Highlights of the One Big Beautiful Bill Act (OBBBA)

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On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The new bill’s replacement of the Tax Cuts and Jobs Act of 2017 has generated many questions from our client base. The highlights below represent our attempt to identify and summarize some key points of interest. We will continue to monitor and share information as it becomes available.

• The tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% remain in place with a slight income threshold increase for those in the 10% and 12% tax brackets.
• Standard tax deductions will rise from $15,000 to $15,750 for single filers; $22,500 to $23,625 for heads of household; and $30,000 to $31,500 for joint filers permanently.
• A temporary (2025 through 2028) additional deduction for seniors age 65+ is set at $6,000 for individuals, or $12,000 for joint filers where both spouses are age 65+. This deduction does carry a phase out, with households earning over $175,000 (single), or $250,000 (joint) being fully phased out.
• Social Security Income is still subject to tax.
• State and Local Tax (SALT) deductions are temporarily increased (2025 through 2029) to $40,000 with an additional 1% added each year. This deduction carries a phase out. SALT deductions will revert to $10,000 in 2030.
• Deductibility of mortgage insurance premiums has been reinstated for those who purchased their home with a less than 20% down payment.
• Starting in 2026, charitable donations will carry a 0.5%-of-AGI (Adjusted Gross Income) floor, meaning a portion of your donation may no longer be deductible.
• Non-itemizers may now deduct charitable contributions (up to $1,000 for single filers, $2,000 for joint filers).
• Highest tax bracket taxpayers (37%) will have a slight decrease in allowable itemized deduction rate.
• A “No Tax on Tips” deduction of up to $25,000 is available for those who work in an occupation that "traditionally and customarily" received tips prior to 2025. These tips must be voluntary and not automatically charged as part of services provided.
• A “No Tax on Overtime” deduction of up to $12,500 for single filers and $25,000 for joint filers is available. Only the overtime portion of the pay above the employee’s base pay rate is eligible. (e.g. If an employee earns $20/hr. base pay and $30/hr. overtime pay, only the $10/hr. difference is eligible.)
• A “New Auto Loan” interest deduction of $10,000 maximum is available for new loans taken after 12/31/2024. This does carry a phase out for single filers making over $149,000, and joint filers making over $249,000.
• The Child Tax Credit will be permanently increased to $2,200 and will automatically increase with the cost of living. Phase out rules still apply.
• The Alternative Minimum Tax (AMT) exemptions established by the Tax Cuts and Jobs Act of 2017 have been made permanent with some reduced thresholds.
• The Estate Tax Exemption has been raised to $15M per person.
• Tax-free distributions may now be taken from 529 plans to cover K-12 expenses such as curriculum materials, textbooks, online education materials, tutoring provided outside the home, test fees (standardized tests, AP exams, college admission exams), and educational therapy costs for individuals with disabilities.
• Tax-free distributions may now be taken from 529 plans to cover post-secondary credentialing expenses.
• “Trump Retirement Accounts” waive the “earned income” requirement of IRA contributions for individuals under 18 years of age, allowing them to start saving for retirement before entering the workforce.
• Over the next 12 months the Federal Government will be repealing “Clean Energy Credits”, beginning on 9/30/2025.

Follow the link below for more information regarding the OBBBA, including a more in-depth look at these topics and others not listed here.

Click Here

As always, consult our Hippo Tax Services office or your tax professional to determine how these changes may affect your filing requirements. We thank you for allowing us to be your trusted financial advisor.

Sincerely,

Curran Wealth Management