July 9, 2025 - Important Tax Updates: One Big Beautiful Bill Act (OBBBA)

Important Tax Updates: One Big Beautiful Bill Act (OBBBA)

We’re sharing an important update on how the recently passed One Big Beautiful Bill Act (OBBBA) may affect your taxes and planning strategies, both this year and in the years ahead.

No Immediate Action Required (With a Few Exceptions)

Most of the tax changes introduced by OBBBA apply to the 2025 tax year or later. However, there are a couple of time-sensitive items to be aware of:

Electric Vehicle (EV) Tax Credits now expire on September 30, 2025.

Home Improvement and Residential Clean Energy Credits will expire at the end of 2025.

If you’re considering taking advantage of either of these credits, we recommend beginning the process soon. Please let us know if you do, so we can update your tax planning accordingly.

Key Tax Changes to Know

       Tax brackets remain unchanged.

       New above-the-line deductions include:

•  Up to $25,000 in untaxed tips (subject to income limits).
•  Up to $12,500 in untaxed overtime pay (also income-limited).
•  Up to $10,000 deduction on car loan interest for qualifying US-built vehicles purchased between 2025–2028.
•  Charitable deductions of $2,000 (married filing jointly) or $1,000 (all others) for non-itemizers.

Standard Deduction Increases

       All filers: $750 increase starting in 2025.

       Seniors (65+) or blind:

•  Additional $3,200 (married filing jointly) or $2,000 (all other filers).
•  Plus, a bonus $6,000 deduction per person (phased out at $150,000 AGI for joint filers, $75,000 for others) from 2025 through 2028.

SALT Deduction Cap Raised

       The State and Local Tax (SALT) deduction cap increases to $40,000 from 2025 to 2029.

       Phaseout begins at $500,000 AGI.

       The minimum deduction remains $10,000.

Planning Ahead: Accounts for Minors

Starting July 2026, a one-time $1,000 credit to an account per child born between 2025 and 2028 will become available. We’ll provide more guidance as the rules are finalized.

Estate and Education Updates

       The Federal Estate Tax exemption will increase from $13.99M to $15M in 2026.

       Education funding changes:

•  Pell Grants can now be used for short-term job training programs.
•  Grad PLUS Loans are being eliminated.
•  Parent PLUS Loans are capped at $65,000per student.
•  Private colleges with large endowments will face a higher tax (up to 8% or more), while public institutions are unaffected.

Final Thoughts

This nearly 1,000-page bill was just signed into law, and we expect further clarification in the coming months. If you have questions about how these changes may affect your personal situation, please don’t hesitate to reach out. We also welcome referrals—if friends or family are wondering how these changes might impact them, we’re happy to help.

As always, we’re here to help you navigate these complicated changes and optimize your tax strategy.

Wishing you a wonderful summer,

The Bond&Devick Team