Changes to tax year 2025
The “OBBB” Act
Changes for tax year 2025 and beyond
|
Provision |
Prior Law |
“OBBB” |
Impact |
Eligibility |
Effective Date(s) |
|
Standard Deduction |
$15,000 - single $30,000 - married |
$15,750 – single $31,500 - married |
Deduction increase of $750 pp |
All filers |
2025 |
|
Deductions for Seniors |
$1600 for 65 + |
$6,000 for 65+ Phase out after $75, 000 single, $150,000 married |
Reduces taxable income by $4,400 more than previous year, per filer |
65+ If married, must file jointly to qualify |
2025-2028 |
|
No Tax on Tips & Overtime Deduction |
N/A |
Up to $25,000 Phase out after MAGI over $150,000 |
Reduces taxable income by varied amount |
Applies only to specific jobs listed by IRS tbd October 2025. May not exceed net income |
2025-2028 |
|
Child Tax Credit |
$2000 per child |
$2,200 per child adjusted for inflation annually |
Makes the refundable portion of the additional child tax credit permanent |
At least one parent and the child must have SS #s and be eligible to work in the US |
2025 |
|
Adoption Credit |
Up to $17,280 Not refundable |
$5,000 of current credit made refundable. Adjusted for inflation annually. Phase out after MAGI $259,150 |
Makes the adoption credit partially refundable |
Child is under 18 during year of adoption or is disabled or special needs. Qualified adoption expenses as calculated on form8839 |
2025 |
|
Estate Tax Exemption |
$13.99 Million per individual, $27.98 Million per married couple |
$15 Million per individual $30 Million per married couple Automatic inflation indexing
|
Permanently increases lifetime exemption |
All filers |
Effective as of 01-01-26 |
|
Provision |
Prior Law |
“OBBB” |
Impact |
Eligibility |
Effective Date(s) |
|
Auto Loan Interest Deduction |
N/A |
Up to $10,000 deduction annually Phase out after MAGI over $100,000 single $200,000 married |
Reduces taxable income by qualifying interest |
Loan must originate after 12-31-24 Applies to NEW vehicles only Final assembly in the US |
2025-2028 |
|
State And Local Tax (SALT) |
$10,000 Cap |
$40,000 Cap 1% increase annually for inflation Phase out after MAGI over $500,000 |
Increase of deduction cap by $30,000 |
All filers itemizing deductions |
2025-2029 |
|
Pass Through Entity Tax (PTET) |
Allows pass-through entities to deduct state taxes at the entity level, bypassing the $10,000 SALT cap for owners |
Allows pass-through entities to deduct state taxes at the entity level, bypassing the $40,000 SALT cap for owners |
Increase of deduction cap by $30,000 Overpayment can be refunded or credited on future year’s personal return |
Partnerships and S-Corps |
2025-2029 |