Individual Impacts OBBBA

One Big Beautiful Bill Act (OBBA) extended or made permanent many provisions from the TCJA, however there are many surprises that will impact most of the economy.  Below are the highlights we see having the greatest impact

Individual Income Tax Essentials

• Permanent extension of the 2017 TCJA individual tax rates
  Standard deduction amounts remain elevated
  State and Local Tax (SALT) Deduction
• SALT cap $40,000 (for incomes under $500,000) for 2025 through 2029.

New Temporary Deductions (2025‑2028)

• Tip income deduction: up to $25,000 per taxpayer (phase‑outs begin at AGI> $150,000 individual / $300,000
• Overtime pay deduction: up to $12,500 (phase‑outs at same AGI thresholds)\
• Auto loan interest for domestically assembled vehicles

Social Security Benefits

• Seniors receive a new deduction of $6,000 (single filers ≤ $75,000; joint ≤ $150,000) (estimated 88% will no longer owe tax on benefits)

Small Business & Pass‑Through Owner Provisions

• Small Business (QBI) deduction retains and permanently extends the 20% deduction rate
• Section 179 expensing cap raised to $2.5 million, and 100% bonus depreciation is restored for qualifying assets starting in 2025.

Estate and Gift Tax Exemption

• Increased to $15 million per person/$30 million joint, permanently extending the 2017 level.

Clean Energy and Related Policy Roll‑Backs

• Many clean energy tax credits created under the Inflation Reduction Act have been repealed or phased out, reducing incentives for renewable energy investments. 

Education, Student Loan, and Long-Term Care Impacts

• Federal private school voucher tax credit—a dollar-for-dollar credit for donations to scholarship organizations.
• Grad PLUS and Parent PLUS loan caps introduced

Health and Welfare Cuts

• Medicaid spending cut by approximately 12%, likely affecting state program and funding.
• SNAP work requirements expanded

Planning Considerations & Next Steps

• Withholding/estimates - Consider adjusting to account for tip/overtime and auto-interest deductions, especially if you may exceed AGI phase‑outs
• QBI & Business Expensing - Evaluate expanded expensing thresholds and bonus depreciation timing to maximize 2025 benefits
• Social Security Recipients - Assess whether seniors can optimize new deductions to reduce taxable benefits
• Estate & Gift Planning - With increased exemption thresholds, revisit trust and lifetime gifting strategiesInvestment & Energy Strategies - Reevaluate renewables investment stance in view of reduced energy credits

If your situation involves retirement considerations, estate planning, start-up ownership, or education funding, please let us know—we’d be happy to prepare a version of this summary tailored to your unique circumstances.

Feel free to reach out to schedule a mid‑year planning review. We will continue to monitor IRS guidance and Treasury regulations as they are released in the coming weeks.