Many of our clients are hardworking individuals, growing families, and small business owners who are doing their best to stay informed and make wise financial decisions. Over the past few weeks, several of our clients have reached out with great questions regarding the recent federal tax changes included in what’s being called One Big Beautiful Bill.
In an effort to keep you informed (while also saving you from reading ~1,000 pages of the new bill), we’ve put together a summary of the changes that are most likely to impact you, your household and your business.
For Individuals & Families
Higher Standard Deduction
The standard deduction is increasing more significantly than in previous years. This means more of your income is protected from taxes—great news if you don’t itemize!
New Senior Deduction
Taxpayers over 65 can now claim an additional $6,000 deduction per person. This is especially helpful for reducing (or potentially eliminating) tax liability on Social Security income. Watch for income-based phaseouts if you’re in a higher bracket.
Child Tax Credit Increased
Parents rejoice: the Child Tax Credit has increased from $2,000 to $2,200 per qualifying child. Income limits for this credit have also been raised, making more families eligible.
Mortgage Interest Premium Deduction Returns
If you itemize deductions, you’ll be glad to know this popular write-off is back.
SALT Deduction Cap Raised
The cap on the State and Local Tax (SALT) deduction has increased to $40,000 (previously just $10,000). Again, this only applies to those who itemize.
New Car Loan Interest Deduction
Buying a new car between 2025 and 2028? You can deduct up to $10,000 in interest—even if you don’t itemize. Yes, you read that right!
Charitable Giving Gets a Boost
A new deduction allows up to $1,000 per taxpayer for charitable contributions without having to itemize.
For Wage Earners
Tip Income Deduction
Employees who receive tips reported on their W-2 can now deduct up to $25,000 in tip income. While tips are still subject to Social Security tax, this deduction helps reduce your taxable income.
Overtime Pay Deduction
Similarly, non-exempt employees can now deduct up to $25,000 in overtime wages (reported on their W-2). Like tips, OT pay is still subject to employment taxes, but this is a big win for those clocking extra hours.
For Business Owners
Qualified Business Income (QBI) Deduction Made Permanent
The 20% deduction on income from qualified businesses and active pass-through entities is here to stay—good news for small business owners and freelancers.
100% Bonus Depreciation is Back
Businesses can now fully expense the cost of qualifying equipment and assets in the year they’re placed into service. This deduction had been phasing out, but it’s back at 100%.
R&D Expenses Fully Deductible
Domestic research and development expenses no longer need to be amortized over 15 years—they can now be expensed in full.
Business Meals Still 50% Deductible
No change here, but it’s worth noting this deduction remains intact.
1099-NEC Reporting Threshold Increased
You now only need to issue a 1099-NEC if you paid a contractor $2,000 or more in the year (up from $600). This could save businesses time and paperwork.
Planning Ahead
New TRUMP Dependent Retirement Accounts
Starting in 2025, you can contribute up to $5,000/year on behalf of a minor to a new dependent retirement account. Even better? The government will contribute $1,000 to accounts opened for children born between 2025–2028.
Estate & Gift Tax Exclusion Increased
Planning to pass down wealth? The estate and gift tax exclusion has been permanently increased to $15 million—allowing for greater flexibility in estate planning.
What’s Ending Soon
Some credits and deductions are set to expire soon, so keep them on your radar:
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Clean Vehicle Tax Credits expire on September 30, 2025
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Energy Efficient Home Improvements & Residential Clean Energy (solar) credits expire on December 31, 2025
Final Thoughts
These updates may feel like a lot—and they are—but they also represent opportunities to reduce your tax burden, claim new deductions, and plan more confidently for the future. Whether you’re an employee wondering how your W-2 might look different, a retiree keeping an eye on Social Security taxation, or a small business owner navigating shifting reporting rules, these changes are worth understanding.
We know every financial situation is unique, and that’s why we’ll continue to keep an eye on how these updates unfold and what they might mean for the real people behind the numbers. As always, if you have questions or want to talk through anything specific, we’re here to help guide you through it.
Because staying informed shouldn’t feel overwhelming—it should feel empowering.
