Contributed by: Michael Brocavich, CFP®, MBA
On July 4th, 2025, President Trump signed into law ‘The One Big Beautiful Bill’. The massive 940 page bill has a lot of provisions that will affect taxes for both individual filers as well as business filers. As we study the provisions of the bill and see how our clients will be affected, we wanted to send out an overview of the provisions that we feel will be the most important to our clients. As this list is thorough it is by no means a comprehensive overview of the entire bill. As we continue to review the bill and understand the provisions within it, we will pass along those updates to you. Please remember that some of the tax provisions will still need some guidance from the IRS on how they will be implemented so some provisions could face delay or require additional clarification before they can go into effect.
Made permanent tax brackets from the Tax Cut and Jobs Act of 2017 which were set to expire in 2026. The bill also includes additional inflation increases for the lower tax brackets 10%, 12% and 22%.
Increased standard deduction – for the 2025 tax year, the standard deduction will be $15,750 for single filers and $31,500 for joint filers.
Senior Bonus Deduction – Taxpayers age 65 and older can claim an extra standard deduction ($2,000 foe single filers, $1,600 per qualifying spouse in a couple) on top of the standard deduction. In addition, from 2025 through the 2028 tax year seniors will also be able to deduct a bonus deduction of $6,000 per qualifying spouse. (Phase out of bonus deduction beginning at $75,000 / $150,000 for single/joint filers) This means that a couple both 65 or older with income of $120,000 can take the standard deduction of $31,500 for a joint filer, plus the existing age-related bonus of $3,200, PLUS the new bonus of $6,000 each for a standard deduction of $46,700.
Increase in SALT Deduction - Temporarily raised to $40,000 in 2025, $40,400 in 2026 and then 1% annual increases over the prior year for 2027, 2028 and 2029. Reverts to $10,000 in 2030. Phases down (but not below $10,000) for those with modified adjusted gross income (AGI) over $500,000 in 2025 and $505,000 in 2026, and then increased 1% annually in each of the three following years.
Charitable contributions for non-itemizers – Taxpayers who do not itemize their deductions can take an above-the-line deduction of $1,000/$2000 for single/joint filers for charitable contributions made in that tax year.
Charitable contribution for tax filers who itemize their deductions – The bill also adds a new floor for charitable giving of 0.50% of income for individuals and 1% for corporations. For example, an individual with $100,000 of income that is itemizing deductions and has a Charitable deduction of $10,000 will only be able to deduction $9,500. ($100,000 X 0.50% = $500 for the floor).
Estate & Gift tax exclusion – Individual lifetime exemption increased to $15,000,000 per person and $30,000,000 for married couples.
Tax on Tips – Up to $25,000 of qualified tip income is deductible. Must be cash or credit card tips from an occupation that customarily received tips on or before December 31st, 2024. Phases out for income over $150,000/$300,000 single /joint. Sunsets after 2028.
Tax on Overtime – Up to $12,500/$25,000 single/joint of qualified overtime income can be deducted. Phase out for income $150,000/$300,000 single /joint. Sunsets after 2028.
Car Loan Interest Deduction – Taxpayers can deduct up to $10,000 of interest on new car loans. To qualify, the final assembly of the vehicle must have been completed in the US and the deduction phases out for income of $100,000/$200,000 single/joint.
Electric vehicle tax credits – Individuals will no longer be able to claim an EV tax credit for new car purchases after September 30th, 2025. Home energy efficiency projects must be completed by December 31st 2025.
ACA Eligibility Verification – For taxpayers that are receiving premium credits for health insurance under the ACA will face changes after December 31st, 2025. Enhanced premium tax credits will expire at the end of 2025. For those that will still qualify for tax credits, they will now have to go through re-verification annually rather than being automatically enrolled. Lastly, the cap to recapture any excess tax credit has been removed and taxpayers will be required to pay 100% of any recaptured tax credit.
Higher Income Individuals
For the higher income earners, there are a few important provisions that you should be aware of.
SALT Deduction - Phases down (but not below $10,000) for those with modified adjusted gross income (AGI) over $500,000 in 2025 and $505,000 in 2026, and then increased 1% annually in each of the three following years.
Limits on Itemized Deductions – New limit reduces all itemized deductions, including SALT, by 2/37 of the lesser of total itemized deductions or amount of taxable income in excess of 37% bracket threshold. Essentially all deduction in the 37% tax bracket will only receive a 35% deduction.
AMT tax – Permanently extends TCJA’s individual AMT exemption amounts in 2026, as inflation-indexed. Thresholds for phaseout of the exemption revert to 2018 levels ($500,000 – single filers; $1 million – joint filers), inflation-indexed thereafter. Phaseout is increased from 25% to 50% of amount by which taxpayer’s AMT income exceeds the applicable exemption phaseout threshold.
Important Provisions for Small Business Owners
Business SALT no limits
QBI Deductions – The bill made QBI deduction permanent at 20%. Expands deduction limit phase-ins from $50,000 to $75,000 (single filers) and from $100,000 to $150,000 (joint filers), including for specified service trades or businesses and pass-through entities subject to wage and investment limitations.
100% Bonus depreciation – qualifying assets will now be able to be expensed in the year that they were purchased.
Immediate Expensing for Domestic R&D.
Reminder of Provisions That Are Set to Expire
If these are provisions that you qualify for, you will want to understand when they would expire so you can make sure to take full advantage of them while they are in effect.
Senior Bonus deduction – Through 2028 tax year
Tax on Tips – Ends December 31st, 2028
Tax on overtime – Ends December 31st, 2028
Car Loan Interest Deduction – Ends December 31st 2028
SALT deduction – Ends December 31st, 2029
Credits for EV/Energy Efficient home projects – EV credits expire after September 30th 2025 and home efficiency projects must be completed by December 31st, 2025.
The "One Big Beautiful Bill" brings substantial changes to the tax landscape, impacting individuals, businesses, and higher-income earners. While some provisions offer immediate benefits, others require careful planning to maximize their advantages. As we navigate these changes, our commitment is to keep you informed and help you make the most of the new opportunities. Stay tuned for more updates and feel free to reach out with any questions or concerns.
Michael Brocavich, CFP®, MBA is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® He has an extensive background in both personal and corporate finance.
The information contained in this letter does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Michael Brocavich, CFP®, MBA, and not necessarily those of Raymond James. Expression of opinion are as of this date and are subject to change without notice. There is no guarantee that these statement, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Individual investor’s results will vary. Past performance does not guarantee future results. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.