What the OBBBA Means for Your Taxes

The One Big Beautiful Bill Act (OBBBA) was officially signed into law on July 4, 2025, bringing a wide range of tax changes that may affect you. Many provisions are extensions of the 2017 Tax Cuts and Jobs Act (TCJA), while others introduce new deductions, rollbacks, and savings opportunities. With so much packed into the legislation, it can be hard to tell what matters most. In this post, we will focus on what the OBBBA means for individual taxpayers. Education and charitable giving impacts will be discussed in upcoming posts.

Most Notable Changes

The OBBBA locks in many popular tax provisions from the TCJA and introduces a few important updates that could impact your tax bill.

• Permanent individual tax brackets: The lower tax rates established by the TCJA are now set in stone.
• Higher standard deduction: The standard deduction rises to $15,750 for single filers and $31,500 for married couples filing jointly.
• Itemized deduction limit: The value of each dollar of itemized deductions is capped at 35% beginning in 2026.
• Increased estate and gift tax exemption: Starting in 2026, the exemption amount jumps to $15 million per person.
• The state and local tax (SALT) deduction cap increases to $40,000 through 2029, then reverts to $10,000 in 2030. High earners will see a phase-out starting at $500,000 of modified adjusted gross income (MAGI).
• The child tax credit increases to $2,200 per child, with inflation adjustments starting in 2026.

New Deductions

The OBBBA introduces several temporary deductions that apply even if you do not itemize. They are available for tax years 2025 through 2028.

• Senior Bonus: Taxpayers age 65 and older can deduct an additional $6,000 from their income. This deduction phases out for income above $75,000 (single) / $150,000 (joint).
• Car Loan Interest: You may be able to deduct up to $10,000 per year in interest on loans for new vehicles that are assembled in the United States. Phaseouts begin with income above $100,000 (single) / $200,000 (joint).
• Tip Income: Allows for a deduction of up to $25,000 in qualified tip income. This deduction phases out at income above $150,000 (single) / $300,000 (joint).
• Overtime Pay Deduction: Up to $12,500 (single) or $25,000 (joint) in qualified overtime wages may be deducted, phaseout starts at $150,000 (single) / $300,000 (joint).
• Charitable Giving: Beginning in 2026, taxpayers who do not itemize may deduct up to $1,000 ($2,000 for joint filers) in qualified charitable contributions annually. This provision does not expire.

Clean Energy Cuts

• The tax credit for purchasing electric vehicles (EVs) is being eliminated effective September 30, 2025. If you purchase an EV before that date, you may still qualify for credits up to $7,500 for new vehicles and $4,000 for used vehicles.
• The Residential Clean Energy Credit, which provides tax incentives for qualified solar, fuel cell, wind, geothermal, and battery storage property expenditures, will be eliminated for any expenditures made after December 31, 2025.

For many taxpayers, there is a real opportunity to engage in some proactive tax planning to maximize any benefits of these changes or utilize benefits that may be lost. If you have any questions about the OBBBA and its effects on you or your plan, please feel free to reach out.

The information provided herein is for educational purposes only, and should not be construed as advice, including, but not limited to tax, legal, insurance, investment, or retirement advice. For your specific planning needs, please seek the advice of Integris Wealth Management, your tax accountant, attorney, insurance agent, or other professional as appropriate. Investing involves the risk of loss.