On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) became law, making key 2017 tax rules from the Tax Cuts and Jobs Act (“TCJA”) permanent and adding several new tax breaks targeted at working households and seniors. Below is your quick-reference guide to what changed for individuals and what to do now. 

Executive Summary

• Permanent (or improved with a 5-year lock)
  • The 2017 lower individual rate schedule from TCJA stays in place permanently. The 20% pass-through (section 199A) deduction and higher AMT exemption stick around, too. 
  • Improvements to the child tax credit and adoption credit.
  • State and Local Tax (“SALT”) cap relief is expanded but only through 2029—good news for high-tax states, but still not “unlimited SALT forever.” Thereafter the $10,000 annual SALT deduction cap applies again.
• New temporary deductions (2025 – 2028): “no tax on tips,” “no tax on overtime,” car-loan interest, and a brand-new $6,000 per-person senior deduction—available even if you don’t itemize. 
• Charitable giving rules change: a small “floor” before itemized gifts count, plus a revived above-the-line charitable deduction for non-itemizers (temporary). Bunching strategies matter again. 

What’s now permanent (or improved with a 5-year lock)

1) Individual rate cuts & AMT relief locked in

The OBBBA keeps the lower post-2017 brackets in place, along with the increased AMT exemption/phase-out thresholds. On balance, expect fewer folks to hit AMT and the rate chart you’ve grown accustomed to is here to stay. Owners of pass-throughs also keep the section 199A 20% deduction, with some expanding modifications [see my article on Business Tax Changes in the OBBBA for more detail]. 

2) Child Tax Credit slightly increased & indexed

The OBBBA bumps the Child Tax Credit to $2,200 per qualifying child and adds inflation indexing (starting after 2026). The refundable portion of the credit remains at a maximum of $1,700 per qualifying child for 2025 (also indexed to inflation in future years).

3) Adoption Credit improvement to add some refundability

Prior law permitted a nonrefundable credit for total qualified adoption expenses incurred (up to a $17,280 limit). The OBBBA preserves the prior law provisions and now allows a portion of the credit to be refundable up to $5,000 (with annual increases indexed to inflation) of qualifying adoption expenses.

4) SALT cap improved with 5-year lock before reverting

SALT deduction relief is broadened to a max deduction of $40,000 annually (indexed for inflation after 2025) through 2029. If you’re in a high-tax state or do state-and-local tax workaround planning, this is a window—plan around the re-tightening after 2029 (i.e., the maximum deduction then returns to $10,000 annually). 

Key new temporary deductions (2025 – 2028)

These are structured as above-the-line deductions—meaning you can claim them even if you don’t itemize (subject to income caps and reporting rules).

1) “No tax on tips”

Deduct up to $25,000 of qualified tips (limited to net income from the trade or business producing the tips, for self-employed individuals) for eligible workers (phases out starting at Modified Adjusted Gross Income (“MAGI”) of $150k for single filers or $300k for married filing jointly filers). The taxpayer must be in a “customarily and regularly” tipped occupation to be listed by the IRS, and the amounts must be properly reported (Form W-2, Form 1099, or Form 4137). If married, a taxpayer must file jointly with the taxpayer’s spouse to claim this deduction. Expect transitional relief and new employer reporting. 

2) “No tax on overtime”

Deduct the overtime premium (for example, the “half” in time-and-a-half) up to $12,500 for single filers ($25,000 married filing jointly), with the same $150k/$300k MAGI phase-out noted above. Applies to FLSA-required OT that’s reported on a Form W-2 or Form 1099 wage statement. If married, a taxpayer must file jointly with the taxpayer’s spouse to claim this deduction.

3) Car-loan interest deduction

Deduct up to $10,000 of interest on a loan for purchase (leases don’t qualify) of a qualified (generally, having a gross weight rating less than 14,000 lbs.) new (used doesn’t qualify) vehicle, assembled in the U.S., for personal use, and secured by a lien on the vehicle (loan originated after 12/31/24). Taxpayers will include the VIN on their returns; lenders will have new Form 1098-style reporting. 

4) $6,000 “Senior Deduction”

Qualifying individuals age 65+ can claim an extra $6,000 deduction ($12,000 for joint filers if both spouses are age 65+), on top of the normal additional standard deduction for seniors. To qualify, a taxpayer must attain age 65 on or before the last day of the taxable year. If married, a taxpayer must file jointly with the taxpayer’s spouse to claim this deduction. The deduction phases out at MAGI of $75k for single filers ($150k for married filing jointly). 

Charitable giving updates

1. Taxpayers who Itemize Deductions: A new 0.5% of income “floor” before cash gifts to public charities are deductible (i.e., your first 0.5% of Adjusted Gross Income (“AGI”) doesn’t count). That makes bunching (or stacking into Donor-Advised Funds) more attractive again. Also, for tax year 2026 and continuing, there’s a new above the line charitable deduction for cash donations, equal to $1,000 (single filers) / $2,000 (married filing jointly) available to both itemizers and non-itemizers.
2. Taxpayers who don’t Itemize Deductions: As noted, for tax year 2026 and continuing the OBBBA provides a new above the line charitable deduction for cash donations, equal to $1,000 for single filers or $2,000 for married filing jointly.

Action checklist (what to do now)

1. Update your Form W-4 / estimates for 2025. If you’ll use the tips/overtime/senior or car-interest deductions, your 2025 tax might drop—consider adjusting withholding so you’re not overpaying. The IRS says no changes to 2025 information returns or withholding tables right away, so it’s on you to tweak. 
2. Tipped/OT workers: start tracking. Keep clean records (pay stubs, Form 4137 for cash tips, employer statements). Employers will face new reporting—expect updated Form W-2 / Form 1099 boxes or separate statements. 
3. Considering a car purchase? If you were already planning to buy, run the numbers on a new, U.S.-assembled, qualifying vehicle financed in 2025 – 2028—the deductible interest (up to $10k) could swing the math. Verify U.S. final assembly (window sticker/VIN or NHTSA VIN Decoder) and other “qualifying vehicle” factors (e.g., gross vehicle weight rating of less than 14,000 lbs).
4. Seniors: Coordinate the $6,000 senior deduction with the standard deduction vs. itemizing—and with charitable bunching—so you don’t leave dollars on the table. 
5. Charitable giving plan: With the 0.5% floor for itemizers, and the new above-the-line deduction for both itemizers and non-itemizers (for tax year 2026 forward), consider bunching gifts into alternating years or front-loading into a DAF in a high-income year. 
6. SALT window (through 2029): If you’re in a high-tax state, re-evaluate state and local tax timing and your use of SALT cap workarounds (e.g., PTE taxes). The expanded relief won’t last forever. 
7. Adoption benefits: If you’re mid-process, confirm the new adoption credit amounts/phase-outs against your qualifying expenses and expected income.
8. State conformity caveat (don’t skip this): Your state may not automatically follow these federal changes (especially the tips/overtime and car-interest deductions). Expect a patchwork in the 2025 filing season; check your state’s conformity rules or talk with your advisor. 

Questions or want a tailored OBBBA impact review?

Contact Nick Eusanio, Partner, Tax Planning & Compliance — DBL Law