Major Tax Provisions in the One Big Beautiful Bill
Permanent 2017 Trump Tax Cuts & Increased Standard Deduction
The individual income tax rate reductions first enacted in 2017 are now permanent under the new law. In addition, the standard deduction will increase for all taxpayers in 2025 to the following amounts: $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly.
Additional Bonus Deduction for Seniors
Seniors age 65 and older will now benefit from an extra $6,000 deduction. This deduction phases out at higher income levels, so eligibility may depend on your total taxable income.
Charitable Contribution Deduction Without Itemizing
Starting in 2026, taxpayers will be allowed to deduct charitable contributions even if they do not itemize deductions. The deduction is capped at $1,000 for single filers and $2,000 for married couples filing jointly.
Deduction of Tip Income
Workers who receive tips can deduct up to $25,000 of tip income per year, subject to income limitations. This provision is intended to reduce the tax burden for those whose earnings rely heavily on tips.
Deduction of Overtime Income
Employees can now deduct up to $12,500 in overtime income each year, again subject to certain income limits. This aims to provide additional take-home pay for those working extra hours.
Deduction for Interest on New Car Loans
For vehicles assembled in the United States, you can deduct up to $10,000 of interest paid on new car loans between 2025 and 2028. This deduction is designed to encourage the purchase of U.S.-assembled cars during this time frame. (Income limitations apply)
Permanent Increase in Estate Tax Exemption
The federal estate tax exemption has been permanently raised to $15 million per individual, with indexing for inflation starting in 2026. This change may benefit family-owned businesses and farms, as well as high-net-worth individuals planning their estates.
Permanent Small Business 20% QBI Deduction (Section 199A)
The Qualified Business Income (QBI) deduction, which allows eligible small business owners and certain self-employed individuals to deduct up to 20% of their business income, is now a permanent feature of the tax code.
Permanent 100% Bonus Depreciation for Vehicles & Equipment
Businesses can continue to immediately deduct 100% of the cost of eligible vehicles and equipment (bonus depreciation), rather than depreciating those costs over several years. This applies to qualifying assets such as vehicles, machinery, and equipment.
Updated IRS 1099-K Reporting Requirements for Payment Platforms
The law removes the lower $600 reporting threshold for third-party payment platforms (such as Venmo, PayPal, and similar services). The threshold for receiving a Form 1099-K will revert to $20,000 in total payments and more than 200 transactions per year, reducing reporting requirements for many small business owners and gig workers.
Electric Vehicle Tax Credits Ending After September 30, 2025
Several federal tax credits designed to encourage the purchase of electric vehicles for both commercial and personal use will expire for vehicles purchased after September 30, 2025:
Qualified Commercial Clean Vehicles Credit (Section 45W): Businesses can claim a tax credit of up to $7,500 for the purchase of qualifying light commercial electric vehicles. For larger commercial electric trucks, the credit can be as high as $40,000, depending on the vehicle’s weight and cost compared to a similar gas-powered vehicle.
New Clean Vehicle Credit (Section 30D): Individuals and businesses purchasing new electric vehicles may be eligible for a credit of up to $7,500 per vehicle. There are specific requirements related to domestic sourcing of battery components and critical minerals that must be met to qualify.
Previously Owned Clean Vehicle Credit (Section 25E): Buyers of eligible used electric vehicles can claim a credit of up to $4,000 or 30% of the purchase price, whichever is lower. This credit is subject to certain income and vehicle price limitations.
Important:
These credits will no longer be available for vehicles purchased after September 30, 2025. If you are considering adding EVs to your fleet or personal vehicles, plan to make your purchase before this deadline to take advantage of the available credits.
Residential Energy Credits Expiring December 31, 2025
A number of popular tax incentives for residential clean energy and home energy improvements will also expire for projects completed after December 31, 2025:
Residential Clean Energy Credit (RCEC): Homeowners and renters can currently claim a non-refundable tax credit equal to 30% of the cost of qualifying renewable energy equipment, including solar panels, solar water heaters, geothermal heat pumps, small wind energy systems, and other eligible improvements. This credit applies to installations at both primary and secondary residences. To qualify, the system must be installed and placed in service by December 31, 2025.
Home Energy Improvement Credits: Individuals upgrading their main home with energy-efficient improvements—such as insulation, exterior windows, exterior doors, or certain HVAC systems—can claim up to $3,200 per year in tax credits. The credit is generally equal to 30% of the cost, with annual maximums for different categories of upgrades. The improvements must be installed and operational by the end of 2025 to qualify.
Please note:
- New construction does not qualify for these credits.
- Only improvements to your main home are eligible for the home energy improvement credit.
- Credits are non-refundable and some have annual, not lifetime, maximums.
What You Should Do Now
If you are considering purchasing electric vehicles or making energy-efficient upgrades to your home, it is important to act before these credits expire. Completing your purchases and installations before the respective deadlines will help ensure you receive the maximum available tax benefit.
If you have questions about eligibility or timing, please contact our team for personalized guidance.