President Trump has signed the One Big Beautiful Bill Act into law. This sweeping legislation introduces new tax changes for businesses and individuals across all income levels, with key provisions effective starting January 1, 2025 and expiring through 2028.
For Small Businesses
• Permanent 21% Corporate Tax Rate
Becomes permanent as of 2026—no impact on 2025 tax planning.
• 20% Pass-Through Deduction Made Permanent
Section 199A deduction extended indefinitely beyond 2025.
• 100% Bonus Depreciation Through 2026
Immediate write-off for qualified assets purchased through Dec 31, 2026.
• Section 179 Expensing Limit Raised to $1.4M
Increased effective tax year 2025, then indexed to inflation.
• SALT Cap Raised to $40,000
Applies to state/local tax deductions for 2025–2028, with phase-outs for higher earners.
For Individuals
• No Federal Tax on Cash Tips for Recipients
Eligible workers can exclude up to $25,000 of reported cash tips from taxable income. Applies 2025–2028, phased out above MAGI thresholds.
• No Tax on Overtime/Bonus Pay
Recipients may exclude up to $12,500 (single) or $25,000 (married) in overtime/bonus pay from taxable income. Effective 2025–2028.
• Child Tax Credit Increased to $2,500
Applies to 2025–2028, with partial refundability for lower-income families.
• Standard Deduction Boosted & Indexed
Slight bump and indexed for inflation beginning 2025.
• Earned Income Tax Credit (EITC) Expanded
Higher benefits and broader eligibility—starting 2025.
• SALT Deduction Cap Raised to $40,000
Applies to 2025–2028, with phased-out amounts for incomes above thresholds.
• Charitable Deduction Limits Extended
60% AGI limit for cash donations maintained through 2026.
• Estate & Gift Exemption Raised to $15M
Permanently applies, effective January 1, 2025, indexed annually.
• Capital Gains Rates Unchanged
15–20% long-term capital gains plus 3.8% NIIT still apply in 2025 and beyond.
• New 5% Remittance Tax
Applies to transfers abroad over $10,000 starting in 2025.
• Senior “Bonus” Deduction
A new $6,000 (individual) / $12,000 (married) deduction for taxpayers aged 65+ is available for 2025–2028, phased out at higher incomes. Likely removes taxes on Social Security benefits for 88% of seniors.
What You Should Do Now
• Hourly & Tipped Employees
Track your cash tips and overtime/bonus pay to maximize tax-free income.
Expect to exclude up to $25K (tips) or $12.5K (overtime) in 2025–2028.
• Families & Lower Earners
Utilize boosted Child Tax Credit and expanded EITC.
Determine if the higher standard deduction or itemizing is more beneficial.
• Retirees & Seniors
Seniors aged 65+ should claim the senior “bonus” deduction—worth up to $6K/$12K.
This likely means 88% of seniors pay no tax on Social Security benefits.
• High-Net-Worth Individuals
Adjust estate and gifting plans under the new $15M exemption.
Use charitable deduction limits before they expire in 2026.
Review any foreign remittances for potential 5% surtax.
• Business Owners
Accelerate capex to leverage bonus depreciation and Section 179.
Ensure payroll systems accurately report tipped/overtime income for benefits.Reach Out for Help:
We’re monitoring IRS and Treasury guidance and are ready to tailor strategies based on your specific situation. Call to schedule your personalized tax planning session.