OBBBA
On July 4, 2025 President Trump signed into law the One Big Beautiful Bill Act “OBBBA”. This law contains some relatively important provisions, and we want to keep you informed about how these changes may impact you. We have highlighted several changes for the 2025 and 2026 tax years below.
2025 Highlights
Standard Deduction: $15,750 (single filers) and $31,500 (MFJ)
Senior “Bonus” Deduction: An additional deduction of $6,000 per eligible senior (65+) (income phase-outs).
Child Tax Credit: $2,200 per qualifying child under age 17.
State and Local Tax (SALT) Deduction Cap: increased to $40,000 per tax return (income phase-outs).
Tips Deduction: An above-the-line deduction of up to $25,000 per tax return for qualified tip income (income phase-outs).
Overtime Pay Deduction: Above-the-line deduction of $12,500 ($25,000 for joint filers) for the “premium” portion of OT pay only – essentially the extra “half” in time-and-a half pay (income phase-outs).
Auto Loan Interest Deduction: Above-the-line deduction of up to $10,000 for interest on loans for new, US-assembled vehicles purchased after 12/31/24 (income and vehicle gross weight limits apply) Lease payments do not qualify. Must be for personal use only.
Energy Credits: The Energy Efficient Home Credit for insulation, windows, doors, HVAC, etc. expires on 12/31/25. Eligible home improvements must be installed by 12/31/25 to qualify for a tax credit.
2026 Highlights
Gambling Losses: Deductions for gambling losses will be limited to 90% of gambling winnings. Recreational gamblers may want to adopt session accounting for their gambling activities in 2026.
Contribution Limits: Beginning in 2026, the charitable contribution deduction included in itemized deductions will be limited to the extent the contributions exceed 0.5% of the taxpayer’s AGI.
Charitable Contribution Deduction for Non-Itemizers: Taxpayers who do not itemize may claim a deduction for charitable contributions of up to $1,000 ($2,000 for married filing joint filers). Make sure to keep charitable giving receipts even if you do not typically itemize.
Trump Accounts: Beginning July, 6, 2026, taxpayers can open these IRA-style investment accounts for children under 18. Maximum contributions are $5,000 per year. Children born after December 31, 2024 and before January 1, 2029 qualify for a one-time government contribution of $1,000 when an account is opened.
Below are additional online resources to assist you in further understanding these changes