The One Big Beautiful Bill Act (OBBBA), which became public law on July 4th, 2025, will bring a lot of changes and/or updates to federal tax law for individuals and businesses. It is important to stay up-to-date with the latest provisions in order to better prepare yourself for the upcoming 2026 tax season.
Some updates and changes to consider for tax year 2025 are:
- For Individuals: Increased Standard Deduction to $15,750 for Single Filers (compared to $14,600 in 2024) and $31,500 for Married Filing Jointly (compared to $29,200 in 2024).
- For Business Owners: QBI (Section 199A) Deduction was set to expire after 2025, but it was made permanent through the OBBBA. The limit on the Section 179 Deduction has been increased to $2.5 million.
- Reporting Threshold for Form 1099-K has been decreased to $2,500 for tax year 2025 (compared to $5,000 in 2024). It is also planned to be decreased even further to $600 from 2026 and after.
- Some Green Energy Credits, such as the Energy Efficient Home Improvement Credit and the Electric Vehicle Credit, will expire before or by the end of 2025.
- Child Tax Credit increased to $2,200 per qualifying child. However, eligibility requirements have changed to make it so that in order to qualify for this credit, at least one of the taxpayers must have a SSN (in the case of a joint return).
- “Trump Accounts” for Children Under Age 18: The OBBBA also assigns “Trump Accounts” for American children born after December 31st, 2024 and before January 1st, 2029. Once the child has been born, they will receive an initial $1,000 deposit from the government into a “Trump Account”; a tax-advantaged and individual retirement account (an IRA, but not a Roth IRA). After the initial deposit has been made, parents can then contribute up to $5,000 per year to the account (which up to $2,500 may come from the parent’s employer and will not be considered taxable income).
The IRS created a brief publication that goes over 4 of the biggest effects of the OBBBA on federal taxes, credits, and deductions for working Americans and Seniors. The income tax relief and deductions mentioned are: “No Tax on Tips”, “No Tax on Overtime”, “No Tax on Car Loan Interest”, and “Deduction for Seniors”.
In the publication, the IRS provides the reader with a summary of the new provision, which taxpayers are eligible, how to manage reporting, and guidance on how the IRS plans to assist taxpayers with these new provisions. You can visit this aforementioned publication at the following link: OBBBA of 2025 Provisions
If you would like to learn more about updates/changes to federal taxes, credits, and deductions derived from the OBBBA, you can also visit the Congress’ official website to read the details of the H.R.1. bill (i.e., summary of the bill, amendments, etc.).