Big Changes Ahead: What the New Tax Law Means for You

Big news out of Washington: The One Big Beautiful Bill Act—yes, that’s the official name—has officially been signed into law on July 4. It’s a sweeping tax and spending package with major implications for individuals, families, and small business owners alike. Please note that specific dollar amounts and detailed provisions should be verified against the official legislative text or updated IRS guidance, as figures may vary in the final enacted version.

Whether you’re planning for retirement, running your own business, or just trying to keep more of your paycheck, here’s what you need to know about how the new law could affect your finances—starting in 2025.

Lower Tax Rates Made Permanent

One of the headline changes: the individual tax cuts from the 2017 Tax Cuts and Jobs Act, which were set to expire after 2025, are now permanent. This means today’s lower federal income tax brackets are here to stay, making it easier to plan for the long term.

Even better: the standard deduction is going up, beginning in 2025:

• $15,750 for single filers
• $31,500 for married couples filing jointly

This simplifies filing for most taxpayers and could reduce your overall tax bill—especially if you don’t itemize.

New Deductions for Everyday Workers

Several new deductions aim to benefit working Americans—particularly those earning variable or service-based income:

• Tip Income Deduction: Deduct up to $25,000 of income earned from tips
• Overtime Deduction: Deduct up to $12,500 of overtime pay
• Auto Loan Interest: Deduct up to $10,000 in interest if you purchase a U.S.-made vehicle
• Senior Deduction: Taxpayers age 65 and older receive a new $6,000 deduction

These deductions are available starting in 2025 and will remain in effect through 2028, unless extended.

Bigger Benefits for Families with Kids

Families will see a boost to the Child Tax Credit, which increases to $2,200 per child in 2025 and will adjust for inflation in future years.

Also introduced: “Trump Accounts”, a new type of government-backed savings account for children. Here’s how they work:

• Every newborn receives a $1,000 seed deposit from the federal government
• Parents can contribute up to $5,000 per year
• Funds grow tax-deferred and can be used for qualified expenses like education or a first home

This could become a powerful savings tool for young families looking to get a financial head start for their kids.

Temporary Relief for High-Tax States

The State and Local Tax (SALT) deduction cap—previously limited to $10,000—is being temporarily raised to:

• $40,000 for most households starting in 2025.

However, this expanded deduction will phase out by 2029, eventually returning to the original $10,000 limit. If you live in a high-tax state, this window offers an opportunity to manage your itemized deductions more strategically.

Positive Updates for Business Owners

If you’re self-employed or run a small business, the new law brings some lasting benefits:

• The corporate tax rate stays at 21%
• The 20% pass-through deduction for qualified businesses (LLCs, S Corps, sole proprietorships) is made permanent
• Bonus depreciation remains in place for new business equipment
• Alternative Minimum Tax (AMT) exemption levels are increased

If you own a business, this is a great time to review your entity structure, retirement plan options, and tax strategy to ensure you’re making the most of these changes.

Fewer Incentives for Going Green

Not all the news is positive. Many clean energy tax credits are being scaled back or eliminated—including those for electric vehicles, solar panels, and home energy upgrades.

If you were planning a green energy investment, check the updated IRS guidance to determine whether those credits still apply or if you need to revise your plans.

Smart Planning Moves to Make

In 2025

• Review your eligibility for the new worker deductions (tips, overtime, auto loans, senior status)
• Adjust your withholding or estimated payments to reflect the updated standard deduction and lower rates
• Open a Trump Account if you’ve had a child born this year
• If you live in a high-tax state, consider itemizing to take advantage of the temporarily expanded SALT deduction

Over the Next Few Years

• Plan for the SALT cap to return to $10,000 by 2029
• Small business owners: explore retirement plans like SEP or Solo 401(k)s while rates are favorable
• Revisit any plans to install solar or buy an EV in light of reduced incentives

Final Thoughts

The One Big Beautiful Bill Act provides more than just lower tax rates—it introduces meaningful new deductions, savings tools, and business incentives. But as always, with new opportunities come new complexities.

If you’re unsure how this impacts your 2025 financial strategy, I’d love to help you walk through it.

Let’s connect and make sure your tax plan is working for you—not against you.

*This information comes from sources we believe to be accurate. However, it is not intended as tax or legal advice and should not be used to avoid federal tax penalties. We encourage individuals to consult their own tax or legal advisors for guidance. Those involved in estate planning should work with a team that includes their personal legal or tax counsel. The information provided, including any opinions expressed, does not represent a specific investment recommendation or advice on buying or selling securities. Additionally, asset allocation and diversification do not guarantee profits or protect against losses in a declining market.