The One Big Beautiful Bill (OBBB) brings sweeping changes to the individual tax landscape, locking in many popular provisions from the Tax Cuts and Jobs Act (TCJA) while introducing a slate of new, time-limited deductions and credits aimed at targeted relief. With permanent updates to tax brackets, standard deductions, and the Child Tax Credit, alongside new deductions for tipped workers, overtime pay, car loan interest, and seniors, taxpayers will see both opportunities and challenges as they plan for 2025 and beyond. Additionally, key modifications to SALT deductions, energy credits, and charitable giving rules highlight the importance of staying informed. This article outlines the major changes you need to know to navigate the evolving tax code with confidence.
TCJA That Were Made Permanent
The TCJA tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) have now been made permanent under OBBB, and the income ranges will continue to adjust annually for inflation.
The standard deduction increase from the TCJA is also permanent, with even higher amounts set for 2025: $15,750 for single filers and married filing separately, $23,625 for heads of household, and $31,500 for married couples filing jointly.
The elimination of the personal exemptions became permanent.
The Child Tax Credit has been preserved and enhanced. Starting in 2025, the credit increases to $2,200 per qualifying child under 17, with inflation adjustments beginning in 2026. The refundable portion will be capped at $1,700 (also indexed). The credit begins to phase out at $200,000 MAGI for single filers and $400,000 for joint filers. Married filing separately (MFS) filers are not eligible for this credit.
New Temporary Deductions (2025–2028)
Under OBBB, several temporary deductions have been introduced to provide targeted relief.
No Tax on Tips Deduction
The “No Tax on Tips” deduction allows employees to deduct up to $25,000 in qualified, reported tips annually. This benefit begins to phase out for single filers with MAGI above $150,000 ($300,000 married filing joint) and is fully phased out by $400,000 ($550,000 married filing joint). This deduction is not available to:
Married couples filing separately
Self-employed individual in Self-Service Trade or Business (SSTB)
Employees in an SSTB
Only tips reported on W-2s are eligible.
Tips are still subject to Social Security and Medicare taxes.
Taxes are still required to be withheld on the tip wages. The deduction, if allowed, is taken on the individual’s tax return.
This deduction only applies to workers in occupations that customarily and regularly receive tips. The Treasury Secretary is required to publish a list of qualifying occupations.
Overtime Deduction
The new overtime deduction allows qualifying workers to deduct up to $12,500 (single) or $25,000 (MFJ) of overtime pay, but only for the premium portion that exceeds regular hourly wages. The deduction phases out at $150,000 for single filers and $300,000 for joint filers. Workers must include their Social Security number to claim the deduction. This is considered an above-the-line deduction, so itemizing is not required.
Overtime is still subject to Social Security and Medicare taxes.
Taxes are still required to be withheld on the overtime wages. The deduction, if allowed, is taken on the individual’s tax return.
Married couples filing separately do not qualify for this deduction.
Car Loan Interest Deduction
For those purchasing a vehicle, the car loan interest deduction allows taxpayers to deduct up to $10,000 in car loan interest annually from 2025 through 2028. The final assembly of the vehicle must occur in the U.S. and meet standard classification requirements. The deduction phases out between $100,000–$150,000 for individuals and $200,000–$250,000 for couples.
Finally, seniors aged 65 and older will benefit from a new “bonus” deduction of $6,000 ($12,000 for joint filers), available to those with MAGI up to $75,000 ($150,000 MFJ). This deduction can be claimed whether the taxpayer itemizes or not.
Deductions & Credits Modified or Phased Out
The State and Local Tax (SALT) deduction cap will temporarily increase from $10,000 to $40,000 beginning in 2025 for taxpayers with income below $500,000 (or $250,000 for MFS). The cap will begin phasing out at $500,000 ($250,000 MFS) and be completely phased out at $600,000 ($300,000 MFS). This higher limit expires after 2029, returning to $10,000 in 2030.
Energy tax credits are being phased out. The credit for new EVs ($7,500) and used EVs ($4,000) will be eliminated after September 30, 2025. Additionally, tax breaks for energy-efficient home upgrades will end after December 31, 2025.
For gamblers, the deduction for gambling losses is now limited. Only up to 90% of gambling losses can be claimed (up to the amount of gambling winnings) starting in 2026. This remains an itemized deduction.
Charitable giving sees two key updates: Beginning in 2026, non-itemizers can deduct up to $1,000 in donations ($2,000 MFJ). Starting in 2027, a new $1,700 federal tax credit is available for donations to certified scholarship-granting organizations (SGOs). How this affects the Ohio SGO tax credit remains to be seen.
Family, Education & Estate Planning
The estate tax exemption will permanently rise to $15 million per individual (or $30 million per couple) in 2026, with inflation indexing starting in 2027.
529 education savings plans will see expanded benefits beginning in 2026. The annual tax-free withdrawal limit for K–12 expenses increases from $10,000 to $20,000 and now includes more qualified expenses such as curriculum materials, tutoring, and software for homeschoolers or trade students.
A new MAGA account (Money Accounts for Growth and Advancement) will be available for children born between 2025 and 2028. The government will contribute $1,000 at birth if parents open the account. Parents can then contribute up to $5,000 annually, while employers can contribute up to $2,500 without it being considered income to the employee. Investments grow tax-deferred, and withdrawals (after age 18) are taxed as long-term capital gains when used for education, housing, or business purposes.
Dependent Care FSAs through employers will have a new contribution limit of $7,500 starting in 2026, up from the current $5,000.
Need Help Navigating These Changes?
These updates will impact tax planning starting in 2025 and beyond. If you have questions or want to discuss how these changes may affect your personal taxes and finances, please reach out. We’re here to help you plan proactively
This material is presented solely for information purposes and has been gathered from sources believed to be reliable, however, Landing Point cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Nothing in this presentation is intended to serve as personalized investment, tax, or insurance advice, as such advice depends on your individual facts and circumstances. Advisory services are only offered to clients or prospective clients where Landing Point and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Landing Point unless a client service agreement is in place.