One Big Beautiful Bill Overview

Tax Rates

The One Big Beautiful Bill (OBBB) permanently maintains the tax rates set by the 2017 Tax Cuts and Jobs Act (TCJA), which are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Deductions and Credits:

Standard Deduction

The standard deduction for the 2025 tax year has been adjusted to:

• Single: $15,750
• Married Filing Jointly (MFJ): $31,500
• Head of Household (HOH): $23,625

Additional Tax Deduction for Seniors (65+)

• The OBBB allows taxpayers aged 65 or older to deduct an additional $6,000 from their taxable income from 2025 through 2028.
• The deduction phases out at a 6% rate for:
  • Individual filers with income over $75,000
  • Joint filers with income over $150,000

• The deduction fully phases out at:

  • $175,000 for individual filers
  • $250,000 for joint filers

Charitable Donation Deduction for Non-Itemizers

• Beginning in 2026, non-itemizers can claim a charitable deduction of up to:

• $1,000 for single filers
• $2,000 for joint filers

State and Local Tax (SALT) Deductions

The SALT deduction is a federal tax provision that allows taxpayers to deduct certain state and local taxes, such as property taxes and either income or sales taxes, from their federal taxable income. The following changes have been updated:

• 2025: Cap increased to $40,000 ($20,000 if married filing separately)
• 2026: Cap increased to $40,400 ($20,200 if married filing separately)
• 2027–2029: Increases by 1% annually over the prior year
• 2030: Reverts to $10,000 ($5,000 if married filing separately).
  
  Phase-down for taxpayers with modified AGI (but not below $10,000 ($5,000 MFS)

• 2025: Begins phasing down for AGI over $500,000 ($250,000 for MFS)
• 2026: Threshold increases to $505,000
• 2027–2029: Threshold increases by 1% annually
• There is a phasedown of the cap for households with incomes at or above $500,000. Specifically, the deduction phases down by 30% until it reaches $10,000. The threshold $500,000 amount will increase by 1% each year.

Qualified Business Income (QBI) Deduction

• The 20% QBI deduction is now made permanent.
• The phase-in income limits have increased to:
  • $75,000 for individual filers
  • $150,000 for married filing jointly (MFJ) filers
• A new minimum deduction of $400 is introduced for taxpayers with at least $1,000 of QBI from an active trade or business.
• This minimum deduction amount will be adjusted for inflation.

Child Tax Credit

• Beginning in 2025, the increased child tax credit amount is made permanent.
• The One Big Beautiful Bill (OBBBA) raises the nonrefundable child tax credit to $2,200 per child.
• Starting in 2026, the credit amount will be adjusted annually for inflation.

Exemptions and Phaseouts: 

Estate Tax Exemption

• Beginning in 2026, the One Big Beautiful Bill Act (OBBBA) permanently increases the estate and gift tax exemption to:
  • $15,000,000 per individual
  • $30,000,000 for married filing jointly (MFJ)
• These exemptions will be adjusted annually for inflation.

Alternative Minimum Tax (AMT) Exemption

• $500,000 per individual
• $1,000,000 for married filing jointly
• When the AMT income reaches the exemption threshold, the new law increases the AMT exemption phaseout rate to 50% of the dollar amount above the threshold, compared to the current 25%.

Itemized Deductions Pease Limitation (Phaseout of Itemized Deductions)

• Beginning in 2026, the Pease limitation is repealed.
• A new limitation now applies, reducing all itemized deductions (including SALT) by 2/37 of the lesser of:

  • Total itemized deductions, or

  • The amount of taxable income exceeding the 37% bracket threshold