Tax Strategies & Credits

US'🇸 2025 Tax Reform: What the “One Big Beautiful Bill” Means for You

by
ANIL GRANDHI
on
8/12/2025

The recently enacted One Big Beautiful Bill (OBBB) has introduced sweeping changes to the U.S. tax code—many of which are designed to lock in favorable provisions before the previous tax laws expire in 2026. While most of the updates take effect from January 1, 2026, several key changes apply retroactively to your 2025 tax return.

Whether you're a working professional, family, retiree, or business owner, these adjustments will likely affect how much you owe—or how much you save—on your next return.

Key Tax Updates for Individuals & Families (2025–2026)

Here’s what’s changing for everyday taxpayers:

âś… Tax-Free Tips & Overtime Income

Up to $25,000 in tips and $12,500 in overtime income will be tax-exempt for individuals earning under $150,000 (or $300,000 for married couples).

Designed to benefit workers in hospitality, retail, and service industries.

âś… Enhanced Standard Deduction

Increased to $15,750 (Single), $23,625 (Head of Household), and $31,500 (Married Filing Jointly) for 2025, with annual inflation adjustments going forward.

âś… Increased Child Tax Credit

Boosted to $2,200 per qualifying child, with expanded eligibility and refundability.

âś… Senior Tax Break

Taxpayers aged 65+ may claim an extra $6,000 deduction between 2025–2028, subject to income thresholds.

âś… New Vehicle Interest Deduction

Taxpayers purchasing U.S.-made vehicles can deduct up to $10,000 in loan interest, phased out above $100K/$200K income levels.

✅ Trump Savings Accounts (Children’s Future Fund)

A unique, tax-advantaged account for children born between 2025–2028, with a $1,000 starter credit and investment growth similar to a Roth IRA. Funds can be used for education, first-time home purchase, or starting a business.

âś… Expanded SALT Deduction

The State and Local Tax deduction cap increases to $40,000 from 2026–2029, giving relief to high-tax state residents.

Additional Benefits

Adoption Credit: Refundable up to $5,000, adjusted annually for inflation.

529 Plan Flexibility: Funds can now cover K–12 education, job certifications, and dual enrollment programs.

HSA Enhancements: Medicare-eligible seniors can now contribute. Fitness costs and direct primary care may qualify.

Business Tax Updates (Starting 2025)

small business owner If you’re a small business owner or self-employed, there’s good news:

-100% Bonus Depreciation restored

-Section 179 Expensing Limit increased

-R&D Expenses now fully deductible in the year incurred

-QBI Deduction (20%) made permanent

-Childcare Credit for Employers: Increased to 40–50% with eligible expenses up to $600,000

-Paid Family Leave Credit extended permanently

-1099-K Threshold raised, easing reporting burdens for freelancers

Inflation-Adjusted Brackets & Phaseouts (2025–onward)

As part of broader tax modernization:

-Income tax brackets will expand yearly to account for inflation

-The AMT (Alternative Minimum Tax) exemption now adjusts automatically

         -For 2025: $88,100 for individuals, phasing out at $626,350

-IRA Deduction Phaseouts now begin at higher income levels:

         -Single: $79,000–$89,000

         -Married Filing Jointly: up to $146,000 (or $246,000 in certain cases)

How to Prepare Now for 2025–2026

With many deductions and credits set to phase in or out over the next two years, proactive tax planning is essential. AG FinTax recommends:

-Maximizing contributions to retirement and HSA accounts before year-end

-Reviewing your filing strategy in light of the updated brackets

-Exploring new deductions tied to vehicle purchases, children, and savings plans

-Leveraging updated SALT and family-based credits to lower your tax bill

AG FinTax: Your Expert Guide Through Every Tax Change

At AG FinTax, our mission is to translate tax law into clear, actionable strategies that protect your income and grow your wealth. With the 2025 tax landscape evolving fast, we offer:

âś… Full-service tax planning and filing handled by licensed experts

âś… Personalized financial checkups and tax planning sessions

âś… Ongoing support for small businesses, self-employed pros, and families

Whether you want someone to file on your behalf or just need advice while doing it yourself, our team is here to help you navigate confidently.

Let’s Get Started

File confidently with AG FinTax Live Full Service

Or get step-by-step guidance with AG FinTax Live Assisted

Visit www.agfintax.com to learn more or get started today.

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ANIL GRANDHI

ANIL GRANDHI

AG Fintax
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Texas

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