The One Big Beautiful Bill Act of 2025
THE ONE BIG BEAUTIFUL BILL ACT OF 2025
On July 4, 2025, President Donald J. Trump signed into law the “One Big Beautiful Bill Act” (OBBBA), a landmark piece of legislation that makes permanent many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and introduces several new tax measures. Outlined below are some of the major provisions of the legislation.
Permanent Extension of TCJA Tax Rates: Tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%, originally implemented in the 2017 Tax Cuts and Jobs Act (TCJA), are permanently extended.
Increased Standard Deduction: The standard deduction is permanently increased to $15,750 for individuals and $31,500 for married couples filing jointly, effective in 2025 and adjusted for inflation thereafter.
No Tax on Tips or Overtime: Temporary deductions on tips up to $25,000 and overtime income up to $12,500 for single filers ($25,000 for joint filers) are created for eligible taxpayers. Deductions are for tax years 2025 through 2028 and phase out for those with AGI over $150,000 for single filers and $300,000 for married couples filing jointly.
“Bonus” Deduction for Seniors: Seniors age 65 and older can claim an additional $6,000 deduction for tax years 2025 through 2028. The deduction phases out for those with a modified adjusted gross income (MAGI) exceeding $75,000 ($150,000 for joint filers).
New Trump Accounts: A new tax-advantaged savings account for children born between Dec. 31, 2024, and Jan. 1, 2029, that includes a one-time $1,000 contribution from the federal government. Parents can contribute up to $5,000 annually per child, and funds must be invested in a diversified index fund. No withdrawals allowed until the child reaches age 18, at which time the account becomes like a standard IRA. Earnings grow tax-deferred, and qualified withdrawals are taxed as long-term capital gains. Pre-retirement withdrawals are allowed for certain expenses, including education and the purchase of a new home.
Personal Exemptions Permanently Eliminated: Originally eliminated in TCJA, the personal exemption elimination is now permanent.
Increased State and Local Tax (SALT) Deduction: The SALT deduction cap is temporarily increased to $40,000 for taxpayers earning under $500,000, effective through 2029. Afterward, the cap reverts to the current $10,000.
Increased Estate and Lifetime Gift Tax Exemption: Permanently increases the estate and lifetime gift tax exemption in 2026 to an inflation-indexed $15 million for single filers or $30 million for joint filers.
Charitable Deductions for Non-Itemizers: Starting in 2026, a charitable deduction of up to $1,000 for single filers or up to $2,000 for joint filers is created. The deduction can be claimed regardless if the taxpayer takes the standard deduction or itemizes.
Termination of Clean Vehicle/Energy Credits: Clean vehicle, residential clean energy and energy-efficient home improvement credits are terminated. The termination applies to vehicles acquired after Sept. 30, 2025, and clean energy expenditures made after Dec. 31, 2025.
Temporary Auto Loan Interest Deduction: For tax years 2025 through 2028, up to $10,000 in interest on a new car loan can be deducted. The vehicle must be purchased after 2024 with final assembly done in the United States. The deduction is available to itemizers and nonitemizers, but phases out at a 20% rate when modified adjusted gross income (MAGI) exceeds $100,000 for single filers or $200,000 for joint filers.
529 Account Expansion: Allows certain elementary, secondary, homeschool and post-secondary credentialing expenses to be treated as “qualified higher education expenses.”
Child Tax Credit Increase: Increased to $2,200 for 2025 and made permanent, adjusted for inflation moving forward.
Scholarship Credit: In 2027, taxpayers can receive a 100% credit on cash donations to a scholarship granting organization. An annual cap of $1,700 per taxpayer is applied.
Qualified Opportunity Zones: The legislation revises the sunset date for current qualified opportunity zones (QOZs) to the end of 2026, rather than 2028. New zones are created beginning in January 2027 and every 10 years after that. The QOZ tax break is available after Jan. 1, 2027, only for investments made in newly designated zones; however, deferred gain invested prior to Jan. 1, 2027, will still be recognized on Dec. 31, 2026. QOZ investors will get up to a 10% reduction on deferred capital gains tax, rather than the 15% reduction in the original law. Those who invest in qualified rural opportunity zones will receive up to a 30% reduction. The reductions are realized after the QOZ investment is held for at least five years. Profits on QOZ investments held for at least 10 years are exempt from all capital gains tax when the assets are sold.
Qualified Business Income: The 20% tax deduction is now permanent, and the income levels for certain wage and asset restrictions are raised to $75,000 for single filers and $150,000 for joint filers. And, anyone earning at least $1,000 from a business they actively work in will get a minimum tax deduction of $400, adjusted for inflation over time.
Reinstate Bonus Depreciation: 100% bonus depreciation is reinstated and made permanent for qualifying property purchased after Jan. 19, 2025.
Principal Limit for Home Mortgage Interest Deduction Made Permanent: The $750,000 principal limit on the home mortgage interest deduction becomes permanent.
Student Loan Repayment Provisions: Changes were made to student loans in deferral; specifically the federal SAVE income-driven repayment plan. Although borrowers currently aren’t required to make payments, interest will begin accruing on SAVE loans starting August 1, 2025. During this pause, borrowers will not earn credit toward forgiveness under IDR or PSLF. The Education Department has extended income recertification deadlines to 2026, and borrowers may consider switching to alternative IDR plans to resume qualifying payments.
WHERE TO GO FROM HERE
You can download the One Big Beautiful Bill Act fact sheet here.
To see how Cornerstone can help you with financial planning or if you have questions regarding these provisions and their potential impact on your portfolio, please contact our advisory team today by calling our office at (775)853-9033 or by clicking here.
Garrett Watson, et al. Tax Foundation. July 4, 2025. “‘One Big Beautiful Bill Act’ Tax Policies: Details and Analysis.” https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/.
Kara Arundel. K-12 Dive. July 8, 2025. “3 things to know about school choice in the ‘One, Big, Beautiful Bill.’” https://www.k12dive.com/news/3-things-to-know-about-school-choice-in-the-one-big-beautiful-bill/752367/#:~:text=Under%20the%20 new%20school%20choice,a%20reduction%20of%20taxes%20owed.
Jeremy Tanner. The Hill. July 8, 2025. “Have children? How the ‘Big, Beautiful Bill’ could affect you.” https://thehill.com/homenews/nexstar_media_wire/5388103-have-children-how-the-big-beautiful-bill-could-affect-you/.
Taxpayers for Common Sense. July 9, 2025. “Energy Tax Provisions in the One Big Beautiful Bill.” https://www.taxpayer.net/energy-natural-resources/energy-tax-provisions-in-the-one-big-beautiful-bill/.
Meghen Ponder. TaxAct. July 8, 2025. “The One Big Beautiful Bill Passed: Learn What’s Changing.” https://blog.taxact.com/one-big-beautiful-bill-act/#:~:text=Tax%20changes%20for%20business%20owners,$10%2C000%20SALT%20cap%20 for%20individuals.
Julio Gonzalez. July 3, 2025. Engineered Tax Services. “What’s in the One Big Beautiful Bill and What It Means for You.” https://engineeredtaxservices.com/whats-in-the-one-big-beautiful-bill-and-what-it-means-for-you/#:~:text=into%20rural%20areas- Why%20It%20Matters:,and%20fuel%20long%2Dterm%20growth.
David Wessel. Brookings. July 8, 2025. “How did the One Big Beautiful Bill Act change Opportunity Zones?” https://www.brookings.edu/articles/how-did-the-one-big-beautiful-bill-act-change-opportunity-zones/.
Sarah E. Adkisson and Jeffrey Kelson. July 8, 2025. EisnerAmer. “GOP’s One Big Beautiful Bill Act Signed Into Law.” https://www.eisneramper.com/insights/tax/one-big-beautiful-bill-signed-into-law-0725/.
Ryan Ermey. CNBC. “‘Free money’ from Trump accounts is a ‘no-brainer,’ says expert — but other options may be better.” https://www.cnbc.com/2025/07/08/how-trump-accounts-work.html.
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