What the One Big Beautiful Bill Act Means for You: Key Takeaways for Taxpayers

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If you’ve been wondering how the One Big Beautiful Bill Act (OBBB), signed into law on July 4, 2025, will affect your personal tax situation—you’re not alone. This sweeping legislation marks a significant pivot in U.S. tax policy, especially for business owners and high net-worth individuals who value planning certainty and maximizing deductions.

Here’s what you need to know about how this new law could affect you, your family, and your future tax planning.

Permanent Tax Cuts—and New Twists

The Good: Lower Rates Stay Put

The OBBB makes permanent the individual income tax rate cuts introduced under the Tax Cuts and Jobs Act (TCJA). Most notably, the top marginal rate of 37% (which was set to expire in 2025) will now continue indefinitely. This provides long-term stability and planning clarity for high-income earners.

The Not-So-Good: No Return of Personal Exemptions

Under the TCJA, personal exemptions were temporarily suspended. OBBB cements that suspension, meaning taxpayers won’t be seeing these exemptions return. However, there’s a silver lining for seniors…

A New Deduction for Seniors (But It’s Temporary)

If you or a loved one is 65 or older, OBBB adds a $6,000 deduction available from 2025 through 2028. This deduction begins to phase out at $75,000 in income for individuals and $150,000 for joint filers. It’s not a replacement for the elimination of taxes on Social Security benefits, but it’s a targeted nod to senior taxpayers who might otherwise lose out under the permanent personal exemption suspension.

Higher Standard Deduction = Bigger Benefit for Most

Good news: The standard deduction is not only sticking around—it’s increasing in 2025 to:

$31,500 for joint filers
$15,750 for single filers
$23,625 for heads of household

This larger deduction means many taxpayers will continue to benefit without needing to itemize.

Charitable Giving: More Limits, More Complexity

Starting in 2026, itemized deductions for charitable contributions will only be allowed for donations that exceed 0.5% of your adjusted gross income. If you’re a high net-worth donor or run a donor-advised fund, this could limit the benefits of your giving.

But here’s a small win: for those who don’t itemize, you’ll still be able to deduct charitable contributions above the line—up to $2,000 for joint filers and $1,000 for single filers.

Heads Up: Changes to Itemized Deductions and SALT

If you’re in the top tax bracket, your total itemized deductions will take a slight cut.
The SALT (State and Local Tax) deduction cap temporarily rises to $40,000 in 2025 ($20,000 for married filing separately), before gradually stepping down and resetting to $10,000 in 2030. If you live in a high-tax state, this window could be crucial for maximizing deductions.

Auto Loan Interest Returns—for Some

This is a first in nearly 40 years: From 2025 to 2028, you can deduct up to $10,000 in auto loan interest, but only if:

The vehicle is newly purchased
Final assembly occurred in the U.S.
Your income is under $100,000 (single filers) or $200,000 (joint filers)

Critics argue this reopens a loophole for personal interest deductions, but for qualifying taxpayers buying domestically assembled cars, it’s a meaningful opportunity.

Introducing: “Trump Accounts” for Kids

Designed to encourage long-term savings, these new accounts provide:

A $1,000 government contribution for babies born from 2025–2028
Annual nondeductible individual contributions up to $5,000
Employer contributions up to $2,500, tax-free
Access after age 18 for education, a first home, or to start a business

Think of these as next-gen IRAs for kids—an interesting tool for families planning for future milestones.

Overtime and Tips Get Special Treatment

From 2025–2028, OBBB offers new deductions for:

Tips (up to $25,000)
Overtime pay (up to $25,000 for joint filers / $12,500 for others)

These deductions apply above-the-line and are phased out for higher-income individuals. Guidance from the IRS is still in development, so keep an eye out if you or your employees fall into tipped or overtime-heavy roles. Payroll taxes will still apply.

Energy Credits Face the Sunset

Two credits introduced under the Inflation Reduction Act will be eliminated for purchases or installations made after December 31, 2025, including:

Energy-efficient home improvements (up to $1,200 annually for specific improvements + $2,000 for certain kinds of heat pumps)
Residential clean energy (solar, geothermal, etc.)

Additionally, electric vehicle credits (up to $7,500) will be eliminated for vehicles acquired after September 30, 2025.

If you’ve been considering solar panels or a new EV—2025 is your deadline. Planning ahead is key.

What Should You Do Next?

Here’s Our Advice:

Review Your 2025-2026 Plans: With some provisions taking effect in 2025 and others in 2026, it’s a great time to revisit your tax plan.
Think Long-Term: The permanence of many TCJA benefits offers new certainty—but some temporary deductions (like for seniors, auto loan interest, and energy credits) are time-sensitive.
Use the Window Wisely: If you’re in a high-tax state, charitable giver, or considering a large purchase or investment, act while the expanded deductions and credits are still in play.
Get Personalized Guidance: While the headlines grab attention, the real savings (or surprises) are in the details.

Let’s Talk Strategy

At Lanigan Ryan, we work with business owners and high net-worth individuals to translate complex legislation like the OBBB into real-world decisions. If you’d like to explore how the new law affects your personal or business tax situation, we’re here to help.