What It Means for You
The most significant overhaul of the U.S. tax code since 2017 is now law. Here is every change that affects your household, your retirement, and your business, and what you should be doing about it right now.
| On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law and with it, the most sweeping rewrite of the Internal Revenue Code since the Tax Cuts and Jobs Act of 2017. At Pantana CPA, our job is to cut through the noise and give you a clear picture of what changed, what stayed the same, and where the real opportunities are for your specific situation. |
This is your plain-English guide to every provision that could affect your tax bill, your business, your retirement, and your estate, written by the team at Pantana CPA to help you make smart, informed decisions before year-end.
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What Is the One Big Beautiful Bill Act?
The OBBBA is a budget reconciliation law signed on July 4, 2025 (Public Law 119-21). Its primary purpose was to prevent a massive automatic tax increase that was set to hit most Americans when the 2017 Tax Cuts and Jobs Act provisions expired at the end of 2025. Beyond that, it added new, targeted deductions aimed at working Americans, seniors, families, and business owners.
| The Bottom Line Upfront The OBBBA makes most TCJA provisions permanent, which means the favorable tax rates, higher standard deductions, and business deductions you have been using since 2018 are not going away. It then layers on new temporary deductions, many in effect from 2025 through 2028, that can meaningfully reduce what you owe. The taxpayers who act proactively will see the biggest savings. |
Here is a high-level summary of every major provision:
| Provision | Change | Years |
| Individual tax rates PERMANENT | Seven brackets (10% to 37%) made permanent and indexed to inflation | 2026+ |
| Standard deduction PERMANENT | $16,100 single / $32,200 MFJ, inflation-indexed going forward | 2026+ |
| No tax on tips NEW | Up to $25,000 deduction; phase-out above $150K MAGI | 2025-2028 |
| No tax on overtime NEW | Up to $12,500 deduction; same phase-out thresholds | 2025-2028 |
| Senior deduction (65+) NEW | Extra $6,000 deduction; phase-out above $75K MAGI | 2025-2028 |
| SALT cap INCREASED | Raised from $10,000 to $40,000; income limit $500K; reverts 2030 | 2025-2029 |
| Child Tax Credit PERMANENT | $2,200 per qualifying child, now inflation-indexed | 2026+ |
| Car loan interest NEW | New deduction up to $10,000 on new U.S.-assembled vehicle loans | 2025-2028 |
| Charitable deduction NEW | Up to $1,000 single / $2,000 MFJ in cash donations for non-itemizers | 2026+ |
| QBI deduction §199A PERMANENT | 20% pass-through deduction made permanent for business owners | 2026+ |
| Bonus depreciation PERMANENT | 100% first-year expensing restored for qualified property (on/after Jan 20, 2025) | 2025+ |
| Estate and gift tax PERMANENT | $15M per person ($30M per couple), inflation-indexed | 2026+ |
| Clean energy credits MOSTLY ELIMINATED | Most credits accelerated to phase-out; residential solar ended Dec 31, 2025 | Varies |
Changes for Individual Taxpayers
Tax Brackets and Rates: The Relief You Almost Lost
Without the OBBBA, the seven income tax brackets established in 2017 would have expired, automatically pushing most Americans into higher rates beginning in 2026. The OBBBA makes all seven brackets permanent, with the 10% and 12% brackets receiving additional inflation adjustments in 2026.
Standard Deduction: Higher, Permanent, and Inflation-Indexed
The doubled standard deduction from the TCJA is now permanent. For 2026:
- Single filers: $16,100
- Married filing jointly: $32,200
- Head of household: $24,150
These amounts will increase with inflation every year going forward. The SALT cap increase may change whether itemizing now beats the standard deduction for your household.
Child Tax Credit
The child tax credit is increased to $2,200 per qualifying child and is now indexed to inflation. The refundable portion is also preserved.
New Charitable Deduction for Non-Itemizers
Starting in 2026, taxpayers who take the standard deduction can also deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash charitable contributions. This is a permanent change that rewards giving regardless of whether you itemize.
No Tax on Tips and No Tax on Overtime
Two of the most talked-about provisions of the OBBBA, and two that require careful understanding to use correctly.
| Important Clarification These are above-the-line income deductions, not exemptions from income. The income is still reported on your W-2 or 1099. You claim the deduction on your individual return. FICA taxes (Social Security and Medicare) still apply to both tips and overtime pay at the employer and employee level. |
No Tax on Tips
Employees and self-employed workers in occupations that customarily and regularly receive tips may deduct up to $25,000 of qualified tip income per year. Phase-out begins at $150,000 MAGI (single) or $300,000 MAGI (MFJ). Available 2025 through 2028.
No Tax on Overtime
A separate deduction of up to $12,500 per year is available for qualified overtime compensation with the same phase-out thresholds. Also available 2025 through 2028.
The New Senior Deduction
Taxpayers age 65 and older may claim an additional above-the-line deduction of $6,000 per person for tax years 2025 through 2028.
- Phase-out begins at $75,000 MAGI (single)
- Phase-out begins at $150,000 MAGI (married filing jointly)
- Available in addition to the standard deduction — does not require itemizing
| Pantana CPA Note For a married couple where both spouses are 65+, this is a potential $12,000 additional deduction on top of the $32,200 standard deduction, for a total of $44,200 in deductions before a single itemized expense is counted. If you or a family member is 65 or older, this deserves immediate attention. |
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The SALT Cap Increase: A Major Win for Many Taxpayers
The $10,000 limit on deducting state and local taxes has been significantly expanded.
- 2025 to 2029: SALT deduction cap raised to $40,000, adjusted annually for inflation
- Phase-down applies for taxpayers with income above $500,000
- 2030 and beyond: Cap reverts to $10,000
| The SALT Calculation You Need to Run If your property tax plus state income tax combined now exceeds the standard deduction threshold, particularly when combined with mortgage interest, itemizing may save you thousands in 2026 that you were not capturing before. This is one of the highest-value planning opportunities in the OBBBA for middle and upper-middle income homeowners. |
What the OBBBA Means for Homeowners
Mortgage Interest Deduction
No change. The deduction remains available for itemizers on up to $750,000 of qualified home acquisition debt. With the SALT cap significantly higher, more homeowners will find itemizing worthwhile again.
New Car Loan Interest Deduction
A brand-new provision allows taxpayers to deduct up to $10,000 in interest paid on a loan for a new, U.S.-assembled passenger vehicle. Phase-outs apply above $100,000 MAGI (single) and $200,000 MAGI (MFJ). Available for loans taken out between 2025 and 2028.
Home Energy Credits: What Changed
The residential solar credit under Section 25D ended on December 31, 2025. The home improvement credit under Section 25C has also been curtailed. Confirm credit status before committing to a qualifying upgrade.
Business Owner Provisions
QBI Deduction (Section 199A): Now Permanent
The 20% qualified business income deduction for pass-through entities is now permanent. Sole proprietors, S-corporations, partnerships, and LLCs can plan around this deduction with long-term confidence.
| What This Means in Practice A business owner generating $200,000 in qualified business income may deduct up to $40,000 under Section 199A. The right entity structure, S-corp election, and reasonable compensation planning can substantially increase the available deduction. If you have not reviewed your structure since the OBBBA passed, contact us for a planning session. |
Bonus Depreciation: 100% Restored
The OBBBA restores 100% first-year bonus depreciation for qualified property placed in service on or after January 20, 2025, reversing the phase-down under the original TCJA.
Section 179 Expensing
The Section 179 expensing limit for 2026 is $1,220,000 with a phase-out beginning at $3,050,000 of qualifying property placed in service.
Domestic R&E Expenditures
The OBBBA restores immediate deductibility of domestic research and experimental expenditures, reversing the TCJA requirement to amortize these costs over five years.
Payroll Note: Tips and Overtime
The no-tax-on-tips and no-tax-on-overtime provisions are employee-level deductions claimed on individual returns, not employer-level payroll exclusions. FICA taxes continue to apply.
Estate and Gift Tax Changes
The generous estate and gift tax exemption established under the TCJA is now permanent.
- 2026 exemption: $15,000,000 per individual
- For married couples: $30,000,000 combined (with portability)
- Both amounts indexed to inflation going forward — no sunset provision
Before the OBBBA, this exemption was scheduled to revert to approximately $7 million per person at the end of 2025. For families with estates above that threshold, the urgency of accelerated gifting strategies has diminished, though proactive planning remains valuable for trust structures, step-up in basis, and long-term wealth transfer.
Clean Energy Credits: What Changed and What Remains
The OBBBA substantially rolled back the clean energy incentives expanded under the Inflation Reduction Act.
| Credit | Status After OBBBA |
| Residential Solar (§25D) | Expired December 31, 2025. No longer available for new installations. |
| Home Improvement Credit (§25C) | Curtailed. Confirm eligibility and timelines before committing. |
| Clean Vehicle Credit (§30D) | Eliminated for most consumers. Confirm status of any pending purchase. |
| Used Clean Vehicle Credit (§25E) | Eliminated. |
| §30C EV Charging (commercial) | Expired June 30, 2026. Projects must have been placed in service by that date. |
| §179D Commercial Building Deduction | Expired June 30, 2026 for new property placed in service after that date. |
| Qualified Opportunity Zones (QOZ) | Permanently extended with modifications to eligibility and incentives. |
| Action Required Do not assume a clean energy credit is available without verification. If you have a project in progress, confirm the placed-in-service date, construction continuity requirements, and applicable phase-out rules with our team before proceeding. |
What You Should Do Right Now
The OBBBA creates real opportunities, but only for taxpayers who plan proactively. Here are the six highest-priority actions for most clients right now:
- Review your withholding or estimated payments. If you receive tips, overtime, are 65+, or took out a qualifying car loan, your current withholding almost certainly does not reflect your new, lower taxable income. A mid-year W-4 update or revised estimated payment schedule could put money back in your pocket today.
- Run the itemize vs. standard deduction comparison. With SALT at $40,000, many taxpayers who defaulted to the standard deduction since 2018 should now check whether itemizing produces a better result.
- Business owners: review your entity structure and QBI optimization. The permanent QBI deduction rewards S-corp elections, reasonable compensation planning, and income structuring. If your entity has not been reviewed since July 2025, this is the most valuable planning conversation you can have this year.
- Accelerate equipment purchases if a major acquisition is planned. With 100% bonus depreciation restored, qualifying property placed in service before December 31, 2026 can be fully expensed in the year of purchase.
- Estate planning: recalibrate your strategy. The permanent $15M exemption removes the urgency of aggressive near-term gifting for many families but does not remove the value of trust structures, basis planning, and wealth transfer strategies.
- If you are on extension, do not wait for the crunch. Business returns are due September 15. Personal returns are due October 15. The clients who send us documents in June and July receive better, more thorough returns than those who wait until the final weeks.
Frequently Asked Questions
- What is the One Big Beautiful Bill Act?
The One Big Beautiful Bill Act (OBBBA) is a major federal tax law signed by President Trump on July 4, 2025. It permanently extended most provisions of the 2017 Tax Cuts and Jobs Act and added new temporary deductions for tips, overtime pay, senior taxpayers, and car loan interest, while also raising the SALT cap, increasing the child tax credit, and making the QBI deduction permanent for business owners.
- Does the OBBBA eliminate taxes on tips?
Not entirely, but it creates a significant deduction. Qualified tip income of up to $25,000 per year can be deducted above-the-line. The deduction phases out for taxpayers with MAGI above $150,000 (single) or $300,000 (MFJ). FICA taxes still apply to tips.
- What is the standard deduction for 2026?
For 2026: $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for heads of household. These amounts are now permanent and indexed to inflation annually.
- How does the OBBBA affect the SALT deduction?
The OBBBA raises the SALT cap from $10,000 to $40,000 for tax years 2025 through 2029 for taxpayers with income below $500,000. Starting in 2030, the cap reverts to $10,000.
- Is the QBI deduction permanent under the OBBBA?
Yes. The 20% qualified business income deduction under Section 199A is now permanent for eligible pass-through business owners, providing long-term certainty for entity structure and compensation planning.
- What happened to clean energy tax credits?
Most were eliminated or accelerated to phase-out. The residential solar credit (§25D) expired December 31, 2025. The clean vehicle credit (§30D) was eliminated for most consumers. The commercial EV charging credit (§30C) and the §179D commercial building deduction both expired June 30, 2026.
- I am on extension. Does the OBBBA affect my return?
Yes. Several OBBBA provisions apply to tax year 2025, including the no-tax-on-tips deduction, no-tax-on-overtime deduction, and the new senior deduction. If your 2025 return is on extension, make sure these are properly captured before your September 15 (business) or October 15 (individual) deadline.
| Ready to Put the OBBBA to Work for You? The clients who meet with us now, before the year-end rush, will see the biggest savings. Let Pantana CPA build a strategy around your exact situation. |
Published by Pantana CPA, Acworth, Georgia | Accounting Services | Bookkeeping | Tax Compliance | Payroll Last – Updated: May 31, 2026
This article is provided for informational purposes only and does not constitute legal or tax advice. Tax laws are complex and individual circumstances vary. The information contained here reflects general principles and may not apply to your specific situation. Pantana CPA recommends consulting directly with a licensed CPA or qualified tax professional regarding your particular facts. IRS procedures, deadlines, and relief programs are subject to change.
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