By: Rob Morris
If you’ve been hearing about the new “Big Beautiful Bill Act” and wondering how it might impact your taxes, your savings, or your investment strategy, you’re not alone. This sweeping new law—enacted on July 4, 2025—includes some of the most significant updates to the U.S. tax code in recent memory, with changes that will affect individuals, families, business owners, charitable organizations, and even future college students.
As your trusted advisors, we’re breaking down the most important changes—especially those that impact individuals, families, and small business owners. We’re also highlighting planning opportunities and proactive steps you can take right now to make the most of these updates.
Permanent Individual Tax Rate Cuts
The individual tax rate reductions first introduced in 2017 under the TCJA were set to expire in 2025—but now, they’re permanent.
What this means for you:
The individual tax rate reductions first introduced in 2017 under the TCJA were set to expire in 2025—but now, they’re permanent.
What this means for you:
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Lower income tax rates across brackets are here to stay.
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Roth IRA conversions, capital gains planning, and income timing are more impactful than ever.
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Strategic income realization could make sense, especially for retirees or those in low-income years.
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The Alternative Minimum Tax (AMT) thresholds and exemptions are also made permanent, reducing surprise liabilities.
Higher Standard Deductions
For 2025 and beyond, the standard deduction is permanently increased:
For 2025 and beyond, the standard deduction is permanently increased:
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$15,750 for single filers
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$23,625 for heads of household
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$31,500 for married couples filing jointly
Fewer taxpayers will itemize, but planning for itemized deductions like medical or charitable contributions becomes more strategic. A new 2/37 limitation now reduces deductions for high-income earners.
New Senior Deduction (2025–2028)
Taxpayers age 65+ can now claim a $6,000 deduction, phased out at $75,000 (single) and $150,000 (joint). This opens the door for strategic Roth conversions, and helps manage Social Security taxability and Medicare brackets.
Taxpayers age 65+ can now claim a $6,000 deduction, phased out at $75,000 (single) and $150,000 (joint). This opens the door for strategic Roth conversions, and helps manage Social Security taxability and Medicare brackets.
Expanded Child Tax Credit
The credit increases to $2,200 per qualifying child, indexed for inflation, with stricter Social Security number requirements. The refundable portion of $1,400 is now permanent. Phaseouts begin at $200,000 (single) and $400,000 (joint).
The credit increases to $2,200 per qualifying child, indexed for inflation, with stricter Social Security number requirements. The refundable portion of $1,400 is now permanent. Phaseouts begin at $200,000 (single) and $400,000 (joint).
Expanded Credits for Child & Dependent Care
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Credit increases to 50%, phasing down to 35% at $15,000 AGI, and to 20% at $75,000 AGI ($150,000 joint)
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Dependent Care Assistance Plan exclusion rises to $7,500 ($3,750 MFS)
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Up to $5,000 of the adoption credit is refundable
Temporary Tax-Free Income Provisions (2025–2028)
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Up to $25,000 in qualified tips per year is deductible
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Up to $12,500 ($25,000 joint) in qualified overtime pay is deductible
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Up to $10,000/year interest on loans for new U.S.-assembled passenger vehicles is deductible
Boosted SALT Deduction Cap (2025–2029)
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SALT cap raised to $40,000 ($20,000 MFS) through 2029
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Indexed for inflation
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Phased down for higher earners
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Reverts to $10,000 in 2030
Mortgage and Itemized Deduction Changes
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$750,000 mortgage interest cap made permanent
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Mortgage insurance now treated as interest
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Casualty loss deduction expanded to state-declared disasters
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Miscellaneous itemized deductions remain suspended (except educator/coaching expenses)
New ‘Trump Accounts’ for Children (2025–2028)
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$1,000 government-funded deposit for newborns
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$5,000 annual contribution limit
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$2,500/year in employer contributions excluded from income
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Withdrawals start at age 18 and are taxed
These accounts support education, housing, or starting a business, and should be planned alongside 529s and custodial accounts.
529 Plan Enhancements
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Expanded use to cover additional K-12 and postsecondary expenses
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Annual contribution limit increased to $20,000
Employer-Provided Student Loan Relief
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Permanently excluded from employee income, with inflation adjustments
Charitable and Community Provisions
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$1,700 federal credit for donations to state-approved K–12 scholarship granting organizations
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Above-the-line charitable deduction increased to $1,000 ($2,000 joint) and made permanent
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0.5% AGI floor for itemized charitable deductions with carryforward rules
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1% taxable income floor for corporate deductions (up to 10%)
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Employer-provided childcare credit increased to 40% (50% for small businesses), with a cap of $500,000 ($600,000 for small businesses)
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Low-Income Housing Tax Credit state ceilings made permanent
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Bond financing requirements relaxed
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New Markets Tax Credit made permanent with a 5-year carryforward
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Opportunity Zones: re-designation every 10 years, new rural opportunity funds, expanded reporting, extended benefits
Business and Investment Provisions
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100% bonus depreciation for qualified property is permanent
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Full expensing of domestic R&D allowed (foreign R&D still amortized over 15 years)
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Interest deduction limit permanently based on EBITDA
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Section 179 limit raised to $2.5M (phaseout at $4M, inflation-adjusted)
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100% depreciation for nonresidential real property in manufacturing
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Advanced manufacturing investment credit increased to 35%
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Spaceports now treated as airports for bond purposes
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New sourcing rule allows 50% of income from U.S.-produced inventory sold abroad to be foreign-sourced
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FDII deduction reduced to 33.34%, GILTI (renamed “net CFC tested income”) deduction reduced to 40%
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Deemed return on foreign investments repealed
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BEAT rate increased to 10.5%
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Look-through rule for CFCs permanently extended
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One-month deferral for specified foreign corporations repealed
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Downward attribution of stock ownership limitation restored
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Subpart F income allocation rules updated
Energy and Environmental Changes
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Terminated credits: clean vehicle (after 9/30/25), alternative refueling property (after 6/30/26), energy-efficient home improvement (after 12/31/25), residential clean energy (after 12/31/25), efficient commercial buildings (after 6/30/26), and new energy-efficient home (after 6/30/26)
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Cost recovery for energy property terminated (after 12/31/24)
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Clean fuel production credit extended through 2029, limited to U.S./Mexico/Canada feedstocks, with restrictions
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Carbon oxide sequestration credit denied to foreign-influenced entities
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Energy credits limited where foreign assistance or content is present
Additional Key Provisions
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Installment payment of capital gains allowed for farmland sold to farmers
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Expensing allowed for sound recording productions up to $150,000
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25% of interest on loans secured by rural/ag property excluded for qualified lenders
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Transfer/manufacturing taxes reduced for certain firearms
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1099 reporting threshold raised to $2,000, indexed
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De minimis rule for third-party networks reinstated ($20,000/200 transaction threshold)
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Percentage-of-completion exception for some residential construction contracts
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QSBS exclusion expanded: 50% at 3 years, 75% at 4 years, 100% at 5 years; per-issuer cap increased to $15M; gross asset test raised to $75M (both indexed)
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Enhanced enforcement for improper ERC claims: longer assessment period, higher promoter penalties, and invalidation of late claims (after Jan 31, 2024)
Final Thoughts: Now Is the Time to Plan
The One Big Beautiful Bill Act introduces sweeping and in many cases permanent changes. Whether you’re an individual navigating tax brackets, a business owner investing in growth, or a family saving for college—there are tactical steps you can take today to benefit.
The One Big Beautiful Bill Act introduces sweeping and in many cases permanent changes. Whether you’re an individual navigating tax brackets, a business owner investing in growth, or a family saving for college—there are tactical steps you can take today to benefit.
At RWM & Company, we’re committed to turning these complex updates into practical advice for your life and business. If you’re unsure how these changes apply to you, want to adjust your tax strategy, or are seeking long-term planning guidance—contact us today.