Summary of Recent Tax Changes

Many clients have asked, below is a summary of some of the more relevant tax changes that are now in effect with the passing of the H.R. 1 - One Big Beautiful Bill Act.

For Individuals:

Income Tax Rates: The 2017 Tax Cuts and Jobs Act (TCJA) lower rates (10%–37%) are now permanent. There are no changes.


Standard Deduction: Permanently increased to

  • $15,750 (single)

  • $23,625 (head of household)

  • $31,500 (married filing jointly)

for the 2025 tax year, these are now indexed for inflation. This will result in no changes to your upcoming tax filing.


Charitable Deduction: Non-itemizers may deduct up to $1,000 ($2,000 joint) for charitable contributions.


State and Local Tax Deduction Cap: Temporarily raised to $40,000 (from $10,000) through 2029, then reverts to $10,000 in 2030.

  • Phase-out: For taxpayers with modified adjusted gross income (MAGI) over $500,000 (2025, indexed), the deduction is reduced by 30% of the excess MAGI, but never below $10,000.

Mortgage Interest: $750,000 cap on deductible mortgage debt made permanent.

Estate & Gift Tax: Exemption increased permanently to $13.99 million per person ($15 million starting in 2026, this amount is now indexed for inflation).
Child Tax Credit: Increased to $2,200 per child, indexed for inflation, with the $1,400 refundable portion made permanent.

  • Phase-out: Credit phases out for MAGI above $200,000 (single) or $400,000 (joint).

Adoption Credit: Now refundable up to $5,000, while dependent care assistance exclusion has been raised to $7,500.


Child/Dependent Care Credit: increased to 50% of expenses.

  • Phase-out: Credit rate decreases by 1% for each $2,000 of AGI over $15,000 (not below 35%), then further reduced (not below 20%) for AGI over $75,000 ($150,000 joint).

QBI Deduction: The 20% qualified business income deduction is now permanent, with expanded phase-in ranges for specified service trades or businesses (SSTBs): Phase-in range increased to $75,000 (single) and $150,000 (joint).


Deductions for Tips & Overtime: Temporary above-the-line deductions for up to $25,000 in tips and $12,500 in overtime ($25,000 for joint returns) for 2025–2028.

  • Phase-out: Begins at MAGI of $150,000 (single) or $300,000 (joint).

Senior Deduction: Additional $6,000 deduction for those 65+ (2025–2028).

  • Phase-out: Begins at MAGI of $75,000 (single) or $150,000 (joint). This starts at age 65.

For Businesses:


Bonus Depreciation: 100% bonus depreciation made permanent for qualifying property placed in service after Jan. 19, 2025.


Section 179 Expensing: Limit increased to $2.5 million, with phaseout beginning at $4 million.


R&D Expenses: Immediate deduction for domestic R&D expenses; foreign R&D still amortized over 15 years.


Paid Family Leave Credit: Employer credit for paid family and medical leave is fully deductible.

Other Notable Changes:

Clean Energy Credits: Many clean energy tax incentives are terminated or set to expire soon.


Reporting Thresholds: Form 1099-K reporting threshold returns to $20,000/200 transactions; general 1099 threshold rises to $2,000.

What This Means for You:

Most people will see continued benefits of the lower tax rates and increased child tax credits passed from TCJA in 2017 and very little change as a result of this bill. However, if you're considering implementing new home energy credits, such as new windows, HVAC, doors, or solar, then you should do so by December 31st, 2025, as these energy tax credits will expire after this year. Also removed are the electric vehicle credits which will expire on September 30th, 2025, instead of the year 2032.

Joseph Esry