Sweeping tax changes don’t happen every day. But when they do, it’s worth taking a step back and looking at how your finances—now and in the future—might be affected. One of the most wide-ranging tax bills in recent years was signed into law on July 4, 2025.
Whether you’re working, retired, running a business, or raising a family, here’s a breakdown of key OBBBA provisions that could shape your financial picture in 2025 and beyond.
👉 Curious how your financial plan stacks up in light of these changes? Learn more about our financial planning approach.
Individual Tax Changes Taking Effect in 2025
How Will the Standard Deduction and SALT Cap Change?
- Standard Deduction: Made permanent and adjusted for inflation. In 2025:
- $15,750 for single filers
- $23,625 for heads of household
- $31,500 for married couples filing jointly
- SALT Deduction: The cap increases to $40,000 but will revert to $10,000 in 2030. There’s a reduction for high earners, though you can’t deduct less than $10,000.
Is There a New Tax Deduction for Seniors?
Yes—temporarily. If you’re 65 or older, you may be eligible for a $6,000 above-the-line deduction through 2028. It phases out based on income, starting at $75,000 for individuals and $150,000 for married couples filing jointly.
Can You Deduct Tips or Overtime on Your Tax Return?
For now, yes. The OBBBA introduces temporary deductions through 2028:
- Up to $25,000 for tips (in eligible tip-based occupations)
- Up to $12,500 for overtime for single filers ($25,000 for couples)
- These deductions phase out for higher earners.
What Changed with the Child Tax Credit?
- Increased to $2,200 per child, with inflation adjustments going forward
- The refundable portion ($1,400) and $500 non-refundable credit for other dependents are now permanent
What’s New for Education and 529 Plans?
Starting in 2025 and expanding in 2026:
- 529 plans can now be used for credentialing programs
- More K–12 expenses, including materials, tutoring, and nontraditional classes, will qualify in 2026
More 2025 Tax Updates: Estate, Car Loans, Charitable Giving
- Car loan interest: Temporarily deductible for certain U.S.-assembled vehicles (up to $10,000 per year)
- Estate tax exemption: Rises to $15 million in 2026, adjusted for inflation
- Tax brackets: 10% and 12% brackets are slightly expanded
- Home mortgage interest: Deduction cap of $750,000 becomes permanent; no deduction for home equity loans
- Charitable giving: Above-the-line deductions up to $1,000 (single) or $2,000 (married) if you don’t itemize
🔗 Want to dive deeper into strategies like charitable giving or estate planning? Visit our Estate Planning or Tax Planning pages.
Notable Long-Term Tax Law Shifts for Individuals
What Happens to Itemized Deductions?
The Pease limitation is gone, but a new rule limits your deduction based on your income. Also:
- Miscellaneous deductions are permanently eliminated (except for unreimbursed teacher expenses)
- A new formula may reduce the total amount you’re allowed to deduct
QBI, AMT, and New IRAs for Kids
The OBBBA makes the Qualified Business Income (QBI) deduction permanent and raises the phase-out thresholds to $75,000 for individuals and $150,000 for couples. It also adds a $400 minimum deduction for those earning at least $1,000 in qualified business income. The higher Alternative Minimum Tax (AMT) exemptions introduced by previous tax law are preserved, but the income level at which the exemption begins to phase out is now $1 million for joint filers.
Additionally, the legislation introduces a new type of IRA for children under 18. Contributions are capped at $5,000 per year and can only be made while the child is still a minor. Distributions can begin at age 18 and must be completed by age 31. Qualifying uses include education, credentialing, small business or farm loans, or a first home purchase, with different tax treatments depending on how the funds are used.
Small Business and Corporate Tax Changes
What’s New for Business Owners in 2025?
- 100% Bonus Depreciation: Reinstated for qualifying property placed in service after January 19, 2025
- Section 179 Expensing: Raised to $2.5 million annually
- R&D Deductions: Domestic R&D expenses can be fully expensed right away
- Small Business Stock: New tiered exclusion based on how long the stock is held (50% to 100%)
- Production Property: Special depreciation rules apply if construction begins by 2029
2026 and Beyond: Future Business Tax Changes
- Corporate Charitable Giving: A new minimum contribution threshold (1% of taxable income) is introduced, though the existing 10% cap remains in place
What to Do Now
The OBBBA covers a lot of ground, and while some changes are already in effect, others are set to roll out over the next few years. Whether you’re nearing retirement, saving for college, managing a business, or simply planning ahead, it’s a good time to revisit your financial strategy.
Working with a financial planner can help you make sense of it all. We’re here to walk through it with you, step by step.
👉 Schedule an introductory meeting to talk about how the OBBBA might impact your financial future.
Tom Hine is a CERTIFIED FINANCIAL PLANNER® professional and owner of Capital Wealth Management. With over 30 years of experience, Tom works with individuals and families on financial planning, retirement strategies, and investment management. He has a particular passion for special needs financial planning, shaped by his personal experience helping raise his sister Amy, who was born with a severe chromosomal condition. Tom understands the emotional and financial challenges that come with caring for a loved one with disabilities and helps clients navigate complex issues like preserving government benefit eligibility, coordinating Special Needs Trusts and ABLE accounts, and long-term care planning. With offices in Glastonbury and Wilton, CT, Tom serves clients across Connecticut and throughout the U.S. Schedule a complimentary introductory meeting with Tom.
*Capital Wealth Management does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete, it is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.