New Tax Bill Signed Into Law: What It Means For You

Signed into law on July 4, the One Big Beautiful Bill Act of 2025 locks in tax cuts and adds several new tax breaks aimed at workers, families, and seniors. Here’s what changes in 2025.

Key Tax Changes

• Tax rates stay the same. The current brackets (10% to 37%) from the 2017 tax law are now permanent.
• Standard deduction goes up.
  • Married couples: +$1,500
  • Heads of household: +$1,125
  • Single filers: +$750
• New senior deduction (2025–2028).Seniors can deduct an extra $6,000. The benefit phases out:
  • Single: $75,000–$175,000
  • Married: $150,000–$250,000
• Child tax credit increases to $2,200, up from $2,000.

Work & Wage Benefits

• Tips deduction (2025–2028). Up to $25,000 in qualified tips is tax-deductible for both employees (W-2) and contractors (1099-K). Phases out above $150,000 ($300,000 joint).
• Overtime deduction (2025–2028). Deduct up to $12,500 ($25,000 joint) for qualified overtime pay.

Other Provisions

• Vehicle loan interest deduction (2025–2028). Deduct up to $10,000 in interest on loans for new U.S.-assembled vehicles.
• Student loan forgiveness due to death or disability is now permanently non-taxable.
• State and local tax (SALT) deduction cap rises to $40,000 (from $10,000) through 2029. It drops back to $10,000 in 2030.
• Electric vehicle tax credits end Sept. 30, 2025.
  • New EVs: Up to $7,500
  • Used EVs: Up to $4,000
• Adoption tax credit expanded. Up to $5,000 of the credit is refundable for low-income families.
• New Trump Accounts for kids.
  • $1,000 gifted at birth (2025–2028 births only)
  • Up to $5,000 per year in contributions allowed
  • Withdrawals allowed starting at age 18
• Expanded 529 plan use.
  • New $20,000 annual withdrawal cap for K-12 tuition
  • Can now be used for books, tutoring, homeschool, therapies, and certificate/trade programs

Tax Law Changes Starting in 2026

• Everyone can now deduct donations– even without itemizing.
  • Up to $1,000 for individuals
  • Up to $2,000 for married couples
• But itemizing donations gets tougher.
  • You can only deduct the part of your donations that exceed 0.5% of your income.
  • Example: Make $200,000, donate $20,000 → only $19,000 counts.
• Mortgage insurance premiums are now deductible if you itemize.
• Top earners see an itemized deduction cap.
  • If you’re in the 37% bracket, your itemized deductions can only reduce tax up to a 35% rate.
• Gambling Losses
  • New limit: You can now only deduct 90% of your gambling losses.
  • Old rule: Deduct up to the amount of your winnings
  • New rule example: Win $10,000, lose $15,000 → you can only deduct $9,000 (not $10,000)
• New Remittance Excise Tax
  • Sending money abroad? A new 3.5% excise tax applies to personal remittance transfers to foreign recipients.