One Big Beautiful Bill - Key Tax Law Changes

The One Big Beautiful Bill (OBBB), passed on July 4, 2025, brings several important tax law changes that will impact many taxpayers in 2026. Here’s a quick summary of the highlights:

Permanent Extensions from 2017:
Many of the tax changes introduced in the 2017 tax law are now permanent, including the Qualified Business Income (QBI) deduction and the higher standard deduction.

Energy Credits Are Expiring:
If you’ve been considering an electric vehicle purchase, note that the federal tax credit expired at the end of September 2025. Similarly, solar and residential energy tax credits expired on December 31, 2025.

Child Tax Credit Increase:
The Child Tax Credit has increased from $2,000 to $2,200 for most taxpayers.

State and Local Tax (SALT) Deduction:
Previously capped at $10,000, the SALT deduction limit has now increased to $40,000, potentially allowing more taxpayers to itemize deductions.

New Income Deductions:

• Tip income: Up to $25,000 of tip income may now be excluded.

• Overtime income: Up to $12,500 ($25,000 for joint filers) can be excluded.

• Auto loan interest: A deduction of up to $10,000 is allowed for vehicles assembled in the U.S. after 2024.

• Senior deduction: Taxpayers aged 65 or older may receive a $6,000 deduction (income limits apply).

These are some of the main changes that will affect the most people, but more guidance is still being released on implementation. As always, there are income limits and specific rules for each of these changes.

If you have questions about how these updates may affect your taxes, reach out to us—we’re here to help!