The “One Big Beautiful Bill Act” — What It Means for You

If you missed it, a major tax bill was enacted on July 4, 2025, officially titled “The One Big Beautiful Bill Act” (or BBB for short).

At 870 pages long, the obvious question is: what does this mean for you, the taxpayer? Let’s take a look at some of the most relevant highlights.

The bill covers five major policy areas — tax, healthcare, education, immigration, and energy/environmental policy — but we’ll focus on the tax provisions.

Major Personal Income Tax Changes

1. TCJA Made Permanent: The bill makes the Tax Cuts and Jobs Act (TCJA) permanent and even enhances several of its provisions. Some older energy-related Internal Revenue Code sections have been repealed.

2. Income Tax Rates and Deductions: The familiar income tax brackets — ranging from 10% to 37% — are now permanent (until Congress changes them again) and will continue to be adjusted for inflation.

• The large standard deduction remains in place and indexed for inflation.

• Personal exemptions are gone for the foreseeable future.

• A new senior exemption of $6,000 (subject to AGI limits) applies for tax years 2025–2028.

• Beginning in 2026, you can take a pre-AGI charitable contribution deduction of up to $1,000 — but only if your total charitable giving exceeds 0.5% of your AGI.

3. Special Income Exclusions (2025–2028): There’s some good news for workers earning tips or overtime:

• Tip income up to $25,000 is fully exempt from income tax.

• Overtime pay up to $12,500 (or $25,000 for married filing jointly) is also exempt, both subject to AGI limits.

4. Itemized Deductions: Several significant updates take effect beginning in 2026:

• Phaseout: Itemized deductions will phase out for taxpayers in the 37% bracket.

• Mortgage interest: The $750,000 cap on acquisition debt remains.

• Miscellaneous deductions: Permanently repealed.

• Casualty and theft losses: Expanded to include state-declared disasters, not just federal ones.

• Educator expenses: Now fully deductible on Schedule A, with no 2% AGI limit.

• SALT deduction: Increased to $40,000 (subject to AGI limits) for 2025–2029.

5. New Car Loan Interest Deduction: Yes, really — car loan interest is now deductible! However, the vehicle must be new to you and assembled in the U.S.

Family and Dependent Provisions

• The Child Tax Credit is now indexed for inflation. For 2025, it’s $2,200 per child.

• The adoption credit now includes a $5,000 refundable portion.

• A new “Trump Account” allows you to contribute up to $5,000 per child, with a $1,000 government match.

• Dependent care assistance plans (Section 129) increase to a $7,500 maximum, with a higher dependent care credit percentage as well.

Business Tax Highlights

1. Depreciation and Expensing

• 100% bonus depreciation is now permanent for qualified production property placed in service after January 20, 2025.

• Section 179 expensing limits rise to $2.5 million (from $1.25 million).

• R&D expenses can now be immediately deducted for domestic companies — no more 5- or 15-year amortization.

2. Reporting Thresholds and Deductions

• 1099-NEC/MISC reporting threshold increases to $2,000 (starting in 2026).

• 1099-K threshold increases to $20,000 and 200+ transactions (starting in 2026).

• The QBI deduction (set to expire after 2025) is now permanent, with relaxed phase-out limits.

• Opportunity Zone Investments have also been made permanent.

Other Notable Changes

Gambling Losses: Beginning in 2026, you’ll only be able to deduct up to 90% of your gambling losses against winnings (down from 100%). If you gamble regularly, start tracking your activity daily to maximize your deductions.

Meals Deduction: Starting in 2026, most meal deductions are gone. The good news: holiday parties and some events remain fully deductible.

The Bottom Line

This summary only scratches the surface of the One Big Beautiful Bill Act — but it covers the most impactful provisions for individuals and small business owners.

If you have questions about how these changes affect your situation, or want to know what’s fact versus fiction, please reach out. We’re here to help you navigate the new rules and make the most of the available opportunities.