Major federal tax law changes are on the horizon in 2025. With key provisions of the Tax Cuts and Jobs Act (TCJA) set to expire at the end of the year—and the recent passage of the “One Big Beautiful Bill” (OBBB) in the House—taxpayers and businesses alike can expect a wave of updates that may significantly impact financial planning.
The full scope of the changes are not yet final due to ongoing negotiations between both chambers of Congress and President Trump. Additional proposals and potential revisions could still reshape the final version of the bill this summer. A wide range of issues such as adjustments, individual tax brackets and deductions, and shifts in corporate tax policy remain on the table.
This update outlines the major provisions currently included in the OBBB, passed by the House of Representatives on May 22, 2025, and what you can do now to stay informed and prepared. Whether you’re an individual filer, small business owner, or corporate taxpayer, the coming months may bring critical decisions with long-term consequences.
Key Extensions from the TCJA
Many provisions in the OBBB seek to extend, update, or permanently codify select temporary tax laws first introduced by the TCJA of 2017. These include:
- Making the current individual tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) permanent
- Elimination of personal exemptions
- Permanently increasing the Alternative Minimum Tax exemption and threshold amounts
- Maintaining the lower cap on the mortgage interest deduction
- Continuing the termination of miscellaneous itemized deductions
- Allowing rollovers from qualified tuition programs to ABLE accounts
Additional Adjustments to Individual Provisions
- Standard Deduction: Extended through 2028 and adjusted annually
- Married Filing Jointly: +$2,000/year
- Head of Household: +$1,500/year
- Single/Married Filing Separately: +$1,000/year
- State and Local Tax (SALT) Deduction: Increased from $10,000 to $40,000, with a phase-out beginning at $500,000 Modified AGI for joint filers ($250,000 for married filing separately)
- Child Tax Credit: Raised to $2,500 through 2028, reverting to $2,000 (adjusted for inflation) after; the refundable portion remains capped at $1,400
- Estate Tax Exemption: Increased to $15 million, adjusted for inflation, and made permanent
New Individual Provisions Introduced in the OBBB
- Tips and Overtime Pay: Despite campaign discussions, both tips and overtime remain taxable, but taxpayers may take deductions for each. These provisions would expire after 2028
- Itemized Deduction Limitation: Reintroduced for taxpayers in the 37% bracket
- Auto Loan Interest Deduction: Deductible up to $10,000 for vehicles purchased after 2024 (2025–2028); available to both itemizers and non-itemizers
- “Trump Accounts”: $1,000 automatically deposited by the U.S. Treasury for every child born between Jan. 1, 2025, and Jan. 1, 2029, with qualifying Social Security criteria
- Scholarship Donations: A new tax credit for contributions to scholarship-granting organizations
- Expanded 529 Plan Use: Now permitted for elementary, secondary, and homeschooling expenses
- Charitable Deduction for Non-Itemizers: Reinstated
Key Business Provisions
- Bonus Depreciation: Restored to 100% for qualifying purchases made after January 19, 2025, through 2029
- Research & Development: Deduction reinstated for R&D expenses from 2025–2029; amortization remains an option
- Qualified Business Income Deduction (QBID): Made permanent and increased from 20% to 23%
- Section 179 Deduction: Increased limitations starting in 2025
- International Tax Provisions: FDII, GILTI, and BEAT made permanent with slight adjustments to tax rates and deduction levels
Sunset of Green Energy Credits
To help offset the cost of the tax cuts, the OBBB eliminates several energy-related credits, including:
- Previously Owned Clean Vehicle Credit
- Clean Vehicle Credit
- Qualified Commercial Clean Vehicle Credit
- Alternative Fuel Refueling Property Credit
- Energy Efficient Home Improvement Credit
- Residential Clean Energy Credit
- New Energy Efficient Home Credit
Final Thoughts
Federal tax changes are coming—and soon. The OBBB as currently proposed would extend, revise, and introduce major tax provisions for both individuals and businesses. However, the version of the bill that passed in the House is not the final bill. Additional proposals and negotiations are expected to continue throughout the summer.
The best strategy to navigate these changes is to stay informed and consult with your trusted advisors. In periods of legislative change, proactive planning is essential. At 1RDG, we’re monitoring developments closely and will continue providing timely guidance to help you make informed financial decisions. We’re here to support you through the transition.