OBBB Tax Law Changes

The One Big Beautiful Bill, signed into law on July 4, 2025, is one the most comprehensive, sweeping overhaul of the U.S. Tax Code enacted in US History. The OBBB makes many of the Code changes under the 2017 Tax Cuts and Jobs Act (TCJA) permanent.

Many of the tax law changes go into effect in 2026 (tax year 2025), while others will go into effect in 2027 for tax year 2026.

Tax Law Change

Effective Year

Notes

Tax brackets (10%–37%) made permanent

2025

Codifies tax rates permanently

QBID 20% pass-through deduction made permanent

2025

Additional $400 minimum deduction starts in 2026

Miscellaneous itemized & moving expense deductions eliminated permanently

2025

Previously set to expire in 2025

$750,000 mortgage interest deduction limit made permanent

2025

Mortgage insurance premiums deductible starting in 2026

Child Tax Credit set at $2,200; ACTC at $1,700

2025

Adjusted in $100 increments going forward

Adoption credit set at $17,280 (refundable up to $5,000)

2025

Casualty loss deduction made permanent

2025

Expanded to include state-declared disasters in 2026

Standard deduction increased

2025

OBBB increased it beyond TCJA levels

SALT deduction cap raised to $40,000

2025

Increases 1% annually through 2029, then reverts to $10,000 in 2030

Car loan interest deduction (up to $10,000)

2025

Applies through 2028

Tip income deduction (up to $25,000)

2025

Phases out at $150K/$300K AGI; expires in 2028

Overtime income deduction (up to $12,500/$25,000)

2025

Same phase-out and expiration as tip deduction

$6,000 deduction for taxpayers over age 65

2025

Above-the-line; expires in 2028

Bonus depreciation increased to 100%

2025

Permanent; includes manufacturing buildings placed in service before 2031

Clean Vehicle Tax Credit expires

2025

Ends September 30, 2025

Energy Efficient Home Improvement Credit expires

2025

Ends December 31, 2025

Minimum $400 pass-through deduction for material participation

2026

Requires $1,000+ in business revenue

Mortgage insurance premiums deductible

2026

Applies to returns filed in 2027

Casualty loss deduction expanded to state-declared disasters

2026

Dependent Care FSA contribution limit increased to $7,500

2026

$3,750 if married filing separately

Child & Dependent Care Credit increased to 50% of expenses

2026

Up to $3,000 for one child, $6,000 for two or more; remains nonrefundable

Educator expense deduction moved to Schedule A

2026

Expanded to include coaches and athletic equipment; no $300 cap

Gambling loss deduction reduced to 90% of winnings

2026

Previously allowed 100%