On July 4, 2025, President Trump signed into law a landmark reconciliation bill, unofficially known as the One Big Beautiful Bill Act. This legislation, based on House Bill H.R. 1, enacts sweeping reforms across the tax code, making many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent, while introducing new deductions, repealing energy incentives, and creating novel savings tools.
This update outlines key changes and strategic considerations relevant to individual taxpayers, family offices, and business owners, particularly those navigating complex income, estate, and investment structures.
Key Tax Updates for Individuals and Families
TCJA Provisions Made Permanent
The individual income tax brackets (10%–37%) are extended indefinitely.
The standard deduction is extended indefinitely ($15,750 S; $31,500 MFJ; $23,625 HH for 2025), adjusted annually for inflation.
The SALT limitation is increased to $40,000 beginning with the 2025 taxable year and increases 1% per year above the prior-year’s limitation through the 2029 taxable year (applies to all taxpayers other than MFS, which has a limit of $20,000). In 2025 the deduction starts to phase out with Modified Adjusted Gross Income more than (MAGI) more than $500,000 ($250,000 MFS), adjusted annually for inflation.
The child tax credit increases to the maximum amount of $2,200 per qualifying child, effective beginning with the 2025 taxable year, adjusted annually for inflation. In 2025 the credit starts to phase out with MAGI more than $400,000 MFJ ($200,000 for all other taxpayers).
The uniform estate tax and gift tax exclusion to $15 million per taxpayer, applicable after 2025. The $15 million exclusion will be inflation adjusted annually and also applies to the generation-skipping transfer tax exemption.
Deductions from Earned Income
Tip Income Deduction: Taxpayers are able to claim an above-the-line deduction of up to $25,000 for cash tips provided voluntarily to taxpayers in an “occupation that traditionally and customarily receive tips” (to be determined by Treasury Secretary) for the 2025 through 2028 tax years and that are reported to the IRS on a W-2 or 1099. Deduction begins to phase out for taxpayers with MAGI $150,000 ($300,000 MFJ). The deduction is adjusted annually for inflation.
Overtime Pay Deduction: Taxpayers are able to claim an above-the-line deduction for the amount of overtime pay received as required under labor law. Similar to the deductions for tip income, taxpayers do not have to itemize deductions to claim the deduction. The deduction is capped at $12,500 ($25,000 MFJ) and begins to phase out for individuals with MAGI more than $150,000 (or $300,000 MFJ) and expires after 2028. The deduction is adjusted annually for inflation.
Qualified Car Loan Interest Deduction: Taxpayers are able to claim an above-the-line deduction for the amount of qualified passenger vehicle interest paid, on US assembled cars, for the 2025 through 2028 tax years on passenger vehicle loans incurred by the taxpayer after 2024. The deduction is capped at $10,000 and begins to phase out for individuals with MAGI more than $100,000 (or $200,000 MFJ). The deduction is not adjusted for inflation.
- Extra Deduction for Seniors: Seniors aged 65 or older can claim an additional $6,000 on top of the standard deduction – even if they itemize. This benefit is available through 2028, but begins to phase out for individuals with MAGI more than $75,000 (or $150,000 MFJ). The deduction is not adjusted for inflation.
MAGA Accounts (Trump Accounts) for Children
- Creates a new IRA-like account called a Trump account, applicable to taxable years beginning after December 31, 2025.
Education Savings Expansion
- 529 plans are expanded to cover expenses eligible for tax-free withdrawals – to include certain additional expenses related to elementary, secondary, or homeschool education.
Major Incentives for Business Owners
QBI Deduction
- The 20% qualified business income deduction is made permanent.
100% Bonus Depreciation Extended
- Full expensing is reinstated and made permanent for qualified property acquired and placed into service after January 19, 2025.
Research & Experimental Expenditures
- Permanently reinstates current expensing for domestic IRC §174 expenditures beginning with the 2025 taxable year and applies the changes retroactively to the 2022 tax year for small taxpayers. Other taxpayers can elect to accelerate remaining deductions for expenses incurred during the 2022 through 2024 tax years over a one-to two- year period.
Rollback of Clean Energy Incentives
One of the big revenue raisers in the Act is the early repeal of the energy credits and incentives enacted and/or modified by the Inflation Reduction Act of 2022. Certain programs established under the Inflation Reduction Act of 2022 are being eliminated (termination generally after 2025).
Next Steps
We recommend:
- Reviewing your 2025–2026 tax projections now under the new framework
- Planning capital expenditures to align with restored bonus depreciation
- Evaluating the sunset of green energy incentives if investing in sustainability
- Exploring MAGA and 529 expansions as part of multigenerational wealth planning
How We Can Help
The One Big Beautiful Bill Act represents more than just a shift in rates and deduction, it signals a renewed emphasis on proactive, multi-year planning for individuals and business leaders.
Whether you’re navigating a complex business structure, planning a generational wealth transfer, or reassessing investment timing, we’re here to guide you.
Our team is ready to work with you to:
- Model long-term tax scenarios under the new law
- Optimize entity structures and compensation strategies
- Re-align estate plans and philanthropic vehicles
- Capitalize on new savings, expensing, and deduction opportunities
If you have questions about how these changes may impact your tax strategy or financial plans, we encourage you to reach out to your DK advisor directly. We’re here to help.
For additional details on this bill, visit congress.gov here.