Just before the July 4th holiday, Congress passed the The One Big Beautiful Bill Act (OBBBA) that extended the 2017 tax cuts that were set to expire this year while making some of the 2017 rules permanent. The bill also created several new tax laws for individuals while addressing other tax issues for businesses.
Some of the changes will start this year, while others will kick in for 2026. Like previous tax laws, some of the new rules are scheduled to expire, while others are permanent.
Here’s a quick summary of some tax law changes that are expected to impact most tax filers in 2025.
Key Tax Changes Starting 2025:
EVERYONE - Standard deduction increases to $15,750 for single filers, and $31,500 for those filing jointly. State and local tax (SALT) deduction increases the cap from $10,000 to $40,000 from 2025 to 2029. The more generous SALT deduction cap is paired with an income limit starting at $500,000, which phases out the more generous deduction back down to $10,000 for taxpayers with incomes over $600,000.
SENIORS (65+) - $6,000 bonus standard deduction (2025-2028) - The new $6,000 bonus deduction will be available to individuals age 65 and older, with eligibility set at $75,000 in income for single filers and $150,000 for couples, and It completely phases out at $175,000 (single filers) and $250,000 (joint). Eligible older adults can add the extra deduction to their regular standard deduction when filing taxes, potentially lowering their overall tax bill.
WORKERS - No tax on tips (up to $25,000) No tax on overtime (up to $12,500 single filer/$25,000 married filing jointly).
BUSINESS OWNERS - 20 percent qualified business income deduction (QBI) is now permanent, plus 100 percent capital expensing restored.
FAMILIES - Child tax credit increases to $2,200, plus Dependent care limits increase to $7,500.
ESTATE MANAGEMENT - Exemption increases to $15 million/$30 million - Starting in 2026, the federal estate tax exemption was scheduled to fall by about 50 percent, from $14 million in 2025 to $7.1 million in 2026, increasing the share of estates subject to the estate tax. The OBBBA extends and makes permanent the expanded exemption amount and increases it to $15 million per decedent, indexed for inflation annually.
The bill also included new rules regarding auto loan interest and on the business side, the bill addressed the expensing of capital and factory investments. There are many other updates in the bill and as noted, some are temporary (2025-2028).
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