The OBBBA = BIG Tax Savings This Year

The One Big Beautiful Bill Act (OBBBA) brings some of the most significant tax law changes in years, offering new ways to save money on your 2025 tax return and beyond. Whether you’re a business owner, parent, senior, or simply someone looking to maximize deductions, these updates are worth knowing.

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1. Convert Your Personal Vehicle to Business Use: Deduct Up to 100%

Do you use a personal vehicle for work? Thanks to the OBBBA, you can now convert it to business use and potentially claim a 100% bonus depreciation deduction.

• Example: If your vehicle is worth $31,000 and you use it 70% for business, you can deduct $21,700 on your 2025 tax return.
• Heavy SUVs, pickups, and vans (GVWR over 6,000 lbs) qualify for full deductions.
• Smaller vehicles are subject to luxury auto limits, but still allow up to $20,200 in first-year deductions.

Key Rule: You must use the lower of your vehicle’s fair market value or adjusted basis at conversion.

Tax Tip: This is a “no new cash outlay” deduction—you’re leveraging an existing asset to lower your tax bill.

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2. Hire Your Children for Bigger Tax Savings

The “hire your child” tax strategy just got even better:

• In 2025, the standard deduction rises to $15,750, meaning your child can earn that much tax-free.
• If you’re a sole proprietor or spouse-only partnership:
  • Wages to children under 18 are exempt from Social Security and Medicare (FICA) taxes.
  • Wages to children under 21 are exempt from federal unemployment tax (FUTA).

Example: Pay three children $15,750 each for legitimate work. They owe zero federal tax, and you deduct the wages—saving thousands in income and self-employment taxes.

Tax Tip: Even S and C corporations benefit, though payroll taxes apply. Your children still pay no federal income tax.

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3. New Senior Tax Deduction (Age 65+)

Starting in 2025, seniors get a bonus deduction of up to $6,000 per person (or $12,000 for married couples filing jointly).

• Deduction phases out starting at $75,000 MAGI for singles and $150,000 for joint filers.
• Fully phased out at $175,000 and $250,000, respectively.

Planning Tip: Keep income below thresholds by spreading capital gains, staging Roth conversions, or boosting retirement contributions.

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4. SALT Deduction Relief

If you’ve been hit by the $10,000 SALT deduction cap, the OBBBA brings good news:

• From 2025–2029, the cap increases to $40,000 (joint filers) or $20,000 (separate filers).
• Phaseouts apply for high earners ($500,000 joint, $250,000 separate).

Tax Strategy: Use your state’s SALT workaround for pass-through entities (LLCs, partnerships, S corps) to maximize deductions.

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5. Charitable Giving Changes Coming in 2026

The OBBBA reshapes charitable giving deductions starting in 2026:

• Non-itemizers win: Deduct up to $1,000 (single) or $2,000 (married filing jointly).
• Itemizers lose some ground: A new 0.5% AGI “floor” applies before deductions kick in.
• C corporations: Deductions allowed only above 1% of taxable income.

Action Step for 2025: If you plan large charitable gifts, consider accelerating them into 2025 to avoid the new limits.

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6. New 1099 Filing Thresholds

Big relief for small businesses and contractors:

• Beginning in 2026, Form 1099-NEC applies only if you pay $2,000 or more (vs. $600).
• Indexed for inflation starting in 2027.
• 1099-K thresholds revert to pre-2022 levels: $20,000 and 200 transactions.

Reminder: Even without a 1099, all income must still be reported.

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Final Thoughts

The OBBBA is reshaping tax strategies in 2025 and beyond, with opportunities to reduce taxes through vehicle conversions, family employment, charitable giving, and new senior deductions.

📌 Next Step: Schedule a tax projection session with our team to create a custom strategy for your situation. Early planning ensures you capture every deduction available.

👉 [Schedule a consultation today]