One Big Beautiful Bill

The One Big Beautiful Bill includes many favorable tax code changes that will impact you beginning with your 2025 filing. We have always focused on tax planning as part of our work with clients. You will want to consider these changes and how they may impact your tax planning for this year and beyond. We are happy to review your individual circumstances to assist you in becoming more tax efficient. ~Jean

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Tax brackets have been made permanent.

At the heart of the recent One Big Beautiful Bill is an extension of the 2017 tax cuts that Trump spearheaded in his first presidency, which were set to expire on Dec. 31, 2025. Making these brackets permanent will help everyone with tax planning going forward. In addition, there have been other tax provisions which may benefit you, some of which are discussed below. 

 Enhanced Personal Deductions, Especially for Seniors

The standard deductions have been increased effective this 2025 tax year as follows:

• Married filing jointly: $30,000 to $31,500

• Single: $15,000 to $15,750

• As before for those age 65 and over, the extra deduction for non-itemizers is $1,600 and there is now an extra $6,000 deduction subject to a phase out depending on income: $150,000 for single filers, and $250,000 for married filing jointly.



A married couple age 65 and older will now have a standard deduction of $46,700!

Increased Deduction for State and Local Taxes (SALT)

The $10,000 limit on state and local taxes (SALT) has been increased to $40,000 (phased out for high-income taxpayers with modified adjusted gross income over $500,000 in 2025), and leaves state pass-through entity tax (PTET) workarounds intact (earlier versions of the bill did not increase the SALT limit and eliminated PTET workarounds). This is good news if you have high in-state taxes and plan to itemize.

Estate and Gift Tax Exemption Amounts are Enhanced

The estate and gift tax exemption has been permanently increased to $15 Million for single filers and $30 Million for married couples, and will be indexed for inflation going forward.

Small Business Qualified Business Income (QBI) Deduction is Made Permanent

The Qualified Business Income Deduction (QBI) allows eligible business owners to deduct up to 20% of their taxable income on their returns. This is now a permanent deduction. Certain limits apply.

No tax on Tips and Overtime

People earning tip income can now deduct up to $25,000 from their taxable income for tips (certain rules and limits apply). For those earning overtime, individuals can deduct up to $12,500 single or $25,000 for joint filers from their taxable income. These new deductions are effective immediately in 2025 but are also temporary as they sunset at the end of 2028, at which time congress can choose to renew or not. 

 Permanent Increase to the Child Tax Credit

The child tax credit has been increased in 2025 to $2,200 per child under age 17 and will be reflect inflation after this year. 

Phase out of Energy Savings Promotions 

Electronic Vehicle $7,500 tax credit goes away September 30, 2025, with delivery due by that date.

The Inflation Reduction Act of 2022 created tax credits for energy-efficient upgrades through 2032, but many of those renewable energy credits are being phased out. For example, the energy efficient home improvement credit, which covers 30% of qualifying upgrade costs, is being phased out. Your project would need to be completed and operational by December 31, 2025 to qualify for the credit. Check with your contractor to make sure you meet the deadlines for this or other energy related programs.

Incentive to Buy Vehicles Made in America

If you buy a car, truck, van, SUV or motorcycle assembled in America for personal use, you can deduct up to $10,000 in annual interest payments on nee war loans. Effective July 4 and ending the end of 2028.

(Side note: You can tell where a car originates by the VIN. A 1, 4 or 5 is from US, Canada is 2, Mexico is 3, Japan is J, So Korea is KL-KR, China is L, England is SA-SM, Poland is SU-SZ, Germany is W, Sweden is Y. The 11^th character of the VIN indicates the manufacturing plant where the vehicle was assembled.)

Charitable Deductions Enhanced for Non-Itemizers

If you are a non-itemizer, you can still get a charitable deduction of $1,000 for single files and $2,000 for married filers. This donation must be cash and not a donation of physical goods. (Note: Donor Advised Fund donations to not qualify for this deduction)

School Choice Credit

The OBBB creates a new Section 25F which provides a nonrefundable credit for $1700 cash or marketable security donations made to 501(c)(3) organizations that provide scholarships for elementary and high school students. The credit is limited to $1,700, but excess over $1,700 may be carried over for five years.

The credit would be taken instead of a charitable contribution deduction and would be reduced by any amount allowed as a credit on a state tax return.

 Consult with your tax advisor for personal tax advice.

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Legacy Financial Solutions, Inc. is an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Legacy Financial Solutions, Inc. is a Registered Investment Advisor and licensed Insurance Producer in the State of New Hampshire.