The new federal tax law, the One Big Beautiful Bill Act (OBBBA), was signed into law July 4, 2025 (PL 119-21). It represents one of the most significant changes to the tax code in recent years. This is the first time in 20-30 years that tax changes were passed before November.  This means we have time to actually plan for how these changes will impact your taxes in the year that they affect!  However, the passage of this bill is just the first step.  Now the IRS has to interpret these rules and update their forms to reflect the changes. The information presented below is a very high level summary of some of the changes.  There is a lot more nuance to each provision so this should not be fully relied upon as tax advice or planning.  Again, we are still waiting for additional guidance on some of the provisions to see how this will really impact taxpayers.

If you have been considering purchasing an electric vehicle or putting solar on your house to take advantage of the tax credits, now is the time as these credit are expiring in the next few months!

OBBBA repeals many energy credits, including all three clean vehicle credits for vehicles acquired after September 30, 2025.   This means you have to have purchased your eligible vehicle prior to that date to be eligible for the credit on your 2025 tax return.

Additionally, both of the energy credits available to homeowners are no longer available after December 31, 2025. These energy efficient improvements include installing solar property, home batteries, and heat pumps, among other items.  You will no longer be able to get the 30% credit on qualified costs after they expire.  To qualify for the credit on your 2025 tax return, the improvements not only have to be paid for, they need to be installed and functioning.  Your solar array has to have passed inspections and been turned on by December 31st.  Expect that solar installation companies will be very busy soon and may not have the lead time to complete the project in time if you do not get started ASAP.

 

Many taxpayers received correspondence from the Social Security Administration praising this bill for making social security nontaxable for most recipients.  There were no changes to the taxation of social security income.  It is still up to 85% taxable depending on your other sources of income.  What the bill actually does is provide a $6,000 deduction for taxpayers aged 65 or older by the end of the taxable year.

This deduction is only for tax years 2025 thru 2028 and is in addition to your standard or itemized deduction.  Married taxpayers can claim the $6,000 personal exemption deduction for each spouse if they each meet the age 65 test.  It also phases out for taxpayers whose modified adjusted gross income exceeds $75,000 for single filers and $150,000 for married filing joint.  Married taxpayers can only claim the exemption if they file a joint return.  To claim the senior personal exemption deduction, taxpayers must provide their Social Security number on the return and if the taxpayer is married, the spouse’s Social Security number as well.  Individual tax identification numbers (ITINs) cannot be accepted in lieu of the Social Security number.

Here’s what this means for you:

1. Many of the old rules stay – permanently

• The individual income-tax rate structure from the Tax Cuts and Jobs Act (TCJA) of 2017, which was due to expire after 2025, is now made permanent under OBBBA.
• The standard deduction, no personal/dependent exemptions, etc., continue

2. Big changes for 2025 and beyond

• Many provisions take effect for tax year 2025 (i.e., filings in 2026) or later
• Example: Inflation-adjusted amounts have been updated.

3. Notable benefits for individual taxpayers

• Standard deduction (for tax year 2026): $16,100 for single / married filing separately; $32,200 for married filing jointly; $24,150 for head of household.
• Taxpayers who are age 65 or older on or before the last day of the tax year may claim an additional deduction of up to $6,000 (for single filers or one spouse) on top of the standard deduction (or even if they itemize).
• Estate tax exclusion (for decedents in 2026): $15 million per person (up from $13.99 million for 2025).
• Adoption credit (tax year 2026): Max expenses up to $17,670 (up from $17,280), refundable portion up to $5,120.
• Increased employer-provided childcare credit (for tax year 2026): From $150,000 to $500,000 (or $600,000 if small business) for the employer.

4. Some new/expanded deductions & credits

• “No tax on car-loan interest” (new language added regarding “final assembly in the U.S.”) was added.
• For tipped workers and overtime pay: Some new deductions/benefits are included (though with limits).
• Business expensing: For businesses, full expensing of certain research and experimentation costs begins tax years after 2024, etc.

5. Temporary or phased-out items to watch

• Some benefits are for a limited time or have sunset or phase-down provisions
• Example: Increased SALT (state & local tax) deduction cap: temporarily higher (for 2025-2029) then reverts.

6. Business & international tax changes

• For businesses, key changes in depreciation, research and development, international tax rules (GILTI, BEAT, FDII) are impacted.
• Clean-energy tax incentives: Some are curtailed or phased out under OBBBA.