Navigating the “Big Beautiful Bill”: New Tax Breaks for Singles and Couples – The Details Matter

The “One Big Beautiful Bill Act (OBBBA),” recently signed into law, is one of the most significant pieces of tax legislation in years. Whether you’re single or married, understanding its key provisions can help you keep more of your hard-earned money. Here’s a breakdown of items to pay special attention to this year, and details on specific opportunities you should know about.

Sunsetting Provisions

Be aware of sunsetting provisions. The bill phases out many clean energy credits from the Inflation Reduction Act.

• Clean Vehicle Credit, up to $7,500 for a new electric vehicle and $4,000 for a used one, terminates credits for vehicles acquired after September 30, 2025.
• Energy Efficient Home Improvement Credit, up to $1,200 toward energy-efficient improvements, terminates credits for property placed in service after December 31, 2025.
• Residential Clean Energy Credit, up to 30% of the purchase or installation of solar, wind, geothermal, or fuel cell technology, terminates credits for expenditures made after December 31, 2025, regardless of when the property is placed in service.
• Alternative Fuel Vehicle Refueling Property Credit, up to $1,000 for electric vehicle charging equipment installed at residence, terminates credits for property placed in service after June 30, 2026.

If you were planning to buy an electric vehicle or install solar panels, you’ll want to act quickly to take advantage of these expiring tax breaks before they’re gone.

NOTE: The OBBBA did not include legislation on the enhanced subsidies under the Affordable Care Act (ACA), which are set to expire at the end of this year.

Real Estate Opportunity

For real estate investors, the OBBBA permanently restores the 100% bonus depreciation for qualified business property, which was previously phasing out. This is a powerful tool for anyone considering rental property. By conducting a cost segregation study (a report that summarizes your property), you can reclassify certain components of the building (like appliances, landscaping, and fixtures) from a long-term depreciation schedule to a shorter one. The bill’s provisions allow you to immediately write off 100% of the cost of those components, creating a substantial tax deduction that can offset your income and significantly improve your cash flow in the first year. The 100% bonus depreciation begins for qualified property acquired and placed in service on or after January 19, 2025.

Charitable Strategy

If you are in the highest tax bracket (37%) and inclined to give to charity, there are two tax law changes in OBBBA that you should be aware of to create your tax-efficient strategy.

For the first time, charitable contributions will be subject to a 0.5%-of-AGI floor starting in 2026. Or stated differently, only charitable contributions that exceed 0.5% of Adjusted Gross Income (AGI) will be eligible as itemized deductions starting in 2026.For example, suppose a taxpayer has an AGI of $750,000 the 0.5% floor would be $3,750. If they made $5,000 in cash donations, they would only be able to deduct $1,250 ($5,000-$3,750).

The new floor on deductibility of charitable organizations means that high-income taxpayers who plan to make charitable contributions may want to consider accelerating 2026 contributions into 2025 before the 0.5%-of-AGI floor takes effect.

NOTE: Taxpayers should be thoughtful about the timing and amount of charitable donations in the year of a liquidity event, such as selling a home or business. In such a high AGI year, the charitable floor could be a very high dollar amount.

Additionally, the OBBBA puts in place itemized deduction limitations for the 37% tax bracket starting in 2026. The new limitation reduces allowable itemized deductions by 2/37 of the lesser of 1) total itemized deductions, or 2) the amount by which taxable income plus total itemized deductions exceeds the 37% bracket threshold.
This effectively caps the tax benefit of certain itemized deductions at 35% for individuals in the top bracket, reducing the impact of these deductions by 2%.

New or Expanded Deductions and Tax Credits that Start in 2025

• Senior Deduction (Age 65+): An additional $6,000 (single) or $12,000 (joint) deduction for taxpayers age 65 or older, available from 2025–2028. Phaseouts begin at incomes (MAGI) above $75,000 (single) or $150,000 (joint). This is on top of the current standard deduction and the current additional standard deduction given to individuals who are either age 65+ or blind.
• Tip Income Deduction: Workers in “traditionally and customarily” tipped occupations can deduct up to $25,000 of qualified tip income starting in 2025 and ending in 2028. There is no difference in the deduction limit for single verses joint filers. The deduction phases out starting at incomes (MAGI) above $150,000 (single) or $300,000 (joint). The IRS will be issuing a list of occupations that qualify before October 2, 2025.
• Overtime Pay Deduction: Employees can now deduct the bonus/premium portion of overtime pay—up to $12,500 for single filers and $25,000 for joint returns—subject to the same timeline and phaseouts as the tip deduction.
• Auto Loan Interest Deduction: Deduct up to $10,000 of interest on new, assembled in the USA, personal-use vehicle loans taken out between 2025 and 2028. Phaseouts begin at income (MAGI) exceeding $100,000 (single) and $200,000 (joint). Translation: This deduction mostly applies to taxpayers in the 12% and 22% tax bracket because of the income limitations.
• State and Local Tax (SALT) Deduction: Taxpayers in high-tax states could benefit from the temporary expansion of the State and Local Tax (SALT) deduction. The previous cap of $10,000 has quadrupled to $40,000 in 2025 for earners under $500,000, then phases down for higher incomes to a minimum of $10,000. The deduction limit will increase by 1% each year and then revert back to $10,000 in 2030. This could make itemizing deductions a more appealing option for those who were limited by the $10,000 cap previously.
• Child Tax Credit: Under OBBBA, the Child Tax Credit receives a permanent boost from $2,000 to $2,200 per child starting in 2025, and for the first time in its history, the credit will be indexed for inflation beginning in 2026. The refundable portion—known as the Additional Child Tax Credit—remains at $1,700 for 2025 but will also increase with inflation moving forward. Importantly, the income phaseout thresholds remain at $200,000 for single filers and $400,000 for joint filers, unchanged from TCJA and not adjusted for inflation, meaning more households may gradually phase out of eligibility.

Standard Deduction or Itemize?

All taxpayers should re-evaluate their tax strategy for the 2025 tax year. With the higher standard deductions and expanded SALT cap, it’s a good time to consult with a tax professional to determine if itemizing or taking the standard deduction is the right choice for you.

Read More Money Saving Ideas

There is much more to this bill – learn about all the opportunities in the new tax bill in our previous article, click here to read. We combed through the bill and found very important tax savings items to talk about with your CPA. As always, feel free to reach out to us as a resource on financial planning and investment strategies that align with these new changes.

Sources:
https://www.congress.gov/bill/119th-congress/house-bill/1/text