Top Tax Highlights from the One Big Beautiful Bill

✅ Trump Tax Cuts Made Permanent

The lower individual tax brackets and the nearly doubled standard deduction from the 2017 Tax Cuts and Jobs Act were originally set to expire after 2025. This bill locks them in permanently.

✅ SALT Deduction Boosted

The deduction for state and local taxes (SALT), previously capped at $10,000 since 2017, is increased to $40,000 for married couples filing jointly with AGI under $500,000 (or $250,000 for single filers). This expanded cap applies from 2026 to 2030, then reverts unless extended.

✅ New Overtime & Tips Deduction

Starting in 2025 through 2028, workers can deduct up to $25,000 of income from tips and overtime from federal taxable income. The deduction is limited to taxpayers with AGI up to $200,000 (single) or $400,000 (married filing jointly).

Note: This deduction reduces federal income tax only—FICA taxes (Social Security and Medicare) still apply in full to tips and overtime income.

✅ Auto Loan Interest Deduction

Starting in 2025, interest on loans for new U.S.-assembled vehicles becomes deductible—up to $10,000, available through 2028—encouraging domestic vehicle purchases.

✅ Extra Deduction for Seniors

Taxpayers aged 65+ receive an additional $6,000 standard deduction starting in 2025. Full benefit applies to incomes up to $75,000 (single) or $150,000 (married filing jointly), phasing out completely at $175,000 (single) or $250,000 (married).

✅ Child Tax Credit Increase

The Child Tax Credit increases to $2,200 per child starting in 2025, with automatic inflation adjustments. The refundable portion remains at $1,400, also indexed. Income phaseouts continue at $200,000 (single) and $400,000 (married).

✅ Other Dependent Credit Maintained

The $500 non-refundable credit for dependents who aren’t qualifying children—such as college-aged children, elderly parents, or disabled relatives—remains unchanged.

✅ QBI (Qualified Business Income) Deduction Made Permanent

The 20% QBI deduction for pass-through businesses (LLCs, S Corps, partnerships, sole proprietors) becomes permanent starting in 2026. Full deduction applies to taxpayers with AGI up to $75,000 (single) or $150,000 (married).

A minimum deduction of $400 is guaranteed for those with at least $1,000 in QBI, with income thresholds and deduction amounts indexed for inflation.