On July 4, President Trump signed into law the controversial, so-called "One Big Beautiful Bill Act" (BBBA). This far-reaching legislation permanently extends most of the tax cuts originally enacted in the 2017 Tax Cuts and Jobs Act (TCJA), while adding additional tax cuts and eliminating others.
This legislation is so far-reaching that its full impact can’t be discussed in a single article. This first in a series will focus solely on the key provisions affecting taxpayers.
Extension and expansion of existing 2018 tax cuts
These tax cuts, originally enacted in the TCJA that were set to expire at the end of 2025, will be extended permanently.
- In 2025, the standard tax deduction will be raised to $15,750 per individual and $31,500 per married couple.
- In 2026, the lifetime estate tax and gift tax exclusion will be raised to $15 million for individuals, and $30 million for married couples.
- The annual child tax credit will be raised to a maximum of $2,200 per child and will adjust for inflation each year.
- Married couples filing jointly will still only be able to deduct mortgage interest of up to $750,000 of their mortgage debt.
- Alternative minimum tax (AMT) phase-out thresholds will decrease to the 2018 level of $500,000 for individuals and $1,000,000 for joint filers, with inflation adjustments starting in 2027.
New tax provisions
These new tax breaks are included in the BBBA.
- From 2025 through 2028, those over 65 will be able to take an additional deduction of $6,000 per year if their adjusted gross income is $75,000 or less as single filers or $150,000 or less for couples filing jointly. Both spouses can take their own $6,000 deduction if their income qualifies.
- From 2025 to 2029, deductions for state and local taxes will rise from $10,000 to $40,000 per year (increasing by 1% per year) for taxpayers with household income under $500,000.
- From 2025 to 2028, those working in service industries can deduct up to $25,000 in tips per year. This benefit begins to phase out for those earning more than $150,000 per year.
- From 2025 to 2028, workers can deduct up to $12,500 in overtime pay per year. This benefit begins to phase out for those earning more than $150,000 per year.
- From 2025 to 2028, vehicle owners can deduct up to $10,000 in auto loan interest each year when they purchase new vehicles made in the U.S.
- From 2025 to 2028, donors who don’t itemize will be able to deduct $1,000 in charitable donations each year.
Tax breaks that have been eliminated
The BBBA eliminates Biden-era tax credits for energy-efficient purchases and investments.
- Starting on October 1, 2025, purchasers of new electric vehicles (EV) will no longer receive a $7,500 tax credit or a $4,000 tax credit for buyers of used EVs.
- As of January 1, 2026, homeowners will no longer receive tax breaks for expenditures that make their homes more energy efficient.
If you have questions about any of these provisions, speak with a tax professional.
This material has been provided for general informational purposes only and does not constitute tax advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax professional on any tax-related issues.
This article was authored by Martin Baker and Jeffrey Briskin. Martin is a financial advisor and Director of Financial Planning with Canby Financial Advisors, a SEC-registered investment adviser. SEC registration does not constitute an endorsement by the SEC nor a statement about any skill or training. Martin can be reached at 508.598.1082 or mbaker@canbyfinancial.com. Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.
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