Your Business & Personal Taxes with OBBB

Published by Matt Tae at December 12, 2025

Individual Income Tax Provisions

Permanent Extension of TCJA Rates

The individual income tax brackets established under the TCJA are made permanent, including the 37% top marginal rate. The seven permanent brackets are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with inflation adjustments continuing under existing indexing rules.

Standard Deduction

The standard deduction is permanently retained at elevated TCJA levels. For tax year 2025:

Filing Status	2025 Amount
Married Filing Joint	$31,500
Single / MFS	$15,750
Head of Household	$23,625

Amounts are indexed annually for inflation. For 2026, these increase to $32,200 (MFJ), $16,100 (Single/MFS), and $24,150 (HOH).

State and Local Tax (SALT) Deduction

The SALT deduction cap is temporarily increased for tax years 2025 through 2029:

Cap: $40,000 per household ($20,000 MFS)
Phaseout: Begins at $500,000 MAGI ($250,000 MFS)
Reduction rate: 30 cents for every dollar over the threshold, down to a floor of $10,000
Indexing: Cap and threshold increase 1% annually through 2029
Sunset: Reverts to $10,000 limit beginning January 1, 2030

Planning Note: Taxpayers below the MAGI phaseout threshold may benefit from prepaying assessed and due property taxes in December 2025. Taxpayers near the threshold should avoid inadvertently increasing MAGI through year-end bonuses, Roth conversions, or large capital gains. Strategic charitable contributions may reduce MAGI and preserve the full SALT benefit. Pass-through entity taxes (PTETs) remain available for non-SSTB businesses, though the higher $40,000 cap reduces urgency for many taxpayers under the $500,000 threshold. SSTBs face significant limitations on PTET benefits due to coordination with §199A.

Child Tax Credit (CTC)

The enhanced CTC is made permanent with the following parameters for tax year 2025:

Maximum credit: $2,200 per qualifying child under age 17
Refundable portion: Up to $1,700 per child (inflation-adjusted)
Phaseout thresholds: $200,000 (Single/HOH) / $400,000 (MFJ)
Other dependent credit: $500 nonrefundable credit for non-child dependents (permanent)

Stricter Social Security number requirements now apply: qualifying children must have valid SSNs, and at least one parent (or the taxpayer, if single) must also have a work-eligible SSN to claim the credit. Both the credit and refundable portion are indexed for inflation beginning in 2026.

Additional Deduction for Seniors

For tax years 2025 through 2028, a new above-the-line deduction is available:

Amount: $6,000 per eligible individual age 65 or older ($12,000 for qualifying married couples)
Phaseout begins at: $75,000 MAGI (Single/HOH) / $150,000 MAGI (MFJ)
Available to both itemizers and standard deduction filers
This deduction is in addition to the existing age-based additional standard deduction amounts

Above-the-Line Deductions (2025–2028)

Deduction for Qualified Tips

Maximum deduction: Up to $25,000
Phaseout begins at: $150,000 MAGI (Single) / $300,000 MAGI (MFJ)
Applies to occupations the IRS identifies as customarily and regularly receiving tips
Tips must be properly reported on Form W-2, Form 1099, or self-reported
Payroll taxes still apply to tip income

Deduction for Overtime Premium Pay

Maximum deduction: Up to $12,500 (Single) / $25,000 (MFJ)
Phaseout begins at: $150,000 MAGI (Single) / $300,000 MAGI (MFJ)
Applies only to the overtime premium portion required under the Fair Labor Standards Act (e.g., the “half” of time-and-a-half)
Payroll taxes still apply

Deduction for Car Loan Interest

Maximum deduction: Up to $10,000 per year
Vehicle must be new (original use begins with taxpayer)
Vehicle must be for personal use (not business or commercial)
Final assembly must be in the United States
Loan must have originated after December 31, 2024
Phaseout begins at: $100,000 MAGI (Single) / $200,000 MAGI (MFJ)

Estate and Gift Tax Exemption

Effective January 1, 2026: The unified estate and gift tax exemption is permanently increased to:

Taxpayer	Exemption Amount
Individual	$15,000,000
Married Couple	$30,000,000

The exemption is indexed for inflation beginning in 2027. Unlike the temporary increase under the TCJA, this provision is permanent and does not sunset. The generation-skipping transfer (GST) tax exemption is also set at $15 million. For 2025, the exemption remains at $13.99 million per individual. The top marginal estate, gift, and GST tax rate remains at 40%.

Clean Energy Credit Changes

Clean Vehicle Credits

All clean vehicle tax credits terminate for vehicles acquired after September 30, 2025:

Credit	Max Amount	Termination Date
New Clean Vehicle (§30D)	$7,500	Sept. 30, 2025
Used Clean Vehicle (§25E)	$4,000	Sept. 30, 2025
Commercial Clean Vehicle (§45W)	$7,500–$40,000	Sept. 30, 2025
EV Charging Infrastructure (§30C)	Up to $100,000	June 30, 2026

To qualify, vehicles must be acquired (binding contract plus payment) and placed in service by the applicable deadline.

Home Energy Credits

Both residential energy credits terminate December 31, 2025:

Section 25C (Energy Efficient Home Improvement): Not allowed for property placed in service after December 31, 2025
Section 25D (Residential Clean Energy): Not allowed for expenditures after December 31, 2025

Planning Note: Homeowners considering solar panels, energy-efficient HVAC systems, or other qualifying improvements should complete projects before year-end to capture these credits.

Business Tax Provisions

Qualified Business Income Deduction (Section 199A)

The Section 199A deduction is made permanent with the following modifications:

Deduction rate: Remains at 20%
Phase-in range expanded: Increased by $75,000 (Single) / $150,000 (MFJ) above the 2025 threshold amounts, indexed for inflation after 2026
- For 2025 the income threshold at which limitations begin is roughly $197,300 for single filers, and $394,600 for married filing jointly
- Under the expanded phase-in range beginning in 2026 and later tax years: The upper end of the phase-in window becomes ~$272,300 for single filers and ~$544,600 for married filing jointly
New minimum deduction: A minimum QBI deduction is available for taxpayers with at least $1,000 of aggregate QBI from active trades or businesses (material participation required), subject to statutory requirements
Wage and capital limitations continue to apply to higher-income taxpayers
Specified service trade or business (SSTB) limitations remain in effect

Bonus Depreciation

100% bonus depreciation is permanently restored under current law for eligible property acquired and placed in service after January 19, 2025. This reverses the TCJA phase-down schedule that had reduced bonus depreciation to 40% for 2025.

Key requirements:

Property must be both acquired AND placed in service after January 19, 2025
Applies to tangible personal property with a recovery period of 20 years or less
Includes qualified improvement property (QIP)
Applies to both new and used assets (if the taxpayer has not previously used the asset)
Taxpayers may elect to claim 40% bonus depreciation instead of 100% during the first taxable year

Qualified Production Property (New): A new 100% deduction is available for nonresidential real property used in manufacturing, production, or refining. Construction must begin after January 19, 2025, and before January 1, 2029, with property placed in service before January 1, 2031.

Section 179 Expensing

For tax years beginning after December 31, 2024:

Parameter	New Amount
Maximum expensing amount	$2,500,000
Phaseout threshold	$4,000,000

Both amounts are indexed for inflation beginning in 2026. Section 179 remains particularly useful for property not eligible for bonus depreciation and for state tax planning, as many states conform more closely to Section 179 than to bonus depreciation.

Research & Experimental (R&E) Expenditures

For domestic research expenditures:

Immediate expensing restored: Effective for tax years beginning after December 31, 2024, through December 31, 2029
Retroactive application: Eligible small businesses may elect retroactive relief for tax years beginning in 2022, subject to IRS procedural guidance (method change or amended return required)
Foreign R&E: Continues to be amortized over 15 years

Business Interest Deduction (Section 163(j))

Beginning with tax years after December 31, 2024, the business interest limitation is permanently calculated using EBITDA (adding back depreciation, amortization, and depletion) rather than EBIT. This generally increases allowable deductions for leveraged businesses.

Excess Business Loss Limitation (Section 461(l))

The excess business loss limitation is made permanent. Previously disallowed losses are subject to retesting in subsequent years. For 2025, the limitation is approximately $500,000 for joint filers.

Reporting Threshold Changes

Form 1099-K

Reverts to prior reporting threshold:

More than $20,000 in gross payments, AND
More than 200 transactions

Taxability of income remains unchanged regardless of whether a 1099-K is issued.

Form 1099-NEC / 1099-MISC

Information reporting threshold increased to $2,000, indexed for inflation after 2026.

Additional Notable Provisions

Trump Accounts

New tax-advantaged savings accounts for children under 18 (subject to Treasury implementation and administrative guidance):

$1,000 federal pilot program contribution for children born between 2025 and 2028
Employers may contribute up to $2,500 per year tax-free
$5,000 annual contribution limit (indexed after 2027)
Funds must be invested in U.S. stock index funds (e.g., S&P 500 trackers)

Adoption Credit

Up to $5,000 of the adoption credit is now refundable (previously nonrefundable). The maximum credit for 2025 is $17,280.

Charitable Deduction Floor (Beginning 2026)

Starting in 2026, a 0.5% AGI floor applies to itemized charitable deductions. The first portion of charitable giving equal to 0.5% of AGI provides no tax benefit for itemizers. This floor does not affect non-itemizers. This makes 2025 the final year to capture full itemized deductibility from the first dollar of charitable contributions.

Strategic Planning Considerations for 2025

Individuals

Monitor MAGI relative to SALT and deduction phaseouts
Confirm dependent SSN eligibility for the enhanced CTC
Track and properly report tips and overtime for new deductions
Complete energy improvements before December 31, 2025
Time vehicle purchases carefully relative to September 30, 2025 clean vehicle deadline
Consider charitable bunching strategies before the 2026 AGI floor takes effect

Seniors

Evaluate income timing to remain below the $75,000/$150,000 deduction phaseout thresholds
Consider the “triple stack” strategy: base standard deduction + age-based addition + new $6,000 senior deduction
Qualified Charitable Distributions (QCDs) from IRAs can help manage MAGI

Business Owners

Place capital assets in service before year-end to secure 100% bonus depreciation (ensure acquisition date is after January 19, 2025)
Reassess R&D capitalization models given restored immediate expensing
Review wage and basis limitations under permanent Section 199A
Evaluate Section 179 vs. bonus depreciation for state tax optimization
Consider cost segregation studies for recent real property acquisitions
Confirm information reporting compliance with new thresholds

Estate Planning

The permanent $15 million exemption (effective 2026) reduces the immediate pressure created by prior sunset concerns, though state estate taxes and long-term legislative risk remain planning considerations
GRAT, SLAT, and other planning techniques may still be advantageous for appreciation shifting and asset protection
Review existing estate plans to ensure formula clauses operate as intended
State-level estate taxes remain a consideration—many states have much lower exemptions
Portability elections remain important for married couples

Conclusion

The One Big Beautiful Bill Act largely solidifies the TCJA framework while introducing targeted deductions, restoring full expensing, and narrowing certain credits. Key permanent changes include the individual tax rates, the QBI deduction, 100% bonus depreciation, the elevated estate tax exemption, and the EBITDA-based interest limitation.

For many taxpayers, 2025 planning centers on threshold management and timing—particularly around the September 30 clean vehicle deadline and December 31 energy credit sunset. For businesses, the focus is on capital deployment, R&D deductibility, and long-term modeling under permanent pass-through rules.

A coordinated review before December 31, 2025 is strongly advisable to ensure full utilization of the enacted provisions and to position for 2026 changes.

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This summary is for informational purposes only and does not constitute tax advice. Please consult with a qualified tax professional regarding your specific situation.