What the One Big Beautiful Bill Act Means for Individuals and Small Businesses

For Individuals

1. Expanded Child Tax Credit
Families will continue to see an expanded child tax credit ($2,200) with more flexibility in claiming it based on income. This helps many households offset the rising cost of raising children.

2. A Bigger Standard Deduction
Fewer people will need to itemize their taxes thanks to a higher standard deduction:

• $15,750 for single filers
• $23,625 for heads of household
• $31,500 for married couples filing jointly

On top of this, taxpayers age 65 or older get a new $6,000 “senior bonus” deduction (or $12,000 if both spouses qualify). That’s real money back in your pocket before any other deductions even kick in.

3. Relief for Seniors
This new senior bonus deduction can also ease the tax burden on retirees who receive Social Security. Since it reduces taxable income, it may help lower or even eliminate the portion of Social Security benefits that are subject to tax. While it doesn’t change the tax thresholds for Social Security directly, it gives many retirees much-needed breathing room.

4. A Break on Tips and Overtime
If tips or overtime are a big part of your paycheck, the new law offers some relief:

• Workers in IRS-defined “customarily tipped” jobs (restaurants, salons, casinos, etc.) can deduct reported tip income, up to $25,000 per year. The deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
• Regular hourly workers can also deduct overtime income under the same cap (only the portion above their regular pay).

High earners will see this deduction phase out, but for service workers and hourly employees, it’s one of the most practical new tax breaks.

5. New Deduction for Car Loan Interest
From 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is for personal use and meets other eligibility criteria. (Lease payments do not qualify.)

• Maximum annual deduction: $10,000
• Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers)
• Qualified vehicle: A car, minivan, van, SUV, pick-up truck, or motorcycle with a gross vehicle weight rating under 14,000 pounds, and that has undergone final assembly in the United States.

6. Bigger Room for Gifting and Estate Planning
   The law significantly expands what you can give without triggering taxes:

• Annual gift limit: $19,000 per person, per year
• Lifetime exemption: $15 million per individual ($30 million per couple)

This creates opportunities for families and business owners to transfer wealth more efficiently — but it’s a good reason to revisit your estate plan to be sure you’re making the most of these changes.

7. Higher SALT Deduction
The cap on deducting state and local taxes (SALT) has increased from $10,000 to $20,000 for individuals and $40,000 for joint filers. This is particularly helpful for taxpayers in higher-tax states who were previously limited in what they could write off.

8. Charitable Giving Gets a Makeover
The Act reshapes the way charitable giving is treated for tax purposes, opening new opportunities but also adding some limits:

• Above-the-line deduction for everyone (starting 2026): Even if you don’t itemize, you’ll be able to deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash donations to charity each year.
• Cap for top earners: Beginning in 2026, the value of itemized charitable deductions will be limited to 35% — even if your tax rate is higher. High-income donors may want to consider making larger gifts in 2025 to lock in today’s higher deduction rates.
• New “floor” for deductions: Starting in 2026, individuals can only deduct charitable donations that exceed 0.5% of their adjusted gross income (AGI). Corporations face a similar 1% floor.

Implication: Charitable giving will still offer valuable tax benefits, but the timing and strategy behind those gifts will matter more than ever. Thoughtful planning — especially around the 2025–2026 transition — can help donors and businesses get the most impact for both their philanthropy and their tax bill.

For Small Business Owners

1. Expanded Bonus Depreciation
Businesses can continue to fully expense certain capital investments, making it easier to reinvest in equipment, technology, and growth.

2. Extended 20% Pass-Through Deduction
Owners of pass-through businesses (like LLCs and S-corps) will benefit from the extension of the 20% qualified business income deduction, lowering taxable income.

3. New Retirement Plan Incentives
Tax credits for setting up small business retirement plans have been expanded, making it more affordable to offer 401(k)s or similar benefits to employees.

4. Simplified Compliance
The law streamlines some IRS reporting rules for small businesses, reducing paperwork and administrative headaches.

What This Means for You

The One Big Beautiful Bill Act creates opportunities to re-evaluate your financial and tax planning — whether you’re an individual taxpayer, a retiree, or a business owner. The details matter, so it’s important to review your situation and see how these changes fit into your financial plan.

We’re here to help you make sense of the new rules and put them to work for your future.