Quick Overview: What Is the “One Big Beautiful Bill”?
Signed into law on July 4, 2025 (Public Law 119-21), this sweeping legislative package makes many of the 2017 tax law changes permanent, adds some new goodies and temporary benefits; particularly for individuals, families, and small-business owners. I've highlighted the most relevant items for the average taxpayer below; See what might impact you, and get in touch if you want personalized guidance.
✨ What Matters for Your 2025 Tax Return (filed in 2026):
Some changes apply right away retroactively to tax year 2025:
“No-tax” on tips and overtime:
- You may deduct qualified tips and overtime income, offering potential savings this year.
- These deductions are temporary and only available through 2028.
Standard deduction stays higher:
- The nearly doubled standard deductions remain, with a boost
- +$1,000 for singles, +$2,000 for married filing jointly in 2025–2028.
- +$1,000 for singles, +$2,000 for married filing jointly in 2025–2028.
- The nearly doubled standard deductions remain, with a boost
📌 Planning Note on Charitable Giving
- Beginning in 2026, a new 0.5% “floor” will apply before contributions can be deducted.
- Making contributions before year-end, 2025 could maximize your deduction under the current, more favorable rules.
- Making contributions before year-end, 2025 could maximize your deduction under the current, more favorable rules.
- Beginning in 2026, a new 0.5% “floor” will apply before contributions can be deducted.
📌 Energy & Vehicle Credits Ending after 2025
- Clean Vehicle Credits: End for purchases after Sept. 30, 2025
- Home Energy Credits: Credits for energy-efficient upgrades (windows, doors, HVAC, etc) end for property placed in service after Dec. 31, 2025.
🔮Starting in 2026 and Beyond:
Tax Rates & Deductions: Permanent Changes
- Individual tax brackets from the 2017 Tax Cuts and Jobs Act are now made permanent, avoiding the "tax hike" that was coming in 2026.
- Standard deduction remains elevated permanently ($15,750 for singles & $31,500 for married filing jointly in 2025), indexed for inflation.
- QBI Deduction (20% pass-through deduction) is permanent, with thresholds adjusted so more small business owners qualify.
- Student loan discharge due to death or disability now permanently excluded from gross income.
Family Benefits
- Child Tax Credit: Permanently increased to $2,000 per child, with more of it refundable.
- Dependent Care Credit: More generous limits for childcare expenses (important for working parents).
State & Local Tax (SALT) Deduction (Schedule A, deductible Property & Income Taxes)
- SALT cap raised to $40,000 in 2025
- Cap is gradually indexed through 2029, but drops back to $10,000 starting in 2030.
Homeowner & Borrowing Benefits
- Mortgage interest deduction expanded: interest can be deducted on acquisition debt up to $1 million (instead of reverting back to $750k).
- Mortgage insurance premiums are deductible as qualified residence interest.
- Home Equity Lines of Credit (HELOC) interest is deductible only if used for home improvements.
Charitable Giving
- Non-Itemizers: New permanent charity deduction even if you take the standard deduction
- Up to $1,000 (single) / $2,000 (married filing jointly).
- Itemizers:
- 60% AGI limit for cash gifts made permanent
- 0.5% AGI “floor” applies before deductions count.
- Corporations:
- Deductions capped at 10% of taxable income with a 1% floor.
- Deductions capped at 10% of taxable income with a 1% floor.
- Non-Itemizers: New permanent charity deduction even if you take the standard deduction
Temporary Additional Deductions & features:
- Tip & overtime deductions continue through 2028.
- Auto loan interest deduction: up to $10,000/year for U.S. assembled cars bought between 2025–2028.
- Senior deduction: a temporary (through 2028) up to $6,000 deduction for seniors; phased out with income
- “Trump Accounts”: Government seeds $1,000 in tax-favored savings accounts for newborns (2025–2028).
Gambling Losses
- Starting 2026, gambling losses are limited to 90% of your wins; previously up to 100% of wins.
- Starting 2026, gambling losses are limited to 90% of your wins; previously up to 100% of wins.
New Reporting & Taxes
- 1099 thresholds rising:
- 1099-MISC/NEC threshold rises from $600 to $2,000.
- Starting 2026, payment apps must report transactions if over 200 transactions or $20,000.
- 1099 thresholds rising:
✅ Wrapping It Up
The "Big Beautiful Bill" doesn’t slash taxes compared to what you’re paying now, but it keeps today’s lower rates and higher deductions permanent while adding some practical benefits for families, homeowners, and small business owners.
👉 For a full list of provisions (including some more technical changes), you can visit the University of Illinois Tax School summary here or view the bill, in entirety, here.