On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act, ushering in sweeping changes to the tax code. Some provisions create new opportunities, while others phase out valuable benefits—meaning timing will be critical for certain strategies. Here’s what you need to know.

Higher State and Local Tax (SALT) Deduction Cap

The cap on state and local tax deductions has increased from $10,000 to $40,000 for married couples earning up to $500,000 (or $250,000 for single filers). The benefit phases down between $500,000–$600,000 of income for joint filers, after which it reverts to the original $10,000 limit.

Planning Tip: This change could significantly benefit taxpayers in high-property-tax states. If you’ve been limited in past years, revisit your tax projections.

Tax Brackets Made Permanent

The 7-tier tax bracket system (10% to 37%) from the 2017 Tax Cuts and Jobs Act is now permanent, eliminating the prior 2025 sunset date.

Bigger Standard Deduction

For 2025, the standard deduction increases to:

  • $15,750 for single filers
  • $31,500 for married filing jointly

New Senior Deduction

Seniors age 65+ can claim an additional deduction of up to $6,000 per individual ($12,000 for couples), on top of the standard deduction increase already available to older taxpayers.

  • Phases out starting at $75,000 (single) / $150,000 (joint)
  • Fully phased out at $175,000 (single) / $250,000 (joint)
  • Applies for tax years 2025–2028

Expanded Child Tax Credit

The credit increases to $2,200 per qualifying child, indexed annually for inflation. The refundable portion remains unchanged.

Permanent QBI Deduction for Pass-Through Businesses

The 20% Qualified Business Income (QBI) deduction is now permanent, with broader eligibility starting in 2026. There’s also a new $400 minimum deduction for qualifying taxpayers.

Estate & Gift Tax Exemption Preserved

The federal estate and gift tax exemption will increase to $15 million in 2026 and be indexed for inflation, rather than reverting to pre-2025 levels.

New Auto Loan Interest Deduction

Up to $10,000 in interest on auto loans for U.S.-built vehicles purchased between 2025–2028 may be deductible—even without itemizing. Income limits apply ($100,000 single / $200,000 joint).

“Trump Accounts” for Newborns

A brand-new savings vehicle for children born between 2025–2028:

  • $1,000 federal seed deposit
  • Up to $5,000/year in contributions
  • Tax-deferred growth for education, first home, or business start-up
  • Required investment in diversified U.S. index funds

Clean Energy Credit Phaseouts

Some popular tax credits are ending soon:

  • Electric Vehicle Credits end September 30, 2025
  • Solar & Wind Credits phase out through 2026–2027
  • EV Charging Station Credits end mid-2026

Planning Tip: If you’re considering clean energy investments or EV purchases, act quickly—supply chain delays and installer backlogs could make the deadlines harder to meet.

Bottom Line

This tax package offers both expanded opportunities and time-sensitive challenges. Higher deductions and new credits could mean thousands in savings, but some benefits will vanish in the next 12–36 months. Early planning will be key.

Contact Elm3 CPA, Tax and Accounting, today to discuss how these changes affect your specific tax strategy and to ensure you take advantage of every available credit before it’s gone.