Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) ushers in a sweeping extension of many tax breaks first introduced by the 2017 Tax Cuts and Jobs Act (TCJA). Alongside those extensions, the bill introduces a host of new tax deductions, credits, and planning opportunities for individuals and business owners alike.
Below is a high-level overview of the key provisions that could affect your personal tax situation. Think of this as your starting point for exploring how to adjust your financial strategy in light of the impact on you.
Basic Highlights for All Individual Taxpayers
Tax Brackets & Rates
The current tax brackets will remain in place with no expiration date—so they’re here to stay unless Congress revisits them.
** This will not cause any major changes.
Itemized Deductions
Because of the 2018 increase of the standard deduction and the removal or limitation of many deductible items, the vast majority of individuals do not itemize. There are several rules in the OBBBA that may change this.
Standard Deduction
The higher standard deduction introduced in 2017 is now permanent and gets a modest bump:
- Single filers: $15,750
- Married filing jointly: $31,500
The additional deduction for age 65+ or blind individuals remains unchanged ($2,000 for single filers, $1,600 for joint filers).
**This will not cause any major changes.
State and Local Tax (SALT) Deduction
The $10,000 SALT cap has increased to $40,000 for 2025–2029. The increase phases out for taxpayers with adjusted gross income (AGI) over $500,000.
** Taxpayers who have large state and local tax bills (from your W2 or business income) and who have large real estate tax bills (from your residence and other property you own and use personally) could have a significant increase (up to a $30K increase) in their deductions.
Educator Expenses
Starting in 2026, teachers can deduct unreimbursed classroom expenses.
**Teachers can still deduct up to $300 of non-reimbursed classroom expenses if they do not itemize. However, if they do itemize, they will now be able to deduct all non-reimbursed classroom expenses they paid, not subject to the $300 limit.
Other Key Personal Tax Updates
529 Plans
- Expanded to cover more K-12 expenses, with the annual contribution limit raised to $20,000.
- Can now include costs related to professional licenses or credentials.
- Student loan payments remain a qualified use of 529 funds.
**The main change is to increase the amount of 529 funds that can be used on (private) K-12 schools from $10K to $20K.
ABLE Accounts
The ability for working individuals with disabilities to contribute to ABLE accounts—and roll over 529 plans—is now permanent. These contributors can also claim an enhanced Retirement Savings Contribution Credit, which increases to $2,100 starting in 2027. Contributions can now be made for individuals who become disabled prior to turning 46 (formerly could only be made for individuals who became disabled prior to turning 26).
**This will affect the caregivers of those who become disabled after age 26 but before age 46. There are several advantages and disadvantages of an ABLE account versus a 529 plan, so if this applies to you, it would be worth investigating.
Adoption Credit
Up to $5,000 of the credit is now refundable, benefitting more families with lower tax liabilities.
**This expands an existing credit to offset adoption expenses, so if you are considering adopting a child, you will want to look into this.
Alternative Minimum Tax (AMT)
AMT exemptions and their annual inflation adjustments are locked in. However, the phase-out threshold resets to $1 million and will increase with inflation from there.
**This is a tax that all but disappeared due to the 2018 tax changes. Now that there is a higher limit to the state and local tax deduction (SALT), taxpayers who have a large amount of SALT payments may be subject to this tax and will need to take this into account when doing tax planning.
Auto Loan Interest
Deduct up to $10,000 annually on interest for qualifying US-assembled passenger vehicles (2025–2028). This is subject to income phaseouts above $100,000 (single) and $200,000 (married filing jointly). Leases, RVs, commercial vehicles, and vehicles not designed to be driven on roads (such as golf carts) don’t qualify.
**Anyone considering financing the purchase of a new vehicle should consider this. Make sure to do your “due diligence” when making a purchase: confirm the vehicle is “US Assembled.” (We anticipate the IRS will likely have something on their website to verify this via a VIN number check.)
Casualty Loss Deduction
Available only for federally—and now certain state—declared disasters.
**This will not cause any major changes.
Changes to the Affordable Care Act (ACA), aka The Marketplace
If you use Marketplace coverage (also known as ACA or “Obamacare”), the OBBBA brings a few key changes that could affect your health insurance planning in 2026:
- Enhanced premium subsidies are ending. The expanded subsidies introduced during the COVID-19 pandemic will expire at the end of 2025. This could mean higher monthly premiums starting in 2026—some estimates suggest increases between 7% and 11%.
- Tighter eligibility rules. You’ll need to meet stricter requirements to qualify for premium tax credits, and automatic re-enrollment will be eliminated. In addition, Marketplace users will now have to actively verify their information and affirm eligibility each year.
**NOTE: If you currently rely on the Marketplace—or plan to in the future—2026 is not the year to set it and forget it. Take time to understand your options and check whether you’re still eligible for assistance under the new rules.
Charitable Giving
- Above-the-line deduction: Returns for non-itemizers—$1,000 for individuals, $2,000 for joint filers.
- Cash gifts: 60% of AGI limit has been made permanent.
- New 0.5% floor: Reduces the benefit slightly for larger charitable deductions.
**As so few taxpayers itemized with the 2018 tax changes, there was no benefit to charitable contributions. Now, even if you do not itemize, you can deduct up to $1,000 ($2,000 for married taxpayers filing jointly).
**If you do itemize, you can only deduct charitable contributions that exceed 0.5% of your adjusted gross income (AGI). So, for instance, if your AGI is $100K, you would only be able to deduct contributions that exceed $500 ($100K x 0.5% = $500). So, in this instance, if you contributed $3,000 to charities, you could deduct $2,500 ($3,000 - $500).
Child Tax Credit
The credit increases to $2,200 per child for 2025, with $1,400 of that refundable. Both figures will be indexed to inflation going forward.
**This will not cause any major changes.
Clean Energy Incentives
Most “Green Credits”—including EVs and energy-efficient homes—are repealed.
** Green Credits, which have existed in various forms since the early 2000s, are largely going away during or after 2025. This includes credits for electric vehicles, charging stations, solar power, and energy-efficient home improvements
**NOTE – Credits for electric vehicles (new, used and commercial) are set to expire 09/30/25. If you are in the market for one of these vehicles, you need to act fast to qualify for the credit.
Dependent Care Benefits
- FSA contribution limit for dependent care: Increased to $7,500 (non-indexed).
- Child and dependent-care credit: Boosted from 35% to 50% of expenses, with more favorable phase-out rules beginning in 2026.
Employer Student Loan Repayment
The ability for employers to make tax-free payments toward employees’ student loans (up to $5,250 annually) is now a permanent option, with indexing starting in 2027.
**This will not cause any major changes.
Estate & Gift Tax Exemption
Starting in 2026, the lifetime exemption grows to $15 million per person and will adjust for inflation each year.
**The big news here is that this exemption was expected to revert back to the pre-2018 numbers ($5.5 million per person).
Gambling Losses
As of 2026, only 90% of losses are deductible (down from 100%), and deductions can’t exceed gambling income.
**If you itemize, you can only deduct 90% of losses (to the extent of gambling winnings), so at a minimum you will have to pay taxes on 10% of all gambling winnings.
Health Savings Accounts (HSAs)
While most proposed HSA changes were dropped, Bronze and catastrophic ACA plans now qualify as high-deductible health plans—expanding access for more individuals.
**This will not cause any major changes.
Mortgage Interest Deduction
The current rules—capping deductible mortgage debt at $750,000 and eliminating the deduction for home equity loans—are made permanent.
**This will not cause any major changes.
Moving Expenses
These continue to be non-deductible, except for active military and now intelligence community members.
**This will not cause any major changes.
New Deductions for Workers
- Tips: Deduct up to $25,000 for reported tips (2025–2028). Phases out above $150,000 (single) or $300,000 (MFJ). **Note – this only applies to industries where tips are ordinary, such as waiters/waitresses and beauty and barber services
**This will reduce the tax liability of anyone working in jobs that ordinarily receive tips (within the income limits). This is for both W2 and 1099 employees.
**NOTE - Your paycheck will not change; you will get the deduction when you file your tax return. - Overtime: Deduct up to $12,500 single ($25,000 married) for overtime pay (2025–2028). Phases out above $150,000 (single) or $300,000 (MFJ).
**This will reduce the tax liability of any W2 employee who receives overtime pay (excluding highly compensated employees and certain professional services; Be sure to look into these exclusions if you think they apply to you.)
**NOTE - Your paycheck will not change; you will get the deduction when you file your tax return.
**NOTE – this deduction is only for the “overtime portion” of the pay. For instance, if you are paid $10 an hour, and OT pay is $15, only the “$5 overtime portion” is deductible, not the full $15.
New Senior Deduction
From 2025 through 2028, individuals aged 65 and older can claim an additional $6,000 deduction per taxpayer. **Note – this deduction starts phasing out for taxpayers who have modified adjusted gross income (MAGI) of $75K single (full phaseout at $175K) and $150K married (fully phased out at $250K).
**Taxpayers over age 65 within the MAGI limits will be able to deduct an additional $6,000, potentially lowering seniors’ tax bills.
Pease Limitation
This cap on itemized deductions for high earners is permanently eliminated. In its place: a new rule that limits deductions for taxpayers in the top tax bracket to a benefit capped at 35%.
**This only affects taxpayers in the top (37%) tax bracket who itemize. In essence, these taxpayers will lose 2% of the tax benefit from itemized deductions.
Personal Exemptions
These remain permanently eliminated.
**This will not cause any major changes.
Student Loans
Loan forgiveness due to death or disability remains tax-free on a permanent basis.
**This will not cause any major changes.
Trump Accounts
Beginning in 2026, these new savings vehicles will be available for children born between 2025 and 2028, with a $1,000 government seed contribution.
- Additional contributions (non-deductible) can be made by parents, the child, or even employers—up to $5,000/year.
- Growth is tax-deferred.
- Withdrawals (allowed after age 18) are taxed if gains are withdrawn for non-qualified purposes and may be subject to a 10% penalty.
- Qualified expenses include education, first-time home purchases, and business start-up costs.
Business & Investment-Related Changes
Immediate Expensing
Full, immediate write-offs for equipment, R&D, and domestic factory investments.
**This extends the “bonus depreciation” write off that was set to expire. This could affect anyone with a business who buys assets but would rather get tax savings up front, as opposed to equally over the life of the asset.
Section 179 Expensing
Expanded limits remain available to help small businesses recover costs faster.
**Similar to “bonus depreciation,” this could affect anyone with a business who buys assets and would rather get the tax deduction up front as opposed to gradually over the life of the asset. Section 179 has limits to the annual allowable deduction; these limits and phaseouts have been increased.
Opportunity Zones
This program has received a long-term commitment with updated rules:
- 10-year rolling designation windows
- Stricter eligibility standards
- More robust reporting for Qualified Opportunity Funds and businesses
**This will not cause any major changes for most taxpayers, as it is a very niche credit (only for people who invest in real estate in Qualified Opportunity Zones (QOZ)). This change expands the physical areas of QOZs to now include some rural areas.
Qualified Business Income (QBI) Deduction
The 20% deduction for pass-through business income is now permanent. Although a proposed increase to 23% didn’t make the cut, the income phase-out thresholds are raised slightly:
- $150,000 for joint filers
- $75,000 for others
A minimum deduction of $400 is available for eligible businesses with at least $1,000 in income.
**This will not cause any major changes.
Qualified Small Business Stock (QSBS)
Section 1202 now offers tiered benefits:
- 3-year hold = 50% gain exclusion
- 4-year hold = 75% exclusion
- 5-year hold = 100% exclusion
The exclusion cap rises to $15 million, with indexing starting in 2027.
**If you are planning on investing in a QSBS and think you may want to sell this stock in under 5 years, there are now some gain exclusions available. (The 5-year 100% exclusion has been available for some time, the 3-year 50% exclusion and 4-year 75% exclusion are new.)
**NOTE – this only qualifies to QSBS purchased after 07/04/25.
In Summary
The OBBBA introduces a range of tax code changes, and while not everyone will be significantly impacted, it’s a good idea to review how these updates might affect your personal and/or business situation. We encourage you to connect with your accountant as needed or reach out to our office at 614-891-5423 with any questions. At N&Co, it is always our goal to make your life #LessTaxing!