The One Big Beautiful Bill Act (H.R. 1, OBBBA), signed into law in 2025, is one of the most sweeping tax reforms in recent years. Many provisions take effect for tax years beginning after December 31, 2024—which means they’ll directly impact your OBBBA 2025 tax return (the one you’ll file in 2026).
So, what does this mean for you, your family, or your business? Here are the highlights to keep in mind as you start planning for your 2025 tax return.
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Lower Tax Rates and Standard Deduction Made Permanent
OBBBA locks in lower rates and higher deductions, giving most taxpayers lasting relief from the scheduled 2026 increases.
- The reduced individual tax rates from the TCJA are now permanent, avoiding the scheduled 2026 increase.
- The standard deduction rises to $23,625 for heads of household and $15,750 for single filers in 2025 (indexed for inflation).
- The MFJ standard deduction increased to $31,500, effective for taxable years beginning after December 31, 2024
📌 Impact on your 2025 return: Most taxpayers will continue to see lower overall tax liability and a larger standard deduction.
Changes to Deductions and Credits
OBBBA reshapes many familiar tax breaks. Families, homeowners, and high earners will see both expanded opportunities and new limits to consider this year.
- Child Tax Credit: Increased permanently to $2,200 per child, with inflation adjustments.
- SALT Deduction Cap: Raised to $40,000 ($20,000 MFS) in 2025, though it phases back to $10,000 after 2029.
- Mortgage Interest Deduction: $750,000 cap made permanent, with mortgage insurance premiums now deductible as interest.
- Miscellaneous Itemized Deductions: Permanently suspended (except expanded educator expenses).
📌 Impact on your 2025 return: Families with children and homeowners may see more favorable deductions, but high-income taxpayers could face new itemized deduction limits.
New Temporary Worker Deductions (2025–2028)
For the first time, OBBBA extends special tax breaks to workers. These new deductions reward tips, overtime, and car loan interest through 2028.
For the first time, workers may claim deductions for:
- Up to $25,000 in qualified tips.
- Up to $12,500 in overtime pay ($25,000 for joint filers).
- Up to $10,000 in interest on car loans for U.S.-assembled passenger vehicles.
📌 Impact on your 2025 return: If you earn tips, work overtime, or finance a new car, these temporary deductions could reduce your taxable income.
Business and Investment Provisions
Business owners and investors gain significantly under OBBBA. Permanent expensing rules and higher thresholds make it easier to plan growth and protect wealth.
- QBI Deduction: Threshold raised to $75,000 ($150,000 joint), with a $400 minimum deduction for active business income.
- Full Expensing & Bonus Depreciation: Now permanent for qualified property.
- Section 179 Expensing: Increased to $2.5M, with a $4M phaseout.
- Estate & Gift Tax Exemption: Permanently increased to $15M, effective after 2025.
📌 Impact on your 2025 return: Business owners benefit from expanded expensing and deductions, making this a key year to revisit equipment purchases or expansion plans.
Education and Family Incentives
Planning for education is getting easier. The OBBBA expands savings options and boosts credits, giving families new ways to reduce costs and taxes.
- 529 Plans: Expanded to cover more K-12 expenses, with a $20,000 contribution cap.
- Employer Student Loan Payments: Exclusion made permanent.
- Child & Dependent Care Credit: More generous phase-in and higher applicable percentages.
📌 Impact on your 2025 return: Families saving for education or paying student loans will see expanded opportunities for tax savings.
Charitable Giving and Community Incentives
Supporting causes you care about may deliver even greater tax benefits. OBBBA updates expand opportunities for both individuals and businesses to give strategically.
- Above-the-line charitable deduction raised to $1,000 ($2,000 joint).
- Opportunity Zones, Low-Income Housing, and New Markets credits made permanent with expanded benefits.
📌 Impact on your 2025 return: Charitable giving strategies may look different, with new floors for deductibility but more options for business-related contributions.
Energy Credits and Phaseouts
Energy incentives are shifting. New and existing credits still offer savings, but phaseouts are on the horizon for clean vehicles and home upgrades.
- Credits for new/used clean vehicles, charging stations, and residential clean energy phase out beginning in 2025–2026.
📌 Impact on your 2025 return: If you’re considering solar upgrades or an EV purchase, acting early could help you capture these credits before they expire.
Compliance and Reporting Updates
- 1099 Thresholds: Increased to $2,000 starting in tax-year 2026.
- Third-Party Network Reporting: $20,000/200-transaction threshold restored.
📌 Impact on your 2025 return: Some small businesses may face fewer reporting requirements compared to the recent lowered thresholds.
Planning Ahead: OBBBA 2025 Tax Return
The OBBBA makes 2025 a pivotal year in tax planning. While many changes are favorable — like permanent lower tax rates, expanded deductions, and new business incentives — others (like the phaseout of energy credits and stricter itemized deduction rules) may require adjustments.
At Beckley & Associates, we’re already working with clients to update their strategies so they’re ready for the first tax return filed under OBBBA. If you’d like to discuss how these provisions may affect your 2025 return, contact us today.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Please consult with your tax advisor regarding your specific situation.
