Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) brings significant tax changes for individuals, families, and small businesses. Whether you earn wages, run a business, or rely on retirement income, these updates could affect how you plan for the year ahead. Here's what you should know now to prepare for the 2025 tax season and beyond.
What the OBBBA Changes for Individuals and Families
OBBBA extends and expands several tax provisions that were set to expire. Most notably, it makes the 2017 Tax Cuts and Jobs Act's personal income tax rates and standard deduction permanent.
The standard deduction is now set at $15,750 for single filers and $31,500 for married couples, with future increases tied to inflation. If you usually take the standard deduction rather than itemizing, this change could simplify your return and reduce your taxable income.
Several new deductions were also introduced:
- A "no tax on tips" deduction allows up to $25,000 in reported tips to be excluded from income through 2028.
- A deduction for overtime earnings allows workers to deduct a portion of their extra pay, capped at $12,500 for individuals or $25,000 for couples.
- Older adults receive a new "senior bonus deduction" of up to $6,000, available in addition to the standard deduction.
- If you purchased an electric vehicle with a qualifying loan, you may be eligible to deduct interest paid, up to $10,000.
These changes are meant to support working individuals, families, and seniors, but each deduction comes with specific eligibility rules. Income limits, timing, and documentation requirements all apply.
Business Owners Have New Opportunities Too
Small business owners will see changes as well. The 20% pass-through income deduction under Section 199A is now permanent. This benefit was previously set to expire, so the extension allows more certainty in long-term tax planning.
In addition, businesses can now expense 100% of certain capital investments in the year they are made. If you've invested in technology, equipment, or infrastructure this year, these provisions may offer new ways to reduce your tax burden.
Why Planning Ahead Matters
These changes are broad, but they won't apply the same way to everyone. You may qualify for several new deductions (or none at all) depending on your income, how you earn it, and what steps you take before the end of the year.
Planning ahead means reviewing your current income, expenses, and any major life changes that could impact your eligibility. If you've worked extra hours, received large tips, or made a big purchase like an EV, now is the time to gather that documentation and ask how it may affect your return.
FAQs
Do the new deductions apply every year?
Most of the new deductions, including tips, overtime, EV interest, and the senior bonus, are available through 2028. Some may change or expire sooner without additional legislation.
What happens if I earn above the income limit for a new deduction?
Each deduction includes income phase-outs. If you're near the cutoff, a CPA can help you review your numbers and determine your eligibility.
Do I have to change anything if I usually take the standard deduction?
You may not need to itemize to benefit from the new provisions. However, some taxpayers may see better results by combining deductions, so it's worth reviewing with a professional.
Talk to a CPA for Clarity and Confidence
Tax laws change frequently, but this year's updates are especially wide-reaching. Whether you're trying to reduce your tax liability, manage your business income more effectively, or make smart decisions about timing, a CPA can help.
At Myrick CPA, we work with clients in Washington, D.C., and across the country. We'll take time to understand your full financial picture and walk you through the new law's impact calmly, clearly, and with your goals in mind.
If you're unsure how the OBBBA Act affects your situation, schedule a consultation. Peace of mind starts with a plan.
