On July 4th, while most of the country was celebrating with family and fireworks, Congress quietly signed a major piece of legislation into law: the One Big Beautiful Bill Act (OBBBA). Despite the name, this is serious business because it makes serious changes to the tax code that affect individuals, families, and business owners alike.

While the OBBBA includes dozens of updates to the tax code, we’re focusing on the provisions that are most likely to impact your household, your business, and your financial plan. Here’s what’s changing, what’s staying, and where it makes sense to plan ahead.

OBBBA Updates for Individual Taxpayers (Single or Married)

Lower Tax Brackets Are Now Permanent

The current federal tax brackets (10% through 37%) were set to expire at the end of 2025 and revert to the pre-2017 rates, which topped out at 39.6%. The OBBBA locks in the lower brackets (for now!).

What this means:

High earners avoid a 2.6% rate increase, locking in potential tax savings year over year. For everyone else, it brings more predictability to income and tax planning.

Higher Standard Deductions Stay

The OBBBA permanently eliminates the personal exemption, which allowed taxpayers to deduct a fixed amount for themselves and dependents. In its place, the law makes permanent the increased standard deduction which will adjust annually for inflation. For tax year 2025, the standard deduction amounts are:

• $31,500 for Married Filing Jointly
• $15,750 for Single filers
• $23,625 for Head of Household

Temporary Senior Exemption: From 2025 through 2028, taxpayers age 65 and older may claim a $6,000 exemption. For married couples, both spouses must be 65+ to receive the full amount.

What this means:

Most taxpayers will see a higher upfront deduction without having to itemize. And for older adults, there’s a limited-time opportunity to lower taxable income even further.

State and Local Tax (SALT) Cap

The SALT deduction cap increases to $40,000 starting in 2025 (double for joint filers), but begins phasing out for high earners. By 2030, the cap will return to the previous $10,000 limit.

What this means:

If you live in a high-tax state like New York, California, or Maryland, you may benefit from the temporary increase. But it’s a short-lived break, and high earners may see little to no benefit depending on their income.

New and Noteworthy OBBBA Benefits

The OBBBA introduces several new deductions aimed at working families, service workers, and everyday taxpayers, most of which don’t require itemizing. Here’s what’s now could be on the table for you:

Expanded Charitable Contributions

Starting in 2026, taxpayers can deduct up to $1,000 in cash contributions ($2,000 for joint filers) without itemizing—a small but welcome break for everyday givers.

But there’s a catch: the law also adds a 0.5% AGI floor. That means you can only deduct contributions that exceed 0.5% of your adjusted gross income. If your AGI is $100,000, you’ll need to give more than $500 before the deduction kicks in. Any unused portion can be carried forward to future tax years.

For C corporations, a new 1% income floor applies to charitable deductions, which must still fall within the existing 10% limit.

What this means:

Smaller donors benefit from a simple deduction, no need to itemize. But larger donors (especially high-income individuals and businesses) may need to give more before seeing any tax benefit. This makes strategic giving and timing contributions more important than ever.

Overtime Pay Deduction

Employees can now deduct up to $12,500 in qualified overtime pay ($25,000 for joint filers) earned after 2024. This deduction is available even if you take the standard deduction, but it begins to phase out once your modified adjusted gross income (MAGI) exceeds $150,000 ($300,000 for joint filers).

What this means:

If you regularly work overtime, this could lower your taxable income—especially helpful for middle-income households who don’t typically itemize.

Tip Income Deduction

Workers in tip-based roles (like servers, stylists, and spa professionals) can deduct up to $25,000 in reported tip income per year, without itemizing. This benefit phases out at the same MAGI thresholds: $150,000 ($300,000 for joint filers).

What this means:

For tipped workers, this is a major win. You get to reduce your taxable income without jumping through hoops to itemize. It’s also a nudge to ensure all tips are properly reported—because only reported tips qualify.

Car Loan Interest Deduction

Starting in 2025, taxpayers can deduct up to $10,000 in interest on loans for new passenger vehicles, as long as the car is assembled in the U.S. and used for personal (not business) use. The deduction phases out once MAGI exceeds $100,000 ($200,000 for joint filers).

What this means:

Buying a new car? This deduction could help ease the sting of interest payments but only if your income falls within the eligible range and you’re buying new, not used.

Stay tuned for our next breakdown: What the OBBBA means for families with kids as well as small business owners. In the meantime, explore more tax planning strategies and financial resources on our blog.