The One Big Beautiful Bill Act (OBBBA) enacted in 2025 makes significant changes to income tax law. It makes permanent some tax benefits, updates others and creates several new tax credits and deductions. This article summarizes some of the changes likely to affect you.
Existing Tax Provisions Made Permanent
- Current Tax Brackets have been made permanent at 10%, 12%, 22%, 24%, 32%, 35% and 37%. Thresholds for each tax bracket will continue to vary year-to-year.
- The larger Standard Deduction has been made permanent. For 2025, standard deduction amounts are $31,500 for a married couple filing jointly, $23,625 for a single head of household, $15,750 for single people and married filing separately.
- Seniors using the standard deduction receive an additional $2,000 deduction ($3,200 for a married couple filing jointly).
- Personal Exemptions, last available in 2017, are permanently eliminated.
- Increases to the Child Tax Credit are now permanent. Beginning in 2025, the credit for each qualifying child is increased to $2,200.
- The Mortgage Interest Deduction becomes permanent. Taxpayers can deduct interest on mortgage debt up to $750,000 (or $375,000 for married couples filing separately).
- The expanded Alternative Minimum Tax exemption amounts are made permanent.
Existing Tax Provisions with Major Changes
- The cap on State and Local Taxes (SALT) deduction is temporarily increased to $40,000 ($20,000 if married filing separately). The new limit applies for 2025-2029 taxes, with a 1% annual increase after 2025. The expanded cap begins to phase down once your modified adjusted gross income exceeds $500,000.
- Energy Related Tax Incentives have been rolled back, phased out and/or eliminated. These include the Clean Vehicle Credit, Energy Efficient Home Improvement Credit, and Residential Clean Energy Credit. Most of these credits remain available for all, or part of, calendar year 2025.
Tax Provisions Created by OBBBA
- New for 2025 through 2028: $6,000 deduction for qualifying seniors (age 65+). Individuals who are age 65 or older by the end of the tax year may claim an additional $6,000 deduction, even if they itemize. The deduction starts declining when modified adjusted gross income exceeds $75,000 (single) or $150,000 (married filing jointly).
- A Charitable Deduction for Non-Itemizers returns permanently, capped at $1,000 ($2,000 for married couples filing jointly), beginning in 2026.
- For tax years 2025-2028, a Car Loan Interest Deduction is available to taxpayers who purchase a new vehicle assembled in the United States. The vehicle must be purchased for personal use. Taxpayers can deduct up to $10,000 in auto loan interest annually. The deduction phases out at higher incomes ($100,000 for single taxpayers and $200,000 for married couples filing jointly).
Increase Retirement Contributions to Reduce Taxes and Build Financial Security
One of the most powerful tax strategies remains unchanged from previous years. That is, your ability to save for retirement through your JRB 403(b) account. Every dollar you contribute pre-tax, up to the 2025 federal limit of $23,500 (plus catch-ups if eligible), directly reduces your taxable income today while growing tax-deferred.
For example, suppose you’re a regular single filer under 65 with $80,000 gross income. Contributing $10,000 to your JRB account reduces your income to $70,000. That $10,000 contribution could save you around $2,200 in federal taxes this year ($10,000 x 22% marginal rate), plus potential state tax benefits (actual savings depend on your full situation).
Conclusion
The OBBBA made major changes affecting federal income taxes. The law made some tax deductions permanent, expanded others and repealed or phased out many energy related tax benefits. This article summarizes some of the tax changes that may be relevant for you. Contact your accountant or tax preparer to determine how these provisions – or others – may apply to you.
This information is for general purposes only and does not constitute legal, tax, or investment advice.
December 2025