ARTICLE | July 09, 2025

Introduction and Context

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), marking a historic moment in tax legislation. Rooted in the need to extend and expand many provisions of the earlier Tax Cuts and Jobs Act (TCJA) of 2017, OBBBA aims to create a more comprehensive and permanent tax framework for individuals and families. While it carries over many of the familiar features of the TCJA, it also introduces new deductions and adjustments that promise to reshape the way Americans plan their taxes. Compared to its predecessor, OBBBA not only simplifies parts of the tax code but also broadens several credits and thresholds, offering new opportunities for taxpayers to strategize and save.

This article summarizes some of the most significant individual tax changes found in OBBBA. As you read on, you will learn about various expanded deductions, brand-new credits, and important threshold increases that could affect your year-end planning, as well as your long-term strategies for retirement, estate planning, and family finances. Finally, we discuss how our team at Larson Gross assists individuals and families in effectively leveraging these new rules, ensuring each client capitalizes on the legislation’s benefits.

Making Sense of the OBBBA’s Individual Tax Provisions

The OBBBA delivers substantial changes touching nearly every aspect of individual taxation. While some provisions lock in the lower rates introduced by the TCJA, others create new, specialized deductions aimed at helping seniors, families with children, tipped workers, and more. Here’s a closer look at how these elements come together.

A. Extended and Permanent Individual Tax Rates

Under the TCJA, the top rates for individuals were scheduled to expire after 2025, which would have caused tax brackets to revert to higher levels. Instead, OBBBA locks in the existing rate brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% indefinitely. In practical terms, this assures taxpayers that the rules they’ve grown accustomed to since 2017 will not suddenly disappear, and future inflation adjustments will gradually push bracket thresholds upward.

B. Standard Deduction Increases and Revisions

One of the hallmarks of the TCJA was a nearly doubled standard deduction. OBBBA solidifies and augments that benefit by permanently increasing the standard deduction beginning in 2025. Filers will see a higher base deduction of $15,750 for singles, $23,625 for heads of household, and $31,500 for married couples filing jointly. These figures will continue to rise with inflation, allowing many individuals to deduct a larger portion of their income without itemizing. In addition, because portions of OBBBA are retroactive to 2025, taxpayers will feel these changes rather quickly in their annual filing routines.

C. SALT Deduction Cap Expansion

The State and Local Tax (SALT) deduction was capped by the TCJA at $10,000, a limitation that many high-tax state residents found burdensome. OBBBA significantly raises that cap to $40,000 beginning in 2025, with a modest 1% annual increase through 2029. However, taxpayers with incomes above a certain threshold (starting around $500,000) may see a phase-down in the available SALT deduction. By 2030, the original $10,000 cap is set to return, though there is a possibility that future legislation may shift this deadline again.

D. The Senior Deduction

With an eye toward supporting older Americans, OBBBA implements a temporary extra deduction for those aged 65 and older. From 2025 through 2028, qualifying individuals can claim an additional $6,000 as a deduction (and married couples can effectively double that). The benefit phases out for seniors whose incomes surpass certain thresholds, so it pays to plan carefully to capture the maximum opportunity during this limited-time window. For those who meet the criteria, this deduction can significantly lower taxable income in retirement years.

E. Child Tax Credit Adjustments

Families with children under age 17 will appreciate OBBBA’s bump to the Child Tax Credit, which climbs to $2,200 per qualifying child. That’s up from the prior $2,000 limit under the TCJA. The legislation also maintains the higher phaseout thresholds that were introduced in 2017, reducing the risk of partial or complete credit disqualification for families with moderately higher incomes. Annual inflation adjustments build more predictability for parents anticipating bigger family costs in the coming years.

F. Deductions for Tips, Overtime, and Car Loan Interest

In an effort to grant targeted tax relief, OBBBA includes temporary deductions for specific categories of earnings that have historically been given less attention in the tax code.

If you work in a tipped industry (such as hospitality) and meet the income qualifications, you can deduct up to $25,000 in qualified tip income from 2025 through 2028. Meanwhile, many employees who rely on overtime pay qualify for an above-the-line deduction of up to $12,500 ($25,000 for married filing jointly). Like the tip deduction, this provision also runs from 2025 through 2028. Both deductions phase out above certain income thresholds, making it important to confirm your eligibility each year.

Additionally, taxpayers purchasing a U.S.-assembled car, truck, or motorcycle may enjoy a deduction of up to $10,000 on interest from loans taken out between 2025 and 2028. Since this deduction is subject to both phaseouts and vehicle criteria, you will need to ensure you meet the guidelines before counting on it.

G. Estate and Gift Tax Changes

Those engaged in estate planning will see that OBBBA preserves a higher estate and gift tax exemption—specifically, $15 million per individual and $30 million for married couples—permanently starting in 2026. This is a substantial shift from the prior schedule that would have significantly reduced these thresholds. Private wealth advisors often recommend that individuals with estates approaching or exceeding these values reevaluate their estate plans to confirm whether new gifting or trust strategies are now advantageous.

H. Charitable Contributions and the New “Floor”

To encourage philanthropy while preventing what some call “over-deduction” spurts, OBBBA creates a 0.5% “floor” for itemizing charitable contributions. Essentially, you must surpass this threshold of your income in charitable giving to see the typical deduction benefits. At the same time, non-itemizers can claim a small above-the-line deduction (up to $1,000 for single filers or $2,000 for joint filers). The end result is that casual donors still receive recognition for their contributions, while more sophisticated givers can implement strategic philanthropic plans, possibly pairing it with donor-advised funds or other structures to maximize their total tax benefit.

I. Expanded 529 and Trump Accounts

In keeping with a growing emphasis on education, OBBBA expands the types of expenses you can pay for from a Section 529 plan. Families can now use 529 funds on a broader range of K–12 and specialized education expenses, building more flexibility into the accounts’ use.

Perhaps the most novel addition is the “Trump Account,” a new savings vehicle designed to help children start off with a financial foundation. From 2025 to 2028, newborns qualify for a one-time $1,000 government contribution. Parents may then deposit up to $5,000 annually per child, with account proceeds eventually available for tuition, entrepreneurial pursuits, or even a first home purchase once the child comes of age. For families planning well ahead, these accounts can dovetail with 529s and other college saving tools to build a robust financial launchpad.

Phased-Out or Repealed Clean Energy & Other Credits

While OBBBA is predominantly about “giving” in the form of lower tax rates and new deductions, it does scale back certain energy-related incentives. Tax credits for solar installations, alternative fuel vehicles, and various other clean-energy projects are either accelerating their scheduled expiration dates or disappearing altogether. Individuals who have been weighing the installation of solar panels or an energy-efficient home improvement may want to confirm that they duck in under the cutoff if they wish to claim any remaining credits.

Additionally, some prior miscellaneous deductions remain eliminated or curtailed. For instance, moving expenses remain non-deductible for most taxpayers. Any major relocation or energy-related improvement you plan should factor these new realities into your cost-benefit calculations.

For reference, here is a table showcasing the looming expiration dates of the credits affected:

Holistic Planning Strategies for Individuals

As with any landmark piece of legislation, wise tax planning under OBBBA goes far beyond checking off a few boxes. In many cases, it involves a synchronized effort involving year-end strategies, retirement adjustments, and even short-term decisions around vehicle purchases or extra hours on the job.

For example, you might cluster charitable giving in strategic years to exceed the charitable floor or reposition your estate plan to take advantage of the higher lifetime gift and estate exclusions. Meanwhile, if you depend heavily on tips or overtime, you may need to monitor your income carefully to remain under the deduction’s phaseout range.

Families can also reevaluate their education savings approach, capitalizing on the expanded 529 rules and possibly layering in Trump Accounts for children born in the next few years. Thoughtful coordination among your tax adviser, financial planner, and (for estate considerations) legal counsel often sets the stage for the most effective use of the new OBBBA provisions.

How Larson Gross Can Help

With major tax laws, the details matter. At Larson Gross, our Individual & Business Tax Planning service extends far beyond preparing your returns. We guide you through each stage of OBBBA to ensure you take advantage of all relevant deductions, avoid pitfalls, and customize an approach that aligns with your life goals. Here’s how we can assist:

• Provide a comprehensive review of your current tax strategy, identifying which OBBBA provisions yield the most savings for your particular circumstances.
• Offer year-round advisory services to help plan timing of income, charitable contributions, investments, and other key moves for maximum benefit under the new legislation.
• Collaborate with your estate attorney or financial planner to incorporate the higher exemptions and new savings vehicles into an integrated financial plan.
• Analyze how potential changes in employment income (tips, overtime) or personal life transitions (marriage, retirement, home purchases) can affect eligibility for these newly available deductions and credits.

We know every individual or family has a unique set of circumstances and aspirations. Our goal is to demystify the complexities of OBBBA so you can direct more energy toward the things that truly matter—whether that’s family, career, hobby pursuits, or charitable enterprises. Larson Gross brings years of hands-on experience to help you cultivate a tailored strategy under the new rules.

Conclusion and Next Steps

The One Big Beautiful Bill Act signals a permanent shift in the federal tax landscape. With its fresh deductions for tips and overtime, expanded child tax credits, and new vehicles like Trump Accounts, there is an opportunity for everyone to rethink their personal finances in ways both big and small. Some provisions are broad-ranging and permanent, while others have a defined window—so recognizing deadlines and thresholds is crucial.

If you have questions on how these OBBBA provisions can specifically impact you, we encourage you to schedule a consultation. Our tax professionals at Larson Gross are ready to help you craft a personal plan that accounts for all the moving pieces, whether it’s your year-end tax strategy, a college savings plan for your newborn, or a more sophisticated approach to your estate and charitable giving. We stay abreast of new Treasury regulations and IRS guidance, ensuring you remain compliant while seizing every opportunity OBBBA presents.

To learn more about how Larson Gross can assist with your individual and family tax needs, reach out and let us guide you to a more secure financial future under the OBBBA era.