Tax Law Changes 2025

Date

August 13, 2025

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Here’s a clear, presentation-friendly snapshot of the major U.S. tax law changes under the One Big Beautiful Bill Act (OBBB), signed into law on July 4, 2025:

Key Tax Law Changes

1. TCJA Provisions Made Permanent

  • The seven federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent for 2025 and beyond.
  • The increased standard deduction (almost doubled under the 2017 Tax Cuts and Jobs Act) and other TCJA features are now made permanent.

2. Child Tax Credit Increase

  • The Child Tax Credit rises to $2,200 per qualifying child, adjusted for inflation annually.

3. SALT Deduction Cap Increased

  • The cap for state and local tax (SALT) deductions jumps from $10,000 to $40,000, with phase-outs for incomes above $500,000.

4. New Deductions: Tips & Overtime

  • Allowed 2025–2028, with employer W-2 reporting:
  • No tax on tips: up to $25,000 deduction per taxpayer, phased out at higher incomes.
  • No tax on overtime: up to $12,500 deduction (single), or $25,000 (joint), with income phase-outs.

5. Senior Bonus Deduction

  • Taxpayers 65 and older get an extra $6,000 deduction (per individual; $12,000 for couples), from 2025–2028, phased out at higher incomes.

6. Additional Major Changes

  • Estate & Gift Tax Exemptions Raised: $15 million for individuals; $30 million for couples (effective 2026).
  • New Deductions & Provisions: Includes auto loan interest, charitable giving for non-itemizers (up to $1,000 individual / $2,000 couple), and limits on green energy credits expiring earlier than before.
  • Updates for Tax-Exempt Organizations: Increased excise tax on high executive compensation; new tax on investment income for private colleges.
  • International & Other Provisions: Excise tax on remittance transfers; redefined GILTI/FDII definitions and rates; clean energy incentives terminate sooner.

Quick Slide Summary Table

  • Tax Brackets- 2017 rates (10–37%) now permanent
  • Standard Deduction- Permanently higher per TCJA
  • Child Tax Credit- Increased to $2,200, inflation-adjusted
  • SALT Deduction- Cap raised to $40,000 (with phase-out)
  • Tips Deduction- Up to $25,000, 2025–2028
  • Overtime Deduction- Up to $12,500 (single), $25,000 (joint), 2025–2028
  • Senior Deduction- Extra $6,000 per senior (2025–2028)
  • Estate/Gift Tax- Exemptions increased to $15M / $30M
  • Other Add-ons- Auto loans, non-itemizer charity, energy credits cut
  • Nonprofits- Higher excise on exec pay, tax on college investment income

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