Since its passage and signing, the One Big Beautiful Bill Act (OBBBA) – from a tax perspective – will have an impact on almost every taxpayer moving forward. The main emphasis of the tax portion of the law was to make much, if not all, of the tax changes from the 2017 Tax Cuts and Jobs Act (TCJA) permanent. It goes further by implementing many additional tax provisions, some permanent and some temporary, which mainly allow taxpayers to reduce their tax bills. Although this legislation deals with much more than tax law, as CPAs, we will only discuss those tax law changes. OBBBA’s tax laws affect individuals, businesses, non-profits and governmental agencies; some affect each of those entities simultaneously. Today, we’ll cover some of the provisions of OBBBA with the broadest impact: changes for individual taxpayers.

Part One: Individuals

Tax Rates: The bill makes permanent the current tax rates, which were scheduled to rise on January 1, 2026, to the pre-2018 levels. Below is a chart showing the final OBBBA rates, compared to the rates as they would have been had the TCJA expired.

Standard Deduction: The enlarged Standard Deduction becomes permanent, with adjustments for inflation. For 2025 it increases to $15,750 for single, $23,625 for HOH, $31,500 for MFJ, and $15,750 for MFS. This Standard Deduction basically combined the smaller standard deduction with the personal exemptions beginning in 2018, eliminating personal exemptions. This was made permanent. An additional standard deduction for seniors (age 65 and over) for tax years 2025 through 2028 was added. This is in addition to the existing extra standard deduction already available to seniors, which is $2,000 for single filers and $3,200 for married couples filing jointly in 2025.

• Eligible seniors (must be 65 and older on or before the last day of the taxable year).
• Single filers – $6,000.
• Married couple where both spouses qualify – $12,000 (must file jointly to claim the deduction).
• Deduction is available for both itemizing and non-itemizing taxpayers.
• Income Limits:
  • For single filers, the full deduction is available if you modified adjusted gross income (MAGI) is up to $75,000.
  • For married couples filing jointly, the full deduction is available if your combined MAGI is up to $150,000.
  • The deduction phases out above these thresholds and is completely phased out at $175,000 for single filers and $250,000 for joint filers.
• Personal exemptions are permanently eliminated.

SALT Deduction: This provision changes by year. See below for a breakdown.

• (Tax Year 2025) Deduction cap is increased to $40,000 for those who choose to itemize rather than taking the standard deduction.
• (Tax Year 2025) Income limitations: Tax filers with a modified adjusted gross income (MAGI) of $500,000 ($250,000 for married individuals filing separately) or less can claim the full $40,000 deduction ($20,000 for married individuals filing separately). MAGI above $500,000 ($250,000 for married individuals filing separately), the deduction will be reduced by 30% of the amount exceeding the threshold but not below $10,000 ($5,000 for married individuals filing separately).
• (Tax Years 2026 – 2029) The cap and phase-out levels will increase by 1% annually.
• (Tax Years After 2029) The cap reverts to $10,000 ($5,000 for married filing separately) and becomes permanent.

Miscellaneous Itemized Deductions: Permanently eliminated after 2025. The exceptions include:

• Unreimbursed educator expenses (including those incurred by coaches for non-instructional athletic equipment) allowing them to be deducted as an itemized deduction with no specific dollar amount starting in 2026. This is in addition to the $300 above-the-line deduction.
• Active-duty military personnel will still be allowed to deduct moving expenses due to a permanent change of station.
• Armed forces reservists who travel more than 100 miles from home can still deduct unreimbursed travel expense.
• Additional limitations are placed on gambling losses. Now limited to 90% of winnings.

No Tax on Tips: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.

• “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.
• The maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.
• Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
• Taxpayer Eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
• Taxpayers mush include their Social Security numbers on the returns file jointly if married.
• IRS is to publish additional guidance by October 2.

No Tax on Overtime: Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation — that is required by the Fair Labor Standards Act (FLSA) and that is reported on a Form W-2.

• The maximum deduction is $12,500 for single filers and $25,000 for MFJ filers.
• The phaseout begins at $150,000 for single filers and $300,000 for MFJ filers.
• Available for both itemizers and non-itemizers.
• IRS will provide additional guidance concerning reporting by October 2.

QBI 199A Deduction Made Permanent: This deduction becomes permanent at 20% with phase-in thresholds from $50,000 to $75,000 for single filers and $100,000 to $150,000 for MFJ filers. Additionally, a new, minimum of $400 is introduced for taxpayers with at least $1,000 in qualified income. The threshold amounts will be indexed to inflation.

Charitable Contribution Deduction Changes: Effective for tax years after December 31, 2025, individuals who itemize can only deduct charitable contributions that exceed 0.5% of their AGI. Effective for tax years after December 31, 2025, non-itemizers can deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash contributions to public charities (excluding donor-advised funds and supporting organizations).

Child Tax Credit: The child tax credit increases to $2,200 from $2,000 effective for 2025 and will have COLA adjustments.

Child and Dependent Care Expense Credit: Beginning in 2026, eligible expenses are increased from 35% to 50%.

Trump Savings Accounts:

• Beginning in tax years after 2025 tax-advantaged savings accounts for minors, Trump Accounts, may be established.
• Deposits are limited to $5,000 per year and are not tax deductible.
• Earnings are tax deferred with qualified distributions taxed as capital gains.
• Provides for a $1,000 taxpayer funded deposit for children born in years 2026 through 2028 who are US citizens at birth.
• All beneficiaries must have a social security number.
• Employer can contribute for employee’s children up to $2,500 per year, excluded from income.

Expansion of 529 Savings Accounts: Expands the definition of qualified higher education expenses to include a broader range of costs for elementary and secondary education.

• Includes tuition, curricular materials, books, instructional materials, online education materials, limited fees for tutoring, specified testing, fees.
• Annual limit for K-12 expenses increases to $12,000.
• Permanently allows rollovers from 529 to ABLE accounts for the same beneficiary or family member.

1099K and 1099NEC Reporting:

• 1099K reporting requirements revert back to threshold amounts of $20000 and 200 transactions. It was scheduled to be $600.
• 1099NEC reporting requirements are increased to $2000 from $600.

Termination of Electric Vehicle (EV) and Other Clean Energy Credits:

• EV credits for new and used automobiles end for purchases after 9/30/25. Alternative fuel refueling property credits will remain available for electric vehicle charging stations placed in service through June 30, 2026.
• Energy Efficient Home Improvement credit eliminated after December 31, 2025.
• Residential Clean Energy credit eliminated after December 31, 2025.
• Qualified New Energy Efficient home credit eliminated for homes acquired after June 30, 2026.

Mortgage Interest and Mortgage Insurance Changes:

• For mortgages incurred after 2017, the $750,000 limit on mortgage debt is made permanent. ($375,000 for MFS filers)
• Mortgage insurance premiums deduction is reinstated and made permanent subject to income limitations of income over $100,000.

Automobile Loan Interest Deduction:

• Effective for years 2025 through 2028 for itemizers and non-itemizers.
• New vehicles only for personal use.
• Final assembly must be in the U.S.
• Limited to $10,000, and income phaseout begins at $100,000 for single filers and $200,000 for MFJ.

Part two (available here) of this series will cover items affecting businesses. If you have individual tax inquiries for our experts, contact us using the button below, or by submitting a form on the “contact us” page of our website.

Visit the IRS here, or read the full Act here from the US Congress.

This article was drafted by Bowman tax experts Dave Evans, Amber Schober, Amy Arena, and Alyssa Griffith.