One Big Beautiful Bill: Update on the Newly Signed Tax Legislation

In a sweeping move set to reshape the U.S. tax landscape for years to come, the “One Big Beautiful Bill” has officially been signed into law. The legislation, lauded by its supporters as a monumental step toward taxpayer relief and simplification, incorporates significant tax cuts, enhanced deductions, and the sunsetting of various green energy incentives. Spanning from 2025 through 2028, this legislative package includes a wide array of tax code revisions aimed at individuals, families, workers, retirees, and businesses. Below is a detailed overview of the key and most interesting provisions.

Enhanced Deductions for Seniors and Families

• $6,000 Senior Deduction (2025–2028): Taxpayers aged 65 or older will now enjoy an additional $6,000 standard deduction, providing meaningful tax relief for older Americans.

• Increased Child Tax Credit (2025): The child tax credit rises to $2,200 per qualifying child, improving financial support for families.

Itemized Deduction Changes and SALT Cap Expansion

• SALT Deduction Cap Raised (2025): The deduction for state and local taxes (SALT) increases to $40,000 for joint filers and $20,000 for married individuals filing separately, subject to certain limitations.

• Limitation on Itemized Deductions: A new phase-out reduces itemized deductions by 2/37 of the lesser of:

  • The amount of itemized deductions, or

  • The amount by which adjusted taxable income exceeds the 37% bracket threshold.

• Permanent Termination of 2% Miscellaneous Deductions: Deductions such as unreimbursed employee expenses and tax prep fees are now permanently disallowed.

Targeted Income-Based Deductions (2025–2028)

• Qualified Tips Deduction: Up to $25,000 of reported tips are deductible, available to both itemizers and non-itemizers, with a phase-out beginning at $150,000 MAGI ($300,000 for MFJ). Must be reported on W-2, 1099 form.

• Overtime Pay Deduction: “Qualified overtime compensation” under the FLSA is deductible up to $12,500 for single filers and $25,000 for joint filers. Applies to both itemizers and non-itemizers.

• No Tax on Car Loan Interest: Interest on personal vehicle loans up to $10,000 is deductible, regardless of itemization status.

Business & Investment Incentives

• 100% Bonus Depreciation (Post-Jan 19, 2025): Businesses can immediately expense 100% of the cost of qualified property.

• Permanent QBI Deduction: The 20% Qualified Business Income (QBI) deduction is now a permanent fixture of the tax code.

• Full Expensing of Domestic R&E Costs: All research and experimental expenditures incurred domestically can now be fully expensed, bolstering innovation.

Estate, Gift, and Specialty Tax Updates

• Estate & Gift Tax Exemption (2025): Raised to a historic high of $15 million, providing greater estate planning flexibility.

• Professional Gamblers: Now permitted to deduct 90% of gambling losses, a notable shift for this niche taxpayer group.

New Family Savings Mechanism: The Trump Account

• Trump Accounts Launch: A new contribution vehicle for children under age 18, with a $5,000 annual limit beginning in 2026 (indexed to inflation starting in 2028).

• Treasury Seed Contribution: A $1,000 government contribution is provided for every eligible child born between 2025 and 2028.

• Tax Treatment: These accounts are treated similarly to IRAs, promoting long-term savings from birth.

Changes to Health and Energy-Related Credits

• Premium Tax Credit Clawback (Post-2025): Taxpayers must repay 100% of any excess advanced premium tax credit received.

• Exclusion for Certain Lawfully Present Aliens (Post-2026): Premium tax credits are disallowed for certain immigrants below the poverty line ineligible for Medicaid.

Sunsetting Green Energy Incentives

• Clean Vehicle Credit Ends: Terminated after September 30, 2025.

• Alternative Fuel Refueling Credit Ends: Expires June 30, 2026.

• Residential Clean Energy & Efficiency Credits: Terminated after December 31, 2025, halting incentives for energy-efficient home improvements.

Miscellaneous Provisions

• Refundable Adoption Credit: Increased to $5,000 and now fully refundable, providing support to adoptive families.

• Charitable Deduction for Non-Itemizers (Starting 2026): Joint filers can deduct up to $2,000, and other taxpayers up to $1,000, even if they do not itemize.

• Mortgage Insurance Premiums: Treated as qualified residence interest starting in tax years after December 31, 2025.

• 1099 Filing Threshold Raised: Forms 1099-NEC and 1099-MISC will only be required when payments exceed $2,000, reducing filing burdens for gig workers and small businesses.

Conclusion: A Bold Shift in U.S. Tax Policy

The “One Big Beautiful Bill” represents one of the most expansive overhauls of the U.S. tax system in recent years. With major new deductions, expanded credits, and permanent provisions that benefit individuals and businesses alike, the legislation delivers on promises of simplification and relief—while also phasing out numerous green energy incentives. As the bill phases in through 2025 and beyond, taxpayers are urged to consult with professionals to best position themselves for these sweeping changes.

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal, tax, or financial advice. Although every effort has been made to ensure the accuracy and timeliness of the content at the time of publication, tax laws and regulations are subject to change and may vary based on individual circumstances. Readers are strongly encouraged to consult with a licensed tax professional, accountant, or legal advisor before making any decisions or taking action based on the contents of this article.