Dear Clients,

Congress just passed major tax legislation — the One Big Beautiful Bill (OBBB) — with changes starting in 2025 and beyond. Here’s what you need to know:

 Tax Rates

• No change to current tax rates:
  • C corps remain at 21%
  • Top individual rate remains 37%
• AMT adjustments are now permanent

 Standard Deduction (2025)

• Joint filers: $31,500
• Single: $15,750
• Head of household: $23,625
• Age 65+ Bonus: +$1,600 per spouse (joint) / +$2,000 (single/HOH)

 Child-Related Breaks

• Child Tax Credit: $2,200 with $1,700 refundable (SSNs required)
• Child & Dependent Care Credit (2026):
  • $1,500 (1 dependent), $3,000 (2+)
  • Dependent Care FSA cap rises to $7,500
  • Employer credit rises to $600,000

 SSNs Required for Deductions

• Child credit
• Senior deduction
• Education credits
• Tips/overtime deductions

 Estate Tax

• Exemption rises to $15 million (2026)
• Top estate tax rate stays at 40%

 SALT Deduction

• Cap increased to $40,000 (2025–2029)
• Phases out for AGI over $500k (joint) / $250k (separate)

 New Deductions (2025–2028)

Available to all filers (standard or itemized):

• $6,000 Senior Deduction (per person 65+)
• Married couples with both spouses 65 and older can deduct $12,000. Not every senior will qualify. The deduction begins to phase out for taxpayers with modified AGI over $150,000 on joint returns and $75,000 on single and head-of-household returns.
• Up to $25,000 in tip income
• The write-off begins to phase out at modified AGIs over $300,000 on joint returns…$150,000 on others. There are lots of rules and complexities, and IRS guidance will be needed.
• Up to $12,500 in overtime pay for single filers
• $25,000 for joint filers. This write-off begins to phase out at modified AGIs over $300,000 on joint returns… $150,000 on others. And there are many rules, guardrails and knotty technicalities.
• Up to $10,000 auto loan interest (U.S.-assembled vehicles)
• All have income limits and detailed rules.
• On new car, minivan, SUV, pickup truck or motorcycle purchased after 2024. Final assembly of the vehicle must take place in the U.S. And the write-off begins to phase out at modified AGI over $200,000 for joint filers…$100,000 for others.

 Charitable Donations

• Nonitemizers: $1,000 (single), $2,000 (joint)
• Itemizers: Only over 0.5% of AGI deductible
• C Corps: Must exceed 1% of taxable income
• $1,700 credit for K–12 scholarship donations (in opt-in states)

 Itemized Deductions Return (2026)

• Value capped at 35% rate for high earners

 Gambling Losses

• Only 90% of losses deductible vs. winnings (2026)

 Adoption Credit

• $5,000 refundable portion added (2025)

 529 Plans Expanded

• Annual K–12 withdrawal cap: $20,000 (2026)
• More qualifying expenses allowed
• Includes post-high school credentials

 Trump Accounts (2026)

• $5,000 annual contributions (non-deductible)
• $1,000 gov’t match for kids born 2025–2028
• Tax-deferred growth

 Green Energy Credits Ending

• EV tax credits end Sept. 30, 2025
• Home energy credits expire 2025
• Wind/solar credits require build start by July 4, 2026

 Business Tax Changes

• QBI 20% deduction made permanent
• Section 179 cap: $2.5M
• Bonus depreciation (100%) returns
• Full R&D expensing for U.S. costs
• Eased interest deduction rules
• New penalties for ERC abuse

 1099 Reporting

• 1099-K: back to $20,000 & 200 transactions
• 1099-NEC/MISC: threshold raised to $2,000 (2026)

 New 1% Remittance Tax (2026)

• Applies to noncitizens sending money abroad
• U.S. citizens/residents generally exempt

We’re here to help!
These changes are complex, and some benefits depend on your income level or filing status. We’ll be reviewing how they affect each of our clients and planning ahead to maximize your tax savings. We do not have full guidance from the IRS regarding all the rules and regulations, but this provides a good overview of what is changing.