The following is a high-level summary of major U.S. federal tax law changes for 2025, centered on the “One Big Beautiful Bill Act” (OBBB) and related adjustments. (Always confirm with a tax professional for your specific situation.)
Key Inflation Adjustments & Baseline Changes
The IRS released inflation-adjusted figures for 2025:
- Health FSA contribution limit rises to $3,300 (from $3,200)
- Foreign earned income exclusion increases to $130,000
- Estate tax exemption (“basic exclusion”) climbs to $13,990,000
- Annual gift exclusion becomes $19,000
- Medical savings account and out-of-pocket limits are also increased
- Standard mileage rate for business use increases by 3¢/mile for 2025
- Notably: the personal exemption remains at zero (i.e. still eliminated)
Major Tax Law Changes via OBBB (Effective 2025–2028, some permanent)
The One Big Beautiful Bill Act (signed July 4, 2025) enacts sweeping tax law changes. Below are many of the most significant:
Individual / Personal Provisions
Standard Deduction & Rates
- The doubled standard deduction from the 2017 TCJA is made permanent and increased: for 2025, single filers get ≈ $15,750, married filing jointly $31,500, head of household some mid-point amounts.
- Beginning 2026, further inflation adjustments apply.
- The existing individual income tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent under the act.
New / Expanded Deductions & Exemptions
– Overtime Deduction (“no tax on overtime”)
Individuals may deduct “qualified overtime compensation” (the premium pay beyond regular rate) up to $12,500 ($25,000 for married filers). Phases out above certain income thresholds (MAGI over $150,000 single / $300,000 joint).
Proskauer Tax Talks
– Tip Deduction
A new deduction allows up to $25,000 of “qualified tips” to be deducted. Available whether or not you itemize. Phases out over income thresholds.
– Car Loan Interest Deduction
You may deduct interest paid on a loan to buy a qualified vehicle (for personal use), up to $10,000 annually. Phases out for higher earners (MAGI over $100,000 single / $200,000 joint).
– Additional Deduction for Seniors (65+)
From 2025–2028, individuals age 65+ can claim an extra $6,000 deduction (in addition to the regular additional standard deduction) even if they itemize.
- State and Local Tax (SALT) Deduction Cap
- The cap on SALT deductions is raised: temporarily increased to $40,000 (from the old $10,000) and indexed upward by 1% annually until 2030, when it reverts.
- Child Tax Credit & Family Provisions
- The Child Tax Credit is increased to $2,200 per qualifying child in 2025, with phaseouts preserved.
- The refundable portion of the CTC is made permanent and adjusted for inflation.
- this
- Qualified Small Business Stock (QSBS)
- OBBB expands the favorable rules for QSBS, making it easier for certain taxpayers to exclude gains on the sale of stock in qualified C corporations.
Holland & Knight
- OBBB expands the favorable rules for QSBS, making it easier for certain taxpayers to exclude gains on the sale of stock in qualified C corporations.
- Bonus Depreciation / Capital Investments
- The 100% bonus depreciation deduction under Section 168(k) is made permanent for most qualifying tangible property.
- Interest Deductibility (Business Interest Limitations)
- The law relaxes some of the restrictions on business interest deductions, especially for domestic businesses, while tightening rules for firms with significant foreign income.
International / Corporate Provisions
- GILTI (Global Intangible Low-Taxed Income)
- The foreign tax credit “haircut” is reduced: corporations can now credit up to 90% (vs. 80%) of foreign taxes under GILTI rules.
- Rules are also adjusted so that only expenses directly tied to foreign income reduce the foreign tax credit cap.
- FDII (Foreign-Derived Intangible Income)
- The base for FDII is expanded beyond intangibles in some cases; the qualified rate is tweaked upward somewhat.
- BEAT, CFC Rules, International Anti-Abuse
- The bill revises BEAT, controlled foreign corporation (CFC) and base erosion rules (e.g. tightening in some cases).
- The “look-through” rule (which allows certain intra-group transactions to be ignored for tax purposes) is permanently extended.
What the Law Doesn’t Change / Key Omissions
- It does not alter the headline corporate tax rate or capital gains tax rates.
- It does not address carried interest taxation.
- Some planned or discussed energy / climate tax credits (e.g., for EVs, clean energy) are scaled back, eliminated, or restructured in the new law.
Fiscal & Policy Impacts
- The Joint Committee on Taxation, CBO, and outside analysts estimate that the tax provisions will increase federal deficits by several trillion dollars over 10 years (in the ballpark of $4–5 trillion on a conventional basis).
- The act is projected to stimulate economic growth modestly (analysts suggest ~1–1.2% in long-run GDP) due to increased incentives for investment and lowered tax burdens.
- Because many of the new deductions (tips, overtime, car interest) phase out with income, the benefits are skewed toward lower- and middle-income earners.