Frank Fantozzi Article Q3 2025 Frank Talk Newsletter

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What New Tax Legislation Means for Individuals

The One Big Beautiful Bill Act (OBBBA), signed by President Trump on July 4, 2025, contains a variety of changes to tax law. In addition to extending or making permanent many of the federal tax provisions in 2017's Tax Cuts and Jobs Act (TCJA), it introduces some new tax breaks — and eliminates others.

TCJA Extensions

As expected, the OBBBA makes permanent individual tax rates (10%, 12%, 22%, 24%, 32%, 35% and 37%) that have been in effect since 2018. It also makes permanent the near doubling of the standard deduction. For 2025, the standard deduction increases to $15,750 for single filers, $23,625 for heads of households and $31,500 for joint filers. The deduction will be indexed to inflation in subsequent years. Further, the personal exemption has been permanently eliminated.

The federal gift and estate tax exclusion amount has been increased to $15 million for individuals and $30 million for married couples beginning in 2026, with annual inflation adjustments. In addition, the child tax credit, which currently enables eligible taxpayers to reduce their taxable income by $2,000 for each child under age 17, increases to $2,200 for 2025. It too will be indexed to inflation starting in 2026.

Other TCJA provisions now made permanent include eliminating miscellaneous itemized deductions (except for unreimbursed educator expenses) and the moving expense deduction (with exceptions for military and intelligence community members and their families, The OBBBA also limits the personal casualty deduction to losses from federally declared and some state-declared disasters.

SALT and Other Homeowner Deductions

One of the more controversial OBBBA negotiations among legislators was over the state and local tax (SALT) deduction cap. For 2025 through 2029, the OBBBA increases the SALT deduction limit to $40,000 with 1% annual inflation adjustments (subject to income-based phaseouts). However, starting in 2030, the $40,000 cap will return to $10,000.

The OBBBA permanently reduces the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers). But the deduction includes mortgage insurance premiums as deductible interest. The deduction for interest on home equity debt is also made permanent.

New Provisions

As promised during Trump's campaign, the law provides a tax break for some tip and overtime income. For 2025 to 2028, eligible tip earners can deduct up to $25,000. Individuals may be able to deduct up to $12,500 for qualified overtime pay. For both tip and overtime income, payroll taxes and income phaseouts apply.

Also new for 2025 through 2028 is an above-the-line deduction of up to $10,000 for qualified vehicle loan interest. Final assembly must take place in the United States, and income-based phaseouts are in effect. And the OBBBA creates a permanent charitable contribution deduction for non-itemizers of up to $1,000 for single filers ($2,000 for joint filers), beginning in 2026.

Another new tax break provides seniors with a bonus tax deduction. For 2025 through 2028, eligible taxpayers age 65 or older can deduct an additional $6,000.

Clean Energy Breaks Eliminated

If you've been holding off on buying an electric vehicle or making energy-efficient home improvements, you'll probably want to accelerate your timeline. Tax credits for purchasing clean vehicles expire after September 30, 2025. Credits for making energy-saving home improvements expire after 2025.

Similar tax breaks for businesses have been eliminated, too. For example, companies can't claim the qualified commercial clean vehicle credit for vehicles acquired after September 30, 2025, and the Sec. 179D deduction for energy-efficient commercial buildings is terminated for property construction that starts after June 30, 2026.

A Wide-Ranging Law

The wide-ranging OBBBA contains other changes, including to eligibility rules and deduction limits. If you're unsure about how the new law may impact you, contact your financial advisor.

© 2025

Important Disclosures

Investment advisory services are offered through Planned Financial Services, LLC, dba Return on Life^® Wealth Partners, an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.

The views expressed are current as of the date of publication and may change without notice. The strategies and concepts discussed in this article are provided for informational purposes only and may not be suitable for all individuals.

This article does not constitute legal, tax, or investment advice. Individuals should evaluate their own circumstances and seek guidance from qualified professionals — including attorneys, tax advisors, and financial advisors — before implementing any strategies discussed.

Charitable contribution limits, deductions, and other tax provisions are subject to IRS rules and limitations, which may change over time.

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