- Stegner CPA Newsletter
- Posts
- One Big Beautiful Bill Act. The Good, The Bad and The Ugly!
One Big Beautiful Bill Act. The Good, The Bad and The Ugly!
Aaron Stegner
July 24, 2025
The OBBBA is one of the largest tax bills ever enacted. Here are the key provisions to look at. Fortunately, many of the changes made temporary tax laws from the Tax Cuts and Jobs Act permanent.
The Good
Individual
Income Tax Rates – Made the lower income tax rates from the Tax Cuts and Jobs Act (TCJA) permanent.
Standard Deduction – Locks in the higher standard deduction from the TCJA.
Child Tax Credit – Set at $2,200 per qualifying child by the TCJA. Indexed the deduction for inflation going forward.
Charitable Deduction for When Not Itemizing – Starting 2026, taxpayers who are not itemizing will be able to deduct cash donations up to $1,000 if filing single and $2,000 if married filing joint.
Seniors – Additional $6,000 for 2025-2028. Phased out based on income.
Tips – Deductible up to $25,000 for 2025-2028. Phased out based on income.
Overtime – Deductible up to $12,500 for 2025-2028. There are limits on highly compensated employees, phased out based on income.
Auto Loan Interest – Deductible up to $10,000 of car loan interest for 2025-2028. Many limitations including when the auto was purchased, assembled in the USA, weight limitations, original owner, just to name a few.
State and Local Tax (SALT) Deduction – Raises the SALT limitation from $10,000 to $40,000 for 2025-2029. There is an income limitation, but this is good news for many taxpayers that itemize.
Business
Qualified Business Income Deduction (QBI) – 20% deduction of business income made permanent.
Bonus Depreciation – First-year bonus deduction permanently set at 100% for qualifying property purchased after January 20, 2025.
Form 1099 – Payment requirements will be increased from $600 to $2,000 after 2025. This will also be indexed for inflation going forward.
The Bad
Charitable Contribution Deduction – Eliminates the charitable deduction of the first .5% of income.
Clean Energy Credits - Many of the clean energy provisions were rolled back: eliminating some, ending some in 2026 and adding other limitations.
The Ugly
The IRS has been understaffed and struggled with serving taxpayers for many years. When legislation is passed the IRS and Treasury must work on updating forms, instructions and taxpayer guidance. We won’t hold our breath!