One Big Beautiful Bill Act

By: Lee Jamison

The “One Big Beautiful Bill Act” was signed into law by President Trump on July 4th, 2025. With this bill comes numerous tax law changes that we here at Equity are staying on top of so we can help clients take advantage of changes. While there are too many changes to list in this article, below is a summary of the most impactful items from the bill.

Tax Changes

  • Increased State and Local Tax Deduction Limitation (SALT Cap). Currently capped at $10,000, beginning in 2025 the SALT cap is increased to $40,000. This does begin to phase out at $500k of taxable income and is fully phased back down to $10k once taxable income is above $600k.

  • No Changes to Pass Through Entity Tax (PTET) Deductions – There was rumors that if you paid state taxes at the entity level that it would potential lower your SALT deduction capability mentioned above. The final bill, however, did not make any changes.  

  • Qualified Business Income Deduction – 20% deduction for QBI remains relatively unchanged but is permanently extended. There were talks that this would increase to 23% but the final bill remained at 20%. The phaseout threshold for Specified service trades or business (SSTBs) was increased from $100,000 to $150,000 for Married Filing Jointly (MFJ). Therefore, for Married filing Jointly the phaseout range will be from approximately $400,000 to $550,000 of income.

  • New Charitable Deductions Floor for itemized filers – Beginning in 2026 there will be a new .5% floor to charitable deductions for itemized filers. If Adjusted Gross Income is $200k, you would need $1,000 ($200k x .5%) of charitable contributions before you start to get a tax deduction.  

  • Charitable Contributions deduction for Standard Deduction Filers – Creates a permanent deduction up to $1,000 ($2,000 MFJ) for cash charitable contributions.

  • Child Tax Credit – Raises the Child Tax Credit from $2,000 to $2,200 and will be indexed with inflation after 2026.

  • Additional Deduction for Seniors over 65 – There is now a $6,000 ($12,000 if married) deduction for seniors with a modified adjusted gross income that does not exceed $75,000 for single filers and $150,000 for MFJ. There is a 6% phaseout rate for income in excess of the threshold.

  • No Tax on Tips – Creates an above the line deduction for qualified tips voluntary received by an individual in an occupation which traditionally and customarily receives tips. The tips must be run through the employees’ W-2 appropriately.

  • Tax Deduction for Overtime – Creates an above the line deduction of up to $12,500 ($25,000 MFJ) for overtime premium pay. Phaseout begins at $150,000 ($300,000 MFJ)

  • Car Loan Interest Deduction - Creates an above-the-line deduction for qualified passenger vehicle loan interest during a given year. Phase out begins when modified adjusted gross income exceeds $100,000 ($200,000 MFJ).

  • 100% Bonus Depreciation – The bill permanently restores 100% bonus depreciation for qualifying property placed in service after 1/19/25.

  • 1099 Reporting – Threshold is currently $600 for when 1099s are required to be filed and adjusts to $2,000.

 

Should you have any questions about how these may affect your tax situation, please reach out to us!