“The One Big Beautiful Bill” Act (OBBA) and its potential impact on individual tax provisions have been top of mind for taxpayers. This sweeping legislation could introduce changes to well-known existing tax breaks as well as create new opportunities for taxpayers.
The Tax Cuts and Jobs Act(TCJA) increased the standard deduction. For 2025, the standard deductions are
Under current legislation, these standard deductions would expire in 2025. The OBBA makes these existing tax breaks permanent. Additionally, it proposes an increase only for the years of 2025-2028.
If you'd like to continue to claim your child for a child tax credit, both yours and the child's social security number will need to be provided. The OBBA also increases the amount per qualifying child for the years of 2025-2028 and then returns it to the original $2000.
Currently, the SALT deduction cap is limited to $10,000, but it is set to expire after 2025. A proposed bill seeks to increase this cap to $40,000 for taxpayers earning under $500,000, beginning in 2025.
Under current law, tips and overtime pay are treated as taxable income. However, new legislation aims to change this by exempting all tip income from federal income tax through 2029, as long as the income is earned in occupations that traditionally receive tips. The proposal also seeks to exempt overtime pay from federal income tax, potentially boosting take-home earnings for hourly workers.
During his campaign, President Trump also pledged to exempt Social Security benefits from taxation, but this measure is not included in the bill. Instead, the legislation introduces a $4,000 deduction for eligible seniors aged 65 or older, available from 2025 through 2028. To qualify, single taxpayers must have a modified adjusted gross income (MAGI) below $75,000, or $150,000 for married couples filing jointly.
Starting in 2025, the federal estate and gift tax exemption is set at $13.99 million per individual. Under the proposed bill, this exemption would rise to $15 million per individual—or $30 million for married couples—beginning in 2026, with future adjustments for inflation. This increase would enable individuals to transfer greater wealth without being subject to federal estate or gift taxes.
Currently, auto loan interest is not tax-deductible. However, the proposed bill introduces an above-the-line deduction for up to $10,000 in eligible vehicle loan interest paid within a taxable year. This deduction would begin to phase out for single taxpayers with a MAGI over $100,000 and for married couples filing jointly with a MAGI over $200,000.
To qualify, certain conditions must be met, including the requirement that the vehicle's final assembly takes place in the United States. If passed, this deduction would apply to tax years 2025 through 2028.
Eligible taxpayers can currently receive a tax credit of up to $7,500 for purchasing a new "clean vehicle" or up to $4,000 for a used one. Originally set to expire in 2032, the proposed bill would instead end these credits for purchases made after December 31, 2025.
While The One, Big, Beautiful Bill narrowly passed the House, it faces scrutiny and potential changes in the Senate. At SD Mayer & Associates, we’re committed to helping you make sense of even the most complex legislative changes. If OBBA goes into effect, we’ll be ready to help you identify strategies.
Have questions about what OBBA could mean for you? Schedule a consultation with us today, and we’ll help you get ahead of the curve.