The 2025 "One Big Beautiful Tax Bill" introduces a series of taxpayer-friendly reforms aimed at reducing the burden on working Americans and small businesses. The bill will head back to the House to reconcile differences so it can be on Trump's desk for signature into law by July 4. Here’s a quick summary of the most impactful tax law changes:
✅What’s Changing in 2025:
1. No Tax on Tips
Workers can deduct up to $25,000 in tip income. Phases out at $150,000 single / $300,000 joint income.
2. No Tax on Overtime Pay
Up to $12,500 per person (or $25,000 per couple) of overtime pay can be deducted. Same income phase-outs as tips.
3. Car Loan Interest is Now Deductible
Interest on U.S.-made car loans (up to $10,000 annually) is deductible. Phased out at $100,000 (single) / $200,000 (joint).
4. Senior Tax Bonus
Taxpayers aged 65+ get a new $4,000 per-person deduction. Phases out starting at $75,000 income (single) / $150,000 (joint).
5. Bigger Standard Deduction
All filers receive an additional $1,000 (individual) or $2,000 (joint) on top of their existing standard deduction.
6. Child Tax Credit Bumped Up
Increased to $2,200 per child (non-refundable), with $1,400 refundable. Income limits remain at $200K/$400K.
7. Pass-Through Business Deduction Lives On
The 20% QBI deduction (or 23% in House version) for self-employed and small businesses becomes permanent.
8. 100% Bonus Depreciation Returns
Businesses can fully expense qualifying equipment through 2029.
9. R&D and Business Deductions Expanded
Full R&D expensing returns. More generous Section 179 expensing and improved interest deductibility.
10. Estate & Gift Tax Exemption Increased
The exclusion is raised to $15 million, inflation-adjusted after 2025.
💡 Other Notables:
- Third-party payment reporting threshold restored to $20K/200 transactions (e.g., Venmo, PayPal).
- Opportunity Zones extended with new rural incentives.
- Some deductions (e.g., moving expenses, miscellaneous itemized) are permanently eliminated.
These provisions aim to simplify the tax code, reward hard work, and support business growth. As always, check with your tax advisor to understand how these changes may affect you personally.