed 8 years ago. The new tax laws have many provisions that will affect individuals and businesses. Some of the highlights
Individual Highlights:
- The tax rates from the 2017 Cuts and Jobs Act were temporary when passed. The new law makes those permanent
- The $10,000 limit on State and Local Taxes for those who itemize was increased to $40,000 for 2025 and $40,400 for 2026
- The higher standard deduction was set to expire after 2025, but those are now permanent (Single $15,750, Head of Household $23,625, Married $31,500)
- The standard deduction for those over 65 and up gets another $6,000 for 2025 to 2028
- Up to $10,000 of Interest on new car loans is now deductible for US-assembled vehicles
- The child tax credit increases to $2200 per child, which was set to revert to $1,000 after 2025 before the new law
- Trump Accounts – A pilot program where the federal government pays a $1,000 credit to the account of each child born after 2024 and before 2029
- No taxes on tips – allows a deduction on up to $25,000 in tip income, subject to phaseout at higher income levels – this expires in 2028.
- No tax on overtime – allows a deduction of up to $12,500 (single) or $25,000 (joint), subject to income limits
Business Highlights
- The 20% Qualified Business Income Deduction (QBI) was set to expire after 2025. It is now permanent, and there are changes to the phase-out rules
- Tip tax credit – currently applies to food and beverage, but expands to the beauty service industry
- 100% Bonus depreciation returns for property acquired after January 19, 2025
- Research Expenses – Amortization is repealed, and expensing is now allowed
As I said above, this is the most significant tax law change since 2017, so these are just some of the highlights. We will keep you posted on other changes in upcoming posts.
