OnJuly 4, 2025,the President signed into law the“Make American Workers and Families Thrive Again Act”(formerly the “One Big Beautiful Bill Act”). This sweeping legislation—over 1,000 pages—extends, modifies, or makes permanent many provisions from the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025. Understanding this Act is essential for effective financial planning in 2025 and beyond.
Key Highlights:
- Tax Brackets:The 10%, 12%, 22%, 24%, 32%, 35%, and 37% income tax rates are now permanent.
- Personal Exemption:Permanently eliminated. Seniors (65+) receive a $6,000 deduction (2025–2028), phased out at $150,000 (joint) / $75,000 (single).
- Standard Deduction (2025):Increased to $31,500 (joint), $23,625 (head of household), and $15,750 (single), with inflation adjustments thereafter.
- Itemized Deductions:Still allowed but limited for those in the 37% bracket.
- SALT Deduction:Cap raised to $40,000 in 2025, increasing 1% annually through 2029, then reverting to $10,000. Phased down for MAGI over $500,000.
- Child Tax Credit:$2,200 credit made permanent, with inflation adjustments. Phases out at $400,000 (joint) / $200,000 (single).
- QBI Deduction:Made permanent for small businesses and self-employed individuals.
- Estate & Gift Tax:Exemption set permanently at $15 million, indexed for inflation.
- AMT:Exemption and phase-out thresholds made permanent.
- Mortgage Interest:Deductible on loans up to $750,000.
- Tip & Overtime Deductions:Above-the-line deductions allowed through 2027, with caps and income phase-outs.
- Vehicle Interest Deduction:Up to $10,000 for U.S.-assembled personal-use vehicles, phased out over $100,000 income.
- Charitable Contributions:Above-the-line deduction of $300 (joint) / $150 (single) through 2029.
- Trump Deferred Account:New tax-advantaged savings plan for children born 2025–2028. $5,000 annual contribution limit, $1,000 government seed, tax-deferred growth.
- Section 179 Expensing:Limit increased to $2.5 million, with phase-out starting at $4 million.
- Opportunity Zones:Incentives extended through 2033.
Next Steps:Further guidance is expected via Treasury regulations issued by the Internal Revenue Service (IRS), as the Act passed without full committee hearings.
The views are those Stanley R. Smiley, Esq., High Net Worth Senior Strategist and Consultant and Vice President Cetera Financial Group and should not construed as investment advice. The information is believed to be from reliable sources; however, no representation as to its completeness or accuracy is made.