Understanding OBBBA- Individuals

No doubt, you've seen constant media coverage about the OBBBA (One Big Beautiful Bill Act), signed July 4, 2025. There are significant tax changes for personal filers. We're here to break it all down.

Here’s what you need to know to prepare for 2025 and beyond.

For Personal Tax Filers:

1. Larger Standard Deduction

- Married filing jointly: $31,500- Single/MFS: $15,750- Head of Household: $23,625- Indexed annually for inflation. These amounts represent a meaningful increase over 2024 levels, reducing taxable income for most filers.

2. SALT (State and Local Tax) Deduction Cap Increase

- Cap raised to $40,000 (joint) / $20,000 (MFS) for incomes under $500,000.- Effective through 2029. Reverts to $10,000 thereafter.- Indexed for inflation during this period. This higher cap helps those in high-tax states mitigate the federal deduction limit.

3. Child Tax Credit Increase

- Raised to $2,200 per child.- Permanently indexed for inflation.- Offers continued relief for families.

4. New “No Tax on Tips” Deduction

- Deduct up to $25,000 in tip income (single) or $50,000 (joint) through 2028.- Phases out at incomes over $150,000 (single) / $300,000 (joint).- Designed to help service workers keep more of their cash earnings.

5. Overtime Deduction

- Deduct up to $12,500 (single) or $25,000 (joint) of overtime pay annually through 2028.- Eases the tax burden on hourly and shift workers.

6. Senior Deduction

- New $6,000 additional standard deduction for taxpayers age 65+.- Phases out for higher-income seniors.- Supports retirees on fixed incomes.

What This Means for You

Individuals:- Higher standard deductions reduce taxable income automatically.- SALT cap increase offers more relief in high-tax states.- Service workers benefit from new tip and overtime deductions—keep good records!- Seniors see additional standard deduction amounts.

Planning Tips

✅ Maximize your standard deduction and track any itemized expenses carefully.

✅ Keep detailed records of tips and overtime to claim new deductions.

*The preceding should not be construed as tax advice. Contact a tax professional for information specific to your tax situation.