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.