Potential Individual Benefits from One Big Beautiful Bill (OBBB) Act
The OBBB Act from May 2025 made permanent the individual income tax rates set by the 2017 Tax Cuts and Jobs Act — 10%, 12%, 22%, 24%, 32%, 35%, and 37% — along with inflation indexing of thresholds. Standard deductions are increased and made permanent: for 2025, $15,750 for single filers, $31,500 for married filing jointly, $23,625 for head of household. The personal exemption remains repealed for most taxpayers.
New deductions are introduced:
- A senior bonus deduction of $6,000 for taxpayers aged 65+ during 2025‑2028, with phase‑outs for incomes over $75,000 (single) / $150,000 (joint).
- A deduction for “qualified tips” (for occupations regularly receiving tips) up to $25,000 per year during 2025‑2028.
- A deduction for overtime income: The portion of overtime pay above the regular rate (“half‑time” extra) can be deducted, with caps ($12,500 single / $25,000 joint), and phase‑outs above certain income levels.
The state and local tax (SALT) deduction cap is raised from $10,000 to $40,000 for taxpayers with moderate incomes (under a MAGI threshold around $500,000), with the cap gradually rising modestly in following years before reverting to $10,000 in 2030. Also, the Alternative Minimum Tax (AMT) exemption and its phase‑out thresholds are made permanent, generally more favorable under OBBB than under previous law.
Disclaimer
The information contained within this article is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant.
Presentation of the information is not intended to create, and receipt does not constitute, an accountant-client relationship. Readers are advised not to act upon this information without seeking the service of a professional accountant.