OBBBA Brings Significant Tax Changes: What You Need to Know

The One Big, Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces a wide range of new tax provisions that may directly impact your financial planning. While the legislation contains numerous changes, we’ve highlighted the key items most relevant to individual taxpayers and small business owners. As always, Cieslik & Glenn, CPAs is here to help you navigate how these updates may apply to your situation.

Extension of Expiring Tax Provisions

A major component of OBBBA is the permanent extension of several individual tax provisions from the Tax Cuts and Jobs Act of 2017, many of which were set to expire at the end of 2025. Notable extensions include:

Lower individual income tax brackets, keeping the top rate at 37% rather than reverting to 39.6%.
Higher standard deduction, plus an additional $6,000 deduction for taxpayers age 65 and older ($12,000 for married couples both age 65+).
$750,000 mortgage interest deduction limit, along with restored deductibility for mortgage insurance premiums.
Elimination of 2% miscellaneous itemized deductions, including investment advisory fees, tax prep fees, and unreimbursed employee business expenses (with the exception of certain qualified educator expenses).
An enhanced Child Tax Credit, updated to make the credit more accessible and beneficial.
Permanent §199A 20% qualified business income deduction, with minor modifications.
Increased unified estate and gift tax exclusion, rising to $15 million beginning January 1, 2026.

State and Local Tax (SALT) Deduction Changes

For a five-year period, the standard SALT deduction increases from $10,000 to $40,000, although the benefit phases out for higher-income taxpayers.

Owners of passthrough entities who make a state-level PTE tax election may continue using this strategy to maximize their SALT benefits.

Itemized Deductions & Alternative Minimum Tax

OBBBA introduces new limitations on itemized deductions and reinstates the Alternative Minimum Tax (AMT). Tax planning will be increasingly important to avoid unintended tax increases in future years.

Charitable Contribution Updates

Charitable giving provisions receive several noteworthy changes:

Non-itemizers may now claim a $1,000 charitable deduction ($2,000 for married filing jointly).
Itemized charitable deductions are subject to a new ½ of 1% of AGI floor, further limiting deductibility.
Contributions to certain K–12 scholarship granting organizations may qualify for either an itemized deduction or a new tax credit of up to $1,700.

New Tax Deductions for Individuals

Beginning in 2025, OBBBA introduces three entirely new deductions—each widely discussed in the media:

Tip Income Deduction (“no tax on tips”)
Overtime Pay Deduction (“no tax on overtime”)
Qualified Car Loan Interest Deduction (“no tax on interest for qualifying U.S.-assembled vehicles”)

Each deduction includes specific limitations and eligibility rules. We encourage you to speak with us to determine whether these apply to you.

Disaster Relief Provisions

Taxpayers affected by federally declared disasters in 2025 may qualify for additional forms of tax relief.

Energy Credit Phase-Outs

Many existing energy-related tax incentives are being discontinued:

All clean vehicle tax credits end for vehicles acquired after September 30, 2025.
Homeowner energy credits for items such as solar installations, heat pumps, home batteries, and other energy-efficient improvements expire after December 31, 2025.

Taxpayers considering energy upgrades or EV purchases should plan carefully around these sunset dates.

Business Tax Provisions

OBBBA also introduces several significant changes for business owners:

Permanent 100% bonus depreciation for eligible assets acquired after January 19, 2025.
Higher §179 expensing limits for assets placed in service after December 31, 2024.
Immediate expensing of research expenditures, including an election to deduct previously amortized research costs.
Relaxed business interest limitation rules, easing restrictions for many companies.