The recently passed One Big Beautiful Bill Act (OBBBA)has sparked a lot of questions. At nearly 900 pages, it’s packed with tax and policy updates—some expected, some surprising. Here’s a simplified overview of what may matter most for individuals, families, and business owners. Note that "permanent” does not necessarily mean forever; future Congresses can change things which is one of the reasons why we always recommend our clients engage a tax advisor.
What’s Staying the Same
Tax Brackets
The lower brackets from the 2017 Tax Cuts and Jobs Act (TCJA) are now permanent and continue adjusting for inflation. The three lowest brackets get slightly higher adjustments in 2025, helping many lower- and middle-income taxpayers.
Qualified Business Income Deduction (QBID)
The additional federal deduction for self-employed and 1099 income, allowing a write-off of up to 20% of net profit, is now permanent, with higher income thresholds and a new $400 minimum deduction—great news for small businesses and freelancers.
Standard Deduction
The higher standard deduction remains and was slightly increased for 2025. Most filers will still use it, though some new OBBBA provisions may make itemizing worthwhile again.
Social Security & Mortgage Rules
Social Security taxation stays the same. Mortgage interest remains deductible as part of itemized deductions on loans up to $750,000 for primary and second homes, and itemized deduction of home equity line of credit (HELOC) interest still applies only if the loan balance was used for qualified home improvements.
Estate & Gift Tax
The doubled lifetime exemption is now permanent, with inflation adjustments. For2025, the Federal estate taxes won’t apply until around $14 million per person or $28 million per couple, though some states tax lower amounts. Effective Jan. 1, 2026, the exemption is permanently set at $15 million per person or $30 million per married couple.
What’s New in OBBBA
State and Local Tax (SALT) Deduction Increase
The cap on SALT deductions rises from $10,000 to $40,000 for 2025, with small increases through 2029 before reverting in 2030. Higher earners will still face phaseouts. The increase of this cap makes itemizing deductions possible for more people.
Child & Dependent Credits
The Child Tax Credit increases to $2,200 per child, indexed for inflation, and the Dependent Care Credit expands in 2026 to cover more childcare costs.
Education Savings
Tax-free 529 plan withdrawals for K–12 expenses double to $20,000 per child per year and now cover more educational costs effective for the tax year beginning January 1,2026.
Bonus Depreciation
Businesses can again deduct 100% of qualifying equipment purchases upfront, retroactive to January 19, 2025. While this is helpful for real business needs, it is not a reason to buy just for the deduction.
Senior Exemption
Taxpayers age 65+ can claim a new $6,000 exemption per person for the next four years, phasing out at higher incomes.
Energy Tax Credits Ending
Credits for electric vehicles (EVs), solar, and energy-efficient home upgrades are ending soon. EV credits expired on September 30, 2025, and home systems must be installed by year-end.
Simplified 1099 Reporting
Plans to lower 1099 thresholds were reversed. 1099-K forms for online sales now apply only to $20,000+ or 200+ transactions in a calendar year. Starting next year, 1099-NEC/MISC (contractor or miscellaneous income) thresholds rise to$2,000.
Charitable Giving
Beginning in 2026, all taxpayers—even those who don’t itemize—can deduct up to$1,000 per person ($2,000 per couple) for charitable gifts.
Tips & Overtime Exclusions
For the next four years, some tip and overtime income can be excluded from federal tax—up to $37,500 for singles and $75,000 for couples. Careful recordkeeping will be key and income limits apply to allow for exclusion.
Auto Loan Interest
Interest on new car loans may now be deductible for four years, up to $10,000 per year, with phaseouts beginning at $100,000 of income for singles and$200,000for couples.
“Trump Accounts” for Children
Starting in 2026, babies born 2025–2028 who are U.S. citizens, will automatically receive a $1,000 government-funded account. Families can add up to $5,000annually until the child turns 18. While interesting, Roth IRAs and 529 plans still offer more flexibility in funding and usage.
Quick Ohio Updates
- Flat 2.75% income tax starts in 2026 for non-business income.
- 2025 top rate drops from 3.5% to 3.125%.
- The first $250,000 of business profit remains exempt from Ohio state income tax.
- Commercial Activity Tax (CAT) applies only to businesses with over $6 million in gross sales.
- Social Security remains exempt from Ohio income tax.
The Bottom Line
The One Big Beautiful Bill Act cements many TCJA provisions while adding targeted updates for families, retirees, and small businesses.
If you’d like to see how these changes affect your personal or business financial plan, reach out anytime. We’re here to help make the complex more simple.
Together, we can work to keep you on-track toward your financial goals.
Request a consultation to learn more.
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