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1. TCJA Tax Brackets Are Now

Permanent

• As a result of the Tax Cuts and Jobs Act of 2017 (TCJA), federal income tax brackets were reduced.
• Prior to the OBBBA passing, tax brackets were set to revert to the previously higher brackets, but have now been made “permanent”.

2. Standard Deduction Increased

& Made Permanent

• The higher standard deduction from the TCJA is made permanent, is increased beginning in 2025, and is indexed for inflation going forward.
• Single: $15,750 (increased from $15,000)
• Head of Household: $23,625 (increased from $22,500)
• Married Filing Jointly (MFJ): $31,500 (increased from $30,000)

3. New $6,000 Personal Exemption

for Age 65+ (2025–2028)

• This is the part of the bill that was touted as “no tax on Social Security” and is only effective 2025-2028.
• Each taxpayer age 65 or older will receive a new $6,000 additional deduction (a married couple filing jointly would receive up to $12,000 if both spouses are age 65 or over).
• This benefit phases out for Adjusted Gross Income (AGI) of $150,000-$250,000 for MFJ and $75,000-$175,000 for other filers.

4. Deduction of up to $25,000 of

Tip Income

• This is what was known as ‘no tax on tips’.
• Only in years 2025-2028, up to $25,000 per person of tip income can be excluded from federal income tax.
• FICA (Social Security & Medicare) taxes are still due on this income
• Eligibility for this deduction phases out between MAGI of $300,000-$550,000 for MFJ and $150,000-$400,000 for other tax filers.

5. Deduction of up to $25,000 of Overtime

Income

• This is what was known as ‘no tax on overtime’.
• Only in years 2025-2028, up to $25,000 for MFJ / $12,500 for other tax filers of overtime income can be excluded from federal income tax.
• FICA (Social Security & Medicare) taxes are still due on this income
• Eligibility for this deduction phases out between MAGI of $300,000-$550,000 for MFJ and $150,000-$400,000 for other tax filers.

6. State and Local Tax (SALT)

Deduction Increase

• The SALT deduction cap increased from $10,000 to $40,000 for 2025-2029, and increases by 1% annually.
• The SALT deduction limit phases out between AGI of $500,000-$600,000, with a minimum limit of $10,000 for those with AGI of $600,000+.

7. Charitable Deductions for

Taxpayers Who Do Not Itemize

• Beginning in 2026, taxpayers who do not itemize can claim a deduction for charitable contributions of $2,000 for MFJ / $1,000 for other filers.
• This deduction is only available for cash contributions to charity.

8. Charitable Deductions for

Taxpayers Who Do Itemize

• For those taxpayers who do itemize, there will now a 0.5% AGI floor before you’re eligible to deduct charitable contributions beginning in 2026.
• For example, if your AGI is $100,000 and you make $1,000 in qualified charitable contributions, 0.5% of your AGI would be $500, so only $500 (the amount above the 0.5% floor) would be eligible to be included as an itemized deduction.

9. Auto Loan Interest Deduction

• The auto loan interest deduction is only available in years 2025-2028.
• It provides a maximum deduction of $10,000 of interest paid, without needing to itemize, for vehicles assembled in the USA.
• Eligibility for this deduction phases out between MAGI of $200,000-$250,000 for MFJ and $100,000-$150,000 for other tax filers.

10. Electric Vehicle Tax Credit Ending

• Federal tax credits for electric vehicles end after September 30, 2025.

11. Child Tax Credit Increase

• The child tax credit increases to $2,200 in 2025 and adjusts for inflation.

12. Dependent Care FSA Contribution

Limit Increase

·       The Dependent Care FSA contribution limit increases to $7,500 in 2026.

13. Health Savings Account (HSA)

Eligibility Expansion

·       Bronze & Catastrophic ACA Plans will be eligible for HSA contributions beginning 2026.

14. Affordable Care Act (ACA)

Marketplace Subsidies Not Extended

• ACA Marketplace subsidies are reverting to how they worked before the ARPA and IRA enhanced subsidies were enacted – the payment cap of 8.5% of income will be eliminated and the ‘subsidy cliff’ will be back in play.
• Beginning 2026, those whose MAGI is above 400% of the Federal Poverty Line will no longer be eligible for tax credits.

15. ‘Trump’ Savings Accounts for

Individuals Under Age 18

• There are still a ton of questions around this and I imagine there will be clarification from Congress and the IRS on how these will actually work.
• Tax-advantaged account for those under age 18.
• Contributions not allowed until July 4, 2026 and are limited to $5,000/year until the beneficiary turns age 18.
• The government will fund the account with $1,000/year for children born between 2025-2028.
• Distributions are not allowed before age 18 and are taxed like IRA distributions.

Changes That Affect Business Owners & Entrepreneurs

16. Qualified Business Income

Deduction (QBI) Made Permanent

• The QBI deduction remains at 20% of qualified business income (it was set to expire on December 31, 2025).
• The income limits to be eligible for the QBI deduction remain the same with the phase-out ranges starting at $394,600 (MFJ) and $197,300 (all others).
• Beginning in 2026, the phase-out ranges increase from $75,000 to $150,000 (MFJ) and from $50,000 to $100,000 (all others).

17. 100% Bonus Depreciation Reinstated

• Previously set to phase out by 2027, 100% bonus depreciation has been restored for qualified assets placed into service on or after January 20, 2025.

18. Section 179 Deduction Expanded

• Effective in 2025, the maximum equipment deduction increases from $1M to $2.5M with phase-out as the cost of property exceeds $4M.

19. Qualified Small Business Stock

(QSBS) Gain Exclusion Enhanced

• Capital gains that can be excluded under QSBS increase from $10M to $15M (greater of $15M or 10x basis).
• Partial exclusions are now available beginning with a 50% exclusion at 3 years, 75% exclusion at 4 years, and 100% exclusion at 5 years.
• Gross assets of the business for qualification cap increases from $50M to $75M.