The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, has reshaped the tax landscape by making many popular provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent while introducing new deductions and credits. Instead of the feared “TCJA sunset” that would have raised rates and slashed deductions after 2025, OBBBA locks in lower taxes for most Americans and adds targeted relief for seniors, workers, and families.
With just 19 days left in 2025, now’s the time to act on these changes to optimize your 2025 return and set up for 2026. Here’s a breakdown of the biggest updates and actionable steps to save big.
1. Individual Tax Brackets Made Permanent with Inflation Adjustments
OBBBA permanently extends the TCJA’s seven tax brackets (10% to 37%), preventing a revert to pre-2018 higher rates like 39.6%. For 2025, brackets remain as they were, but 2026 sees inflation-adjusted thresholds:
- 10%: Up to $12,400 (single) / $24,800 (married filing jointly)
- 12%: $12,401–$50,400 / $24,801–$100,800
- 22%: $50,401–$105,700 / $100,801–$211,400
- 24%: $105,701–$201,775 / $211,401–$403,550
- 32%: $201,776–$256,225 / $403,551–$512,450
- 35%: $256,226–$640,600 / $512,451–$768,700
- 37%: Over $640,600 / $768,700
Year-End Move: If you’re near a bracket threshold, consider deferring income to 2026 (e.g., delay invoicing) or accelerating deductions into 2025 to stay in a lower bracket.
2. Standard Deduction Boosted and Permanent
The nearly doubled standard deduction from TCJA is now permanent and increased further under OBBBA:
- 2025: $15,750 (single/married separate), $31,500 (married joint), $23,625 (head of household)
- 2026: $16,100 (single), $32,200 (joint), $24,150 (head of household)
This means fewer people need to itemize, but if you’re close, bunching could still pay off.
Year-End Move: Prepay 2026 expenses like property taxes or charitable donations before December 31 to potentially itemize in 2025 if it exceeds the standard amount.
3. Qualified Business Income (QBI) Deduction Locked In Forever
The 20% deduction on pass-through business income (for freelancers, LLCs, S-Corps) is now permanent, with a new $400 minimum for those with at least $1,000 in qualified income. Phase-outs remain ($182,100 single / $364,200 joint for 2025).
Year-End Move: Maximize QBI by contributing to retirement plans like a SEP-IRA before your filing deadline (April 15, 2026) to lower your income and stay under phase-out limits.
4. Bonus Depreciation Jumps Back to 100% (But Timing Matters)
OBBBA reinstates 100% bonus depreciation permanently for qualified property acquired and placed in service after January 19, 2025. For early 2025 (Jan 1–19), it’s only 40%.
Year-End Move: If you need equipment, vehicles (over 6,000 lbs), or software, buy and use it before December 31 to claim up to 40% for 2025—or wait until after January 19 for full 100% in your 2026 return. Consult a tax pro for your specific situation.
5. Estate and Gift Tax Exemption Rises to $15 Million
The exemption increases from $13.99 million in 2025 to $15 million per person ($30 million married) starting in 2026, indexed for inflation thereafter. Annual gift exclusion stays at $19,000 per recipient.
Year-End Move: For high-net-worth individuals, make gifts before year-end to utilize the 2025 exemption if you’re near the limit, or plan larger transfers in 2026.
6. Child Tax Credit Enhanced to $2,200
OBBBA boosts the CTC from $2,000 to $2,200 per qualifying child for 2025, with inflation adjustments starting in 2026. It’s partially refundable up to $1,700.
Year-End Move: No direct action needed, but ensure you claim it fully on your 2025 return. Families with newborns in 2025 can also elect a $1,000 refundable credit to seed a “Trump Account” (a new savings vehicle converting to an IRA at age 18).
Additional New Deductions to Grab Before Year-End
OBBBA introduces temporary relief (2025–2028) you can claim starting now:
- Senior Deduction: Extra $6,000 ($12,000 joint) for age 65+, phases out over $75,000/$150,000 AGI.
- Tip and Overtime Deductions: Up to $25,000 for tips, $12,500 ($25,000 joint) for overtime, phases out over $150,000/$300,000 AGI.
- Auto Loan Interest: Up to $10,000 on new U.S.-assembled vehicles, phases out over $100,000/$200,000 AGI.
- SALT Cap Increase: From $10,000 to $40,000 in 2025, rising 1% yearly until 2030.
- Non-Itemizer Charitable Deduction: $1,000 single / $2,000 joint starting 2026 (permanent).
Year-End Move: For auto loans, finance a qualifying vehicle before December 31. Bunch charitable gifts to maximize the new rules.
Expiring Green Energy Credits: Act Fast
Several clean energy incentives end December 31, 2025:
- Residential Clean Energy Credit (solar, wind, geothermal): Up to 30%.
- Energy Efficient Home Improvement Credit (windows, doors, insulation): Up to $1,200.
Year-End Move: Install eligible improvements before midnight December 31 to claim on your 2025 return.
Your Quick Year-End Checklist
- Review your bracket: Accelerate/defer income if needed.
- Bunch deductions: Prepay taxes, donate, or buy supplies.
- Open retirement accounts: Fund SEP-IRA or Solo 401(k) for QBI boost.
- Purchase assets: Time for bonus depreciation.
- Claim new credits: Ensure eligibility for CTC and energy incentives.
These changes under OBBBA mean lower taxes for most, but missing year-end deadlines could cost you. With potential future tweaks always possible, lock in these wins now.
Which OBBBA change excites you most? Share in the comments.
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