2025 OBBBA Tax Law Changes
Congress passed a new tax law with a big name—the One Big Beautiful Bill Act (OBBBA). While the bill is anything but beautiful to the majority of Americans, the changes inside are helpful to many.
This law isn’t just an extension of the old rules. It reshapes the tax landscape by creating three kinds of changes:
Temporary breaks that expire quickly
Permanent improvements you can count on
New restrictions that require extra planning
Temporary Tax Breaks: Opportunities With an Expiration Date
These are short-term perks. If you don’t use them, you lose them.
SALT Deduction Relief (2025–2029): The cap rises from $10,000 to $40,000. In 2030, it snaps back to $10,000 permanently. Think of it as a five-year vacation before the IRS tightens the belt again.
Senior Deduction (2025–2028): Seniors 65+ get an extra $6,000 deduction per spouse. Retirement finally comes with a coupon.
Tips & Overtime (2025–2028): Workers can deduct up to $25,000 in tips and overtime. The IRS is basically saying, “Yes, we see you hustling those extra shifts.”
Car Loan Interest (2025–2028): Up to $10,000 of interest on personal car loans is deductible. Just don’t tell your spouse you bought that SUV for the tax break.
Green Energy Credits: Electric vehicle credits end in September 2025. Solar and home energy credits end in December 2025. If you’ve been “thinking about it,” stop thinking. Do it.
Adoption Credit (2025): Families adopting children may get up to $5,000 refunded in cash.
“These breaks reward action. Use them while they last—or watch them disappear.”
Permanent Improvements: Long-Term Planning Tools
These are the sturdy building blocks you can rely on for years to come.
Lower Tax Rates: The TCJA brackets (10%–37%) are now permanent.
Higher Standard Deduction: $31,500 for couples in 2025, indexed for inflation. Translation: fewer shoeboxes full of receipts.
Child Tax Credit: Increased to $2,200 per child, with inflation adjustments.
Business Owner Benefits:
20% Qualified Business Income deduction made permanent, with higher thresholds
100% bonus depreciation and Section 179 expensing ($2.5M) are permanent
Domestic R&D costs can be deducted immediately
Estate & Gift Exemption: $15M per person ($30M for couples), permanent and inflation-adjusted
Student Loan Relief: Employers can contribute up to $5,250 annually, tax-free. Discharges due to death or disability also remain tax-free
Casualty Losses: Losses from federally declared disasters remain permanently deductible
“These aren’t going anywhere. They’re reliable levers you and your advisor can use for long-term planning.”
New Restrictions: Rules That Get Tighter
Starting in 2026, several provisions will add more complexity.
Charitable Deduction Floor: The first 0.5% of income given to charity won’t count toward deductions. Small donations may still do good—but not for your tax return.
Pease Limitation Returns: High earners will see their itemized deductions trimmed.
Alternative Minimum Tax (AMT): The AMT exemption phases out faster, pulling more taxpayers in.
Miscellaneous Deductions: Job expenses, investment fees, and similar write-offs are gone permanently. RIP to the “can I deduct this?” questions.
Gambling Losses: Only 90% of losses are deductible starting in 2026. The house still wins.
Education Credits: Returns must include Social Security numbers and school EINs by 2026. Miss a digit, lose the credit.
Health Premium Tax Credits: Repayment caps end in 2026, with stricter verification rules beginning in 2027.
“These rules don’t eliminate benefits—but they make precision and planning essential.”
The Bottom Line: Plan Ahead or Fall Behind
The OBBBA splits the tax world into three lanes:
Temporary breaks—use them while they last
Permanent improvements—count on them for long-term strategies
New restrictions—adjust now so they don’t catch you off guard
The clients who win are those who prepare. Those who don’t may end up paying more than necessary.
At Simonsgroup Tax Advisory, our role is to simplify these rules and help you act at the right time.
