What the “Big Beautiful Bill” Means for Your Taxes

Congress just passed major tax legislation on July 4th, and it will affect nearly every taxpayer starting in 2025. Here’s a straightforward breakdown of the most important changes, what’s staying, what’s going away, and how it could impact you. This information is for educational purposes and is not tax advice, always consult with your tax professional. 1. Individual Tax Rates & Standard Deduction

What it was: Lower tax brackets and higher standard deduction from the 2017 Tax Cuts and Jobs Act (TCJA) were set to expire after 2025 (“sunset”).

What it is now: These rates and deduction levels are now permanent. 2025 standard deduction: $15,750 (single), $31,500 (married filing jointly), indexed for inflation.

Example: A married couple who previously planned for their standard deduction to drop in 2026 can now continue to use the $31,500 deduction in future years unless changed by new law.

2. Child Tax Credit

What it was: $2,000 per child, partially refundable (up to $1,400).

What it is now:$2,200 per child, indexed for inflation; the $1,400 refundable portion is now permanent.

Example: A family with two qualifying children receives a credit of $4,400 (vs. $4,000 previously).

3. SALT Deduction Cap (State and Local Taxes)

What it was: Deduction capped at $10,000 per return, which led most taxpayers to use the standard deduction.

What it is now: Cap raised to $40,000 for incomes under $500,000 (single & married filing jointly) from 2025–2029. For incomes between $500,000 and $600,000 the $40,000 cap is reduced by 30% of the amount over $500,000. For incomes over $600,000 cap goes back to $10,000.

Example 1:  A married couple with $23,000 in state and local taxes (SALT), $10,000 in mortgage interest, and $4,000 in charitable donations could now claim $37,000 in itemized deductions (above the $31,500 standard deduction) so they would itemize and reduce taxable income further.

Example 2: Another married couple with $16,000 in state and local taxes (SALT), $4,000 in mortgage interest, and $2,000 in charitable donations would have total itemized deductions of $22,000. Because the 2025 standard deduction is $31,500, they would still use the standard deduction, as it provides a much larger benefit than itemizing.

Example 3 (Phaseout Example): A married couple with $550,000 in income pays $30,000 in state and local taxes (SALT), $12,000 in mortgage interest, and $2,000 in charitable donations. At this income, their SALT deduction cap is reduced to $25,000 ($40,000 minus 30% of the $50,000 over the threshold). Since they paid $30,000 in SALT but can only deduct $25,000, their total itemized deductions are $39,000. Because this is above the $31,500 standard deduction for 2025, they would itemize and reduce taxable income further.

For households with income above $600,000, the SALT deduction cap drops to $10,000. Many will use the standard deduction unless their other itemized deductions are very high.

 Note: With the higher SALT cap, some households, particularly in high-tax states or with significant deductible expenses, may find it beneficial to itemize again. However, many taxpayers will still use the standard deduction unless their total deductible expenses exceed the new higher threshold. For incomes between $500,000 and $600,000 the cap is phased out. Consult with your tax professional when filing.

4. Senior Deduction (Age 65+)

What it was: No special deduction beyond the small additional standard deduction for age.

What it is now: $6,000 deduction per taxpayer age 65+ ($12,000 for a couple if both are 65+).

Phased out for incomes above $75,000 (single) or $150,000 (joint) at a rate of 6% for every dollar of MAGI above the threshold.

Fully eliminated at $175,000 (single) or $250,000 (joint).

Available for tax years 2025 through 2028 only.

Example 1 (both spouses 65+):

Married couple, both 68, MAGI $200,000:

 o Excess over $150,000 = $50,000

 o Phase-out: 6% × $50,000 = $3,000

 o Deduction: $12,000 – $3,000 = $9,000

 o Tax savings (24% bracket): $9,000 × 24% = $2,160

Example 2 (single, age 65+):

Single taxpayer, age 70, MAGI $100,000:

 o Excess over $75,000 = $25,000

 o Phase-out: 6% × $25,000 = $1,500

 o Deduction: $6,000 – $1,500 = $4,500

 o Tax savings (24% bracket): $4,500 × 24% = $1,080

5. Business Tax Changes

What it was: Bonus depreciation and Section 199A pass-through deduction were scheduled to expire after 2025.

R&D expenses had to be amortized over several years.

 What it is now: 100% bonus depreciation and the 20% Section 199A pass-through deduction are now permanent.

Immediate expensing for R&D is restored and permanent.

Example: A business owner who buys $100,000 in equipment can now immediately deduct the entire amount.

A qualifying S-corp owner with $250,000 in pass-through income can continue to deduct $50,000.

Note: Consult your tax advisor to confirm eligibility and to ensure proper documentation for these deductions.

6. Other Temporary Deductions (Through 2028)

What it was: No special deduction for tips/overtime or auto loan interest.

What it is now: Tips & Overtime: Up to $12,500 (single) / $25,000 (joint), but phased out dollar-for-dollar for every $1 your modified adjusted gross income (MAGI) is above $150,000 (single) or $300,000 (joint).

 Auto Loan Interest: Up to $10,000/year for new U.S.-assembled vehicles, phased out dollar-for-dollar for MAGI above $100,000 (single) or $200,000 (joint).

Clean-energy credits: Most repealed as of 2025.

Car Buyer’s Note:

If you plan to buy a new car in 2025 or later and want to claim the new auto loan interest deduction, make sure the vehicle is both new and assembled in the United States. Ask your dealer to confirm and provide documentation of U.S. assembly, and keep all your purchase and financing records in case you need them for tax purposes.

Example 1 (Auto, married, partial deduction):

A married couple buys a new U.S.-built car, pays $8,000 in qualifying loan interest, and has a MAGI of $205,000 ($5,000 above the $200,000 threshold).

 o Allowed deduction: $8,000 – $5,000 = $3,000

 o Tax savings (24% bracket): $3,000 × 24% = $720

Example 2 (Overtime, married, full deduction):

A married couple earn a combined $18,000 in tips and overtime, and have a MAGI of $295,000 ($5,000 below the $300,000 threshold).

 o Allowed deduction: $18,000 (full amount, since income is below the threshold)

 o Tax savings (24% bracket): $18,000 × 24% = $4,320

Expiration Table: What’s Temporary?

Provision	Ends After
Senior (65+) deduction	2028
Tips & Overtime deduction	2028
Auto loan interest deduction	2028
SALT cap increase	2029
Other changes	Permanent

Bottom Line

Most taxpayers will see some impact from these changes, whether it’s in their deductions, credits, or tax planning strategies. If you’re unsure how this affects you or want to plan ahead, it’s a good idea to talk to your tax professional. For questions about how these changes fit into your overall financial plan, feel free to reach out. Disclosure:

This post is for informational and educational purposes only and should not be considered tax, legal, or investment advice. Individual situations vary, and tax laws can change. Please consult a qualified tax professional or your CPA for guidance specific to your circumstances. Altruist Wealth Management does not provide tax advice or filing.