The 2025 “One Big Beautiful Bill” legislative package modifies and makes permanent many of the key provisions of the 2017 Tax Cuts and Jobs Act.
Permanent changes include lower tax brackets, a higher standard deduction and higher gift and estate tax exemption amounts. Temporary provisions include a bonus deduction for individuals aged 65 and older an increase in the SALT deduction limit.
Net new provisions include 529 plan enhancements and “Trump Account” savings account for minors.
Passed in 2017, the Tax Cuts and Jobs Act (TCJA) made several significant changes to the tax code that affected the tax planning strategies for millions of Americans. But many of these changes weren’t permanent and the legislation was set to expire at the end of 2025.
In July 2025, Congress passed, and President Donald Trump signed into law, a comprehensive package focused on tax laws and many other issues known as the “One Big Beautiful Bill Act.”
While maintaining many provisions of the TCJA, the far-reaching legislation adds even more updates to the tax law, notes Daniel Willing, Senior Wealth Strategist with U.S. Bank Private Wealth Management. “With so many adjustments happening in mid-year that take immediate effect,” says Willing, “the need to get a jump on planning well before the 2025 tax filing season is critical.”
From a tax perspective, you’ll want to be aware of changes affecting three broad categories: individual income taxes, corporate income taxes, and estate and gift taxes. Below is a summary of the most pertinent provisions included in the comprehensive tax bill; for an overview of significant individual income tax changes, please download our OBBBA quick reference guide.
The 2017 Tax Cuts and Jobs Act lowered individual tax brackets across the board. Under the new legislation in 2025, these tax brackets have been made permanent (subject to changes enacted by a future Congress) and will remain as 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
“Knowing the new law makes permanent these brackets and other parts of the TJCA will better facilitate long-term tax planning,” says Willing.
The Big Beautiful Bill Act has secured the higher standard deduction amounts initially introduced under the TCJA, making them permanent. The deduction increases slightly for 2025 to $15,750 for single filers/$31,500 for married couples filing jointly and will be indexed for inflation in subsequent years.
A $6,000 deduction per person will be added to the new standard deduction level for taxpayers ages 65 and older. For single filers, it brings the total deduction to $21,750 and to $43,500 for married couples filing jointly (and if both are 65 or older) for the 2025 tax year.
The “bonus” deduction phases out for individuals with income more than $75,000 and married couples filing jointly with income exceeding $150,000. The bonus deduction provision expires in 2029.
The TCJA created a $10,000 cap on state and local tax (SALT) deductions for married couples filing jointly/$5,000 for married couples filing separately. One of the Tax Cuts and Jobs Act updates includes raising the SALT the deduction cap to $40,000 for married couples filing jointly/$20,000 for married couples filing separately.
However, there are income limits and phase outs for the deduction. Phase out begins at $500,000 modified adjusted gross income (MAGI) for married couples filing jointly and fully phases out/reverts to $10,000 for MAGI above $600,000. For married couples filing separately, phase out begins at $250,000 MAGI and fully phases out/reverts to $5,000 at $300,000 MAGI.
This is a particularly sensitive issue for many high-income households located in high-tax states. “The higher deduction could result in lower taxes for certain households and individuals who live in high-tax states and itemize deductions,” says Willing. Note that the higher SALT deduction cap is permanently reduced to $10,000 for married couples filing jointly/$5,000 for married couples filing separately in 2030.
The Tax Cuts and Jobs Act slightly raised the child tax credit, from $2,000 to $2,200 per qualifying child and will be adjusted for inflation going forward.
The new legislation adjusted the alternative minimum tax (AMT) income and exemption phaseout levels for 2025 and indexed for inflation going forward.
The new law made permanent TCJA provisions that limit home mortgage interest deductions to $750,000 for new borrowing, and no deductions are allowed for interest on home equity loans.
529 education savings plans are a tax-advantaged way to save for your child’s education, allowing tax-free withdrawals for qualified education expenses. The One Big Beautiful Bill made these plans even more flexible for use in K-12 and post-secondary education.
Effective for the 2026 tax year, the federal withdrawal limit for K-12 education increases from $10,000 to $20,000 per year. Additionally, the definition of “qualified expenses” for K-12 education expands to include non-tuition costs such as books, materials, testing fees, tutoring services, online education, and certain educational therapies.
529 plan beneficiaries will also be able withdraw tax-free funds for qualified expenses related to recognized postsecondary credential programs, such as trade schools, certificate programs, licensing fees, and registered apprenticeship programs approved by the Department of Labor. Tuition, fees, books, supplies and equipment required for the program or credentialing are included as qualified expenses.
A new type of tax-advantaged savings account known as “Trump Accounts” (or TAs) will become available sometime in 2026. While these accounts will be overseen by the Treasury Department, they’ll be opened through a bank or other financial institution.
Specific details are still forthcoming, but here’s what’s known so far:
Because of the elevated TCJA standard deduction, most tax filers no longer itemize deductions. Therefore, many lost the benefit of tax-deductible charitable contributions.
Effective for tax year 2026, the new law creates a permanent $1,000 above-the-line deduction for charitable contributions for single tax filers/$2,000 deduction for married couples filing jointly. “Above-the-line” means the deduction is allowed regardless of whether the tax filer itemizes deductions.
Taxpayers who itemize deductions must contribute at least 0.5% of their adjusted gross income before claiming charitable deductions. “For those who plan gifts in advance, it makes a case for bunching major charitable contributions into a single tax year in order to maximize the deductibility,” says Willing.
Additionally, taxpayers in the top income tax bracket (37%) will have the value of itemized deductions reduced to 35% of their value. That means for every dollar of deductibility, those affected by the law can only claim 35 cents of the deduction.
Effective for the 2025 tax year, eligible taxpayers can deduct up to $10,000 of interest on car loans. The annual deduction can’t exceed $10,000, but if you qualify, you can claim it as an “above the line” deduction on top of the standard deduction.
There are income limits and phase outs for the deduction. The phase out for single filers begins at $100,000 MAGI and fully phases out at $150,000 MAGI. For married couples filing jointly, phase out begins at $200,000 MAGI and fully phases out at $250,000 MAGI. Taxpayers with incomes above these limits are not eligible.
Qualified vehicles must be new, assembled in the U.S. and purchased after Dec. 31, 2024. Note that this provision expires in 2029.
The Tax Cuts and Jobs Act essentially doubled the federal lifetime gift and estate tax exemption, which in 2025 is $13.99 million for individuals and $27.98 million for married couples filing jointly. This has enabled wealthy families to transfer assets up to this amount out of their estates, lowering the value of their estate and transfer taxes on heirs.
The new legislative package made the expanded estate and gift tax exemption permanent, removing uncertainty surrounding the TCJA’s expiration at year’s end. While 2025’s exemption amounts remain the same, it will increase to $15 million per person ($30 million for a married couple) in 2026 and be indexed for inflation going forward.
“By extending TCJA provisions to estate tax laws, the urgency that was facing many individuals and families to accelerate gifting plans has been eliminated,” says Willing. “Families can now structure estate plans knowing that current laws will be in place permanently.”
The exemption amount also applies to the generation-skipping transfer (GST) tax. “This enables high-net-worth individuals to transfer wealth directly to grandchildren or further generations,” says Willing. “Transfers can be free of GST tax, using advanced strategies such as GST-exempt dynasty trusts.”
The step-up in basis at death for capital gains is also retained. Heirs who inherit assets can apply an augmented cost basis equal to the fair market value on the decedent’s date of death. “This eliminates significant capital gains accrued during the decedent’s lifetime,” says Willing.
A new gifting opportunity with an unprecedented tax benefit is now available to individuals. Gifts of up to $1,700 per person or $3,400 for a married couple can be given to organizations that provide vouchers for K-12 students to attend private schools and will be fully reimbursed by federal tax credit.
The Tax Cuts and Jobs Act permanently lowered the top federal corporate income tax rate from 35% to 21% and repealed the corporate AMT. The new law sets the top tax rates for S Corporations at 29%.
The TCJA also created a new deduction for pass-through entities (such as S corporations, partnerships and sole proprietorships) that allows these businesses to deduct up to 20% of qualified business income (QBI) on their federal income tax return if their income is below a certain threshold. While the lower corporate income tax rate is permanent, the new legislation permanently extended the QBI deduction, providing a corresponding rate reduction to what applies to corporations.
Also made permanent are 100% bonus depreciation for qualified property acquired and placed in services after January 19, 2025. This allows the full cost of property to be deducted in the year it is placed in service.
An additional change restores the ability of businesses to immediately expense certain domestic research and experimental expenditures paid or incurred after Dec. 31, 2024. “This should be particularly beneficial for research-heavy businesses,” says Willing.
The new tax act significantly enhances the tax benefits associated with qualified small business stock (QSBS). Prior to the One Big Beautiful Bill Act, gain on the sale of QSBS held for at least five years was eligible to be fully exempt from capital gains tax. A new three-tiered capital gain exclusion now applies:
Additionally, the maximum capital gain exclusion is increased from $10 million to $15 million per issuer, with the possibility of higher exclusions if the gain exceeds 10 times stock basis. Finally, for corporate issuers, the aggregate gross asset test for QSBS eligibility increases from $50 million to $75 million.
“The changes to QSBS are a significant boon for small business owners and start-up investors,” says Willing. “The fact that QSBS exclusion amounts are now tied to inflation means the provision will continue to provide a meaningful tax benefit for investors for years to come.”
“H.R.1 – One Big Beautiful Bill Act” is a legislative bill containing tax and spending policies that was signed into law on July 4, 2025. The package includes hundreds of provisions, from tax legislation to funding for federal agencies.
The One Big Beautiful Bill Act was signed into law by President Trump on July 4, 2025. Some of the provisions included in the legislative package are effective in the 2025 tax year, such as the child tax credit increase. Other provisions, such as opening a Trump Account, go into effect at the beginning of 2026.
Note that some of the provisions effective for the 2025 tax year will end in 2028, including the car loan interest deduction and bonus deduction for people age 65 and older.
The One Big Beautiful Bill Act includes numerous tax cuts and changes. Many make permanent or modify tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA).
Permanent changes include lower tax brackets, a higher standard deduction and higher gift and estate tax exemption amounts. Temporary provisions include a bonus deduction for individuals aged 65 and older an increase in the SALT deduction limit. Net new provisions include 529 plan enhancements and “Trump Account” savings account for minors.
This year’s tax legislation is unusual in that it updated many tax law provisions which take effect for the 2025 tax year. Talk to your financial professionals about how you can best prepare and make sure your financial plan is consistent with today’s new tax laws.
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