What the One Big Beautiful Bill Act (OBBBA) Means for You: A 2025 Tax Update

yelenakim
Jul 28
3 min read

The recent passage of the One Big Beautiful Bill Act (OBBBA) brings sweeping changes to the tax landscape for individuals, families, and business owners. As your trusted CPA advisors, we break down what’s new, what stays the same, and practical actions you should consider making the most of the law this year and beyond.

OBBBA at a Glance

The OBBBA, enacted July 4, 2025, is the most significant tax overhaul since 2017. It aims to provide stability and simplicity after years of temporary tax provisions and uncertainty. Key highlights include:

Permanent extension of individual tax brackets and rates.
Changes and expansions to popular tax credits.
Increased deductions and new savings opportunities for families.
Greater clarity and benefits for small business owners.
New compliance rules for certain business incentives.

Key Tax Changes for Individuals

Permanent Tax Brackets and Standard Deduction

The law cements the 2017 rates and brackets—avoiding a “tax cliff” and offering predictability for planning.
The larger standard deduction is now permanent, continuing to simplify the process for millions of taxpayers.

Child Tax Credit

The child tax credit is now $2,200 per child, with annual inflation adjustments starting in 2026.
The refundable portion is $1,700, benefiting lower-income families.

SALT Deduction Cap

For 2025, state and local tax (SALT) deductions are capped at $40,000 (up from $10,000), providing relief for those in high-tax states.
This cap is temporary and may sunset, so consider the timing of deductible payments.

New “Trump Account” Savings Vehicle

Parents can open special government-backed savings accounts for children born in the next four years.
The program offers a $1,000 baby bonus and allows up to $5,000 in annual contributions.
Funds grow tax-free until age 18, then can roll over into an IRA.

Scholarship Donation Tax Credit

New $1,700 credit for contributions to qualifying scholarship organizations.

Highlights for Business Owners

Immediate Expensing: Permanent full expensing for short-lived assets and domestic R&D.
Section 179 and Interest Deductions: Favorable provisions continue, supporting investment and cash flow.
Opportunity Zone Reporting: New rules require closer attention to compliance for those using these tax incentives.

What Hasn’t Changed?

No major updates to retirement account rules, such as Roth conversions, required minimum distributions, or catch-up contributions.
Long-term capital gains and qualified dividends are taxed as before.
Estate tax exclusion remains untouched.

Who Benefits Most?

Families with Young Children: Expanded credits and new savings options.
Small Businesses: Increased expensing and stable tax structure.
Taxpayers in High-Tax States: Short-term relief on the SALT cap.

Who Should Be Cautious?

High-Income Earners in High-Tax States: Watch the temporary nature of the SALT relief and plan accordingly.
Anyone Facing New Complexity: With new credits and limits, proactive planning is crucial.

CPA Advice: Tax Planning Tips for 2025

Revisit Your Withholdings: Changes to credits and deductions will impact your tax bill—review your W-4 or estimated payments now.
Max Out Retirement and HSA Contributions: These shelters remain untouched and are a core tool for reducing taxable income.
Consider Charitable Giving Strategies: Bunching donations can help if you itemize, and the new scholarship credit rewards educational philanthropy.
Business Owners: Plan equipment purchases or R&D investments this year to take advantage of permanent expensing. Review your business structure for potential optimization.
Avoid Last-Minute Stress: Organize your records now and check in with your CPA quarterly—don’t wait until the year-end rush.

Final Thoughts

The OBBBA brings lasting changes and new opportunities, but also greater complexity.

The key to maximizing your benefits is early, proactive planning.

Our team is here to answer questions, review your situation, and help you build a smart tax strategy for 2025—and the years ahead.

Ready to discuss your tax plan?