Bird's Eye View of the (887-Page) One Big Beautiful Tax Bill

On the nation's 249th birthday, President Donald J. Trump officially signed The One Big Beautiful Bill into law.

I've studied up on this massive piece of legislation and offer this synopsis in case you were wondering what it's about and what it means for Americans and American businesses:

• The highest of seven (now permanent) tax rates for individuals remains at 37%.

• The new standard deduction for single and married couples who file jointly is now $15,550/$31,500 beginning in 2025 (adjusted annually for inflation).

• The much ballyhooed state and local tax deduction (SALT) is now $40,000 vs. $10,000 and will increase by 1% annually (but only through 2029 when it adjusts back to $10,000). During its  2025-2029-year life, it will also start phasing out when annual income exceeds $500,000.

• The new minimum child tax credit for 2025 is $2,200 versus the old $2,000 (adjusted annually for inflation). The bill makes permanent the existing income phaseout thresholds of $200,000 for individuals and $400,000 for joint filers.

• Beginning in 2026, the estate tax threshold will increase to $15 million (adjusted annually for inflation).

• Taxpayers who take the standard deduction can now get a charitable deduction of up to $1,000 for single filers and $2,000 for joint filers beginning in 2026 (itemizers will only be able to deduct amounts above 0.5% of their adjusted gross income).

• Taxpayers can now deduct up to $10,000 in interest on new car loans during the period 2025-2028 - but only for U.S.-assembled cars, vans, pickup trucks and motorcycles. This deduction phases out for single taxpayers with income exceeding $100,000 and joint filers with income exceeding $200,000.

• For the period 2025-2028, the new law includes tax deductions for people who earn tip income (capped at $25,000) and work overtime (capped at $12,500 for single filers and $25,000 for joint filers). The deductions phase out above income thresholds of $150,000 for single filers and $300,000 for joint filers.

• The tax law affects Social Security, but it doesn’t change its taxation. It simply includes a temporary bonus deduction for seniors of $6,000 for the period 2025-2028.

• For those with 529 plans, beginning in 2026 the new law doubles the annual limit to $20,000 for K-12 “covered expenses” that can be taken tax-free (to include tutoring, books and supplies, and fees for AP, SAT, or ACT tests). Original 529 funds were for “covered” college expenses only.

• The new law totally eliminates the claiming of a federal tax credit for buying or leasing a new or used electric vehicle - up to $7,500 - for car purchases after September 30, 2025. It also eliminates tax breaks for homeowners adding solar panels or making energy-efficient home improvements such as insulation after December 31, 2025.

  
  

NOTE: The failure to pass this legislation would have effectively resulted in a huge federal tax increase on the American people.

The White House's website has a handy "Tax-Free Tips & Overtime Calculator" and an interactive map that summarizes how much individuals and businesses will save based on where you live (state). Check it out!