Tax Changes Ahead: Key Provisions for Individuals in the One Big Beautiful Bill Act
Congress has passed sweeping legislation known as the One Big Beautiful Bill (OBBB)—a wide-reaching package aimed at overhauling the tax code and implementing a number of economic policy updates. While the bill also includes business-focused provisions, this summary highlights the key changes that may affect individual taxpayers starting in 2025.
Permanent Extension of Individual Tax Rate Cuts
The OBBB makes permanent the reduced individual income tax rates originally set to expire after 2025 under the TCJA. Thus, the top individual tax rate will remain at 37%.
Temporary Expansion of SALT Deduction
The cap on state and local tax (SALT) deductions increases to $40,000 for tax years 2025 through 2029, before reverting to $10,000 in 2030.
Note: For taxpayers with income above $500,000, the expanded deduction phases out gradually, but won’t drop below $10,000.
Estate and Gift Tax Exemption Increased and Made Permanent
The estate and gift tax exemption amount is now permanently set at $15 million (or $30 million for married couples) and will be adjusted for inflation going forward. This change prevents the scheduled reduction that was set to occur after 2025.
New Tax Relief for Seniors
Taxpayers age 65 and older will now benefit from a $6,000 bonus deduction (or $12,000 on a joint return) in addition to the standard deduction.
Child Tax Credit
The Child Tax Credit increases permanently to $2,200 per qualifying child, with automatic adjustments for inflation starting in future years.
Qualified Business Income (QBI) Deduction Made Permanent
The 20% deduction for Qualified Business Income (Section 199A)—originally set to expire—has been made permanent. The provision applies to eligible income from pass-through businesses such as sole proprietorships, partnerships, and S corporations.
100% Bonus Depreciation Reinstated (Starting 2025)
Beginning January 20, 2025, businesses can again claim 100% bonus depreciation for qualifying property (such as machinery and equipment) with a recovery period of 20 years or less. There are no retroactive changes to bonus depreciation for the 2023 and 2024 tax years.
Need Help Understanding How This Affects You?
The One Big Beautiful Bill includes major provisions that could impact your 2025 tax planning. If you have questions about how these changes apply to your situation—or you’d like to run the numbers ahead of year-end—Thomas Cooper CPA PLLC is here to help.
