Key Aspects of the One Big Beautiful Bill Act

by the Storen Team | Jul 9, 2025 | Financial Planning, Resources, Retirement, Taxes

How will the One Big Beautiful Bill Act affect you?

The One Big Beautiful Bill Act of 2025 brings a host of changes that will sweep US tax law, affecting deductions, credits, and savings accounts across the board. To help you sift through all the legislation and ongoing updates, we’ve compiled a list of the key aspects that will impact how Americans file their 2025 tax returns.

Here are the highlights…

1) NO changes to how Social Security is taxed/ $6k deduction for seniors

• There are NO specific deductions, new income adjustments, or exemptions for Social Security. However, seniors may benefit from an additional $6,000 deduction per person 65 years and older or $12,000 per couple for those married filing jointly who are both 65 years and older.
• Effective 1/1/25 until 2028
• You will receive this even if you don’t itemize.
• Income limitations apply to those who make more than $75,000 as a single filer or $150,000 for those married filing jointly. If your income is above this amount and you are in the phase-out range, you may qualify for a partial deduction.

2) The 2017 Tax Cuts & Jobs Act income tax rates are now permanent

• Click here to learn more about this act.

3) Credits ending in 2025

• Electric Vehicle Credits end 9/30/25; qualified vehicles must be acquired by 9/30/25.
• All Home Energy Credits end 12/31/25, including Energy Improvements and the 30% Solar, Wind, and Battery Credits.

4) State and Local Tax (SALT) itemized deduction increased from $10k to $40k annually

• Effective 1/1/25
• Income limitations apply to those who make more than $250,000 as a single filer or $500,000 for those married filing jointly. If your income is above this amount, and you are in the phase-out range, you may qualify for a partial deduction.

5) Up to $25K of tip income as reported on your W-2 can be deducted from your Adjusted Gross Income

• Effective 1/1/25
• Applies to jobs that generally include tipping as a source of income such as food workers, hair stylists, valets, etc.
• Income limitations apply to those who make more than $150,000 as a single filer or $300,000 for those married filing jointly. If your income is above this amount and you are in the phase-out range, you may qualify for a partial deduction.

6) $12,500 of overtime pay deducted from Adjusted Gross Income for singles and $25,000 for those married filing jointly

• Effective 1/1/25
• A taxpayer can only deduct for qualified overtime that is reported on their W-2 by an employer.
• Income limitations apply to those who make more than $150,000 as a single filer or $300,000 for those married filing jointly. If your income is above this amount and you are in the phase-out range, you may qualify for a partial deduction.

7) New auto loan interest deduction

• Effective 1/1/25
• Includes up to $10,000 interest deduction from your Adjusted Gross Income
• Only applies to a new and personal auto purchase
• The final assembly of the auto must be in the USA.
• Money must be borrowed with the new auto as collateral.
• You must include the Vehicle Identification Number (VIN) on the tax return.
• You do not have to itemize to take this deduction.
• Income limitations apply to those who make more than $100,000 as a single filer or $200,000 for those married filing jointly. If your income is above this amount and you are in the phase-out range, you may qualify for a partial deduction.

8) New child savings account for children born after 12/31/24

• The federal government will fund these accounts with $1000.
• These funds cannot be withdrawn until the child is 18. Otherwise, there is a 10% penalty.
• Additional contributions can be made to these accounts starting July 2026.
• There is no deduction for additional contributions.
• The growth of the savings is tax-free.
• More information to come about what types of accounts these entail

9) Health Savings Account (HSA) contribution limits increased

• Will be indexed for inflation
• More information to come

10) Child Tax Credit increased from $2,000 to $2,200 per child

• Will be indexed for inflation
• More information to come

11) New charitable contribution amount deducted from your Adjusted Gross Income

• Effective 1/1/26
• Up to $1,000 deduction for those filing single and $2,000 for those married filing jointly
• You cannot take this deduction and itemize as well.
• You must keep your receipts for these.
• Public 501(c)(3) nonprofit organizations only

12) The Child and Dependent Care Credit percentage increased

• Effective 1/1/26
• The percentage of the credit on the first $3000 spent per child increased from 35% to 50%.
• Section 129 plan for employees’ dependent care deducted from your paycheck has increased to $7,500 annually.
• Income limitations apply to those who make more than $75,000 as a single filer or $150,000 for those married filing jointly. If your income is above this amount and you are in the phase-out range, you may qualify for a partial credit.

13) Federal estate exemption increased to $15 million permanently

• Effective 1/1/26
• More information to come

As the One Big Beautiful Bill Act continues to be fleshed out, more information about the timeline of these changes and other corresponding details will circulate on the internet and in the media. We know you will have many questions, so please be assured that we’ll continue to provide relevant updates and resources to keep you informed and give you peace of mind. Our utmost priority is making sure that you feel financially capable of understanding the ever-changing shifts in our economy.

Have questions about this bill? Or interested in a consultation to further discuss the details? Click here to contact us now. Or click here to learn more about our Tax, Business, and Financial Planning & Investment services.

Want to learn more? Here are additional resources for you…

The One Big Beautiful Bill: Legislation for Historic Prosperity and Deficit Reduction – The White House 
“One Big Beautiful Bill Act” Tax Policies: Details and Analysis – The Tax Foundation 

Blog by Greg Storen, MBA – President/ CEO, Advisory Services Director

Learn more about Greg and the rest of the Storen Financial team here.