Relevant Tax Updates from the One Big Beautiful Bill Act
By Brandon Clark CPA
I’ve put together details of the tax provisions most relevant to our clients and network. As you can imagine, there’s some good news, and some bad news.
In the good news column: A number of provisions that help save taxes for most Americans were extended from the 2017 Tax Cuts and Jobs Act (TCJA). There are also a few new provisions that the bill adds, like the senior deduction and the allowance of some charitable deductions even for those who don’t itemize.
In the bad news category: A number of environmental and clean-energy credits will now expire in 2025 or later years ahead of the schedule that was previously passed into law.
Read on below for more details:
Standard deduction: The act makes the TCJA’s increased standard deduction amounts permanent. For 2025, the standard deduction increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married individuals filing jointly. The standard deduction will be adjusted for inflation after that.
Tax rates: The act generally makes the tax rates enacted in 2017 in the TCJA permanent. The act also adds an additional year of inflation adjustment for determining the dollar amounts at which any rate bracket higher than 12% ends and at which any rate bracket higher than 22% begins. That means more space than originally planned in tax brackets.
State and Local Tax deduction (SALT) cap for Itemized deductions: The act increases the limit on the federal deduction for state and local taxes to $40,000 (from the current $10,000) and adjusts it for inflation. In 2026, the cap will be $40,400, and then will increase by 1% annually, through 2029. Starting in 2030, it will revert to the current $10,000.
This deduction change will be beneficial for high income earners in higher cost of living areas like DC, MD, and VA who pay significantly real estate and state income taxes. While the standard deduction also increased, this provision will still make metro area residents more likely to itemize their deductions. Higher levels of charitable giving, therefore will be more likely to actually lower tax bills (in contrast to recent years since 2017) because there will be more deductible taxes to get taxpayers over the standard deduction. Talk to your tax advisor about how this could impact your personal tax picture. This area of taxes is very specific to your tax profile.
Charitable contribution deduction: The act also creates a charitable contribution deduction for taxpayers who do not elect to itemize, allowing nonitemizers to claim a deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for certain charitable contributions.
$6,000 Senior Deduction: provides a $6,000 deduction for seniors who are 65 and old. This senior deduction begins to phase out when a taxpayer’s Modified Adjusted Gross Income (MAGI) exceeds $75,000 ($150,000 in the case of a joint return). It will be in effect for the years 2025 through 2028. Because of the income limits, this is a provision that many seniors in higher cost of living areas won’t be able to take advantage of.
Child tax credit: The act increases the amount of the nonrefundable child tax credit to $2,200 per child beginning in 2025
Estate and gift tax exemption amounts: The act permanently increases the estate tax exemption and lifetime gift tax exemption amounts to $15 million for single filers ($30 million for married filing jointly) in 2026 and indexes the exemption amount for inflation after that.
Car loan interest: For the years 2025 through 2028, the act includes an interest deduction on interest paid during the year on vehicle loans for vehicles purchased in 2025 or later. Among other restrictions, applicable passenger vehicles must have had their final assembly in the United States.
Trump accounts: The act takes the House bill’s concept of tax-free savings accounts for minors, called Trump accounts, and revises it to make them a form of individual retirement account (IRA) under Sec. 408(a). Under the act, Trump accounts will be IRAs (but not Roth IRAs) for the exclusive benefit of individuals under 18. Contributions can only be made in calendar years before the beneficiary turns 18 and distributions can only be made starting in the calendar year the beneficiary turns 18.
The act does not allow Trump account contributions until 12 months after the date of enactment of the act.
A Trump accounts contribution pilot program was created that provides a $1,000 tax credit for opening a Trump account for a child born between Jan. 1, 2025, and Dec. 31, 2028.
Repeal of Clean Energy Credits
Clean Vehicle: The law removes the credit of $7,500 for new and $4000 for used electric clean energy vehicles starting with vehicles purchased September 30, 2025
Alternative Fuel Vehicle Refueling Property Credit. Up to $1,000 for electric vehicle charging equipment installed at a taxpayer's personal residence. The act terminates this credit for property placed in service after June 30, 2026.
Residential Clean Energy Credit. Up to 30% of the cost of purchasing or installing solar panels, wind power, geothermal heat pumps, or fuel cell equipment. Section 70506 terminates this credit for expenditures made after December 31, 2025, regardless of when the property is placed in service.
This discussion is for educational purposes only. This is not tax advice. Please consult your tax advisor before implementing any tax strategies.
Tax Law Changes FAQ: What Individuals, Families, Retirees, and Charitable Donors Need to Know
What are the biggest tax changes included in the new tax legislation?
The legislation extends many provisions from the 2017 Tax Cuts and Jobs Act (TCJA), including higher standard deductions, current tax brackets, and increased estate tax exemptions. It also introduces new benefits such as a senior deduction, charitable deductions for non-itemizers, and tax-advantaged savings accounts for children.
What is the standard deduction for 2025?
For tax year 2025, the standard deduction increases to:
$15,750 for single filers
$23,625 for heads of household
$31,500 for married couples filing jointly
These amounts will continue to be adjusted for inflation in future years.
Are the current federal income tax brackets changing?
The legislation makes the existing TCJA tax rates permanent and adds additional inflation adjustments to certain tax brackets, potentially allowing taxpayers to keep more income in lower tax brackets over time.
What is happening to the SALT deduction cap?
The State and Local Tax (SALT) deduction cap increases from $10,000 to $40,000 beginning in 2025. The cap rises to $40,400 in 2026 and increases by 1% annually through 2029 before returning to $10,000 in 2030.
Who benefits most from the higher SALT deduction?
Homeowners and higher-income taxpayers in states with significant property taxes and state income taxes—such as Maryland, Virginia, and Washington, D.C.—may benefit most from the expanded deduction.
Can I deduct charitable donations if I don't itemize deductions?
Yes. The legislation creates a charitable deduction for taxpayers who claim the standard deduction. Non-itemizers may deduct:
Up to $1,000 for single filers
Up to $2,000 for married couples filing jointly
for qualifying charitable contributions.
What is the new $6,000 senior deduction?
Taxpayers age 65 and older may qualify for a $6,000 deduction between 2025 and 2028. The deduction begins to phase out when Modified Adjusted Gross Income (MAGI) exceeds:
$75,000 for single filers
$150,000 for married couples filing jointly
Is the child tax credit increasing?
Yes. Beginning in 2025, the nonrefundable child tax credit increases to $2,200 per qualifying child.
What are the new estate and gift tax exemption limits?
Starting in 2026, the federal estate tax and lifetime gift tax exemptions increase to:
$15 million for individuals
$30 million for married couples
The exemption amounts will continue to be indexed for inflation.
Can I deduct interest on a car loan?
For vehicles purchased in 2025 or later, taxpayers may be able to deduct interest paid on qualifying vehicle loans between 2025 and 2028. To qualify, the vehicle must generally have final assembly in the United States.
What are Trump Accounts?
Trump Accounts are tax-advantaged IRA-style savings accounts designed for children under age 18. Contributions may be made until the beneficiary turns 18, and distributions generally begin after age 18.
Is there a government contribution for Trump Accounts?
A pilot program provides a $1,000 tax credit for opening a Trump Account for eligible children born between January 1, 2025, and December 31, 2028.
Are electric vehicle tax credits ending?
Yes. The federal clean vehicle tax credit of up to $7,500 for new electric vehicles and up to $4,000 for used electric vehicles ends for vehicles purchased after September 30, 2025.
Is the EV charger tax credit being eliminated?
The Alternative Fuel Vehicle Refueling Property Credit, which provides up to $1,000 for residential EV charging equipment, expires for equipment placed in service after June 30, 2026.
Is the federal solar tax credit ending?
The Residential Clean Energy Credit, which provides a credit of up to 30% for qualifying solar panels, geothermal systems, wind energy systems, and fuel cells, ends for expenditures made after December 31, 2025.
Should I accelerate planned solar or EV purchases?
Individuals considering solar installations, electric vehicles, or home EV charging stations may want to evaluate their timeline, as several federal clean-energy incentives are scheduled to expire sooner than previously expected. Consult a qualified tax advisor before making decisions.
Is this information considered tax advice?
No. This information is educational in nature and should not be considered tax advice. Tax laws are complex and highly individualized. Consult your CPA, tax advisor, or financial professional before implementing any tax strategy.