Tax season may feel far off, but with sweeping legislative changes just passed, proactive financial planning starts now. In this episode, we’re sharing our accessible, in-depth breakdown of the new Big Beautiful Bill, highlighting ten key tax provisions that every taxpayer should understand.
1. Individual and Joint Tax Rates Extended
The tax rates most Americans have grown accustomed to since 2018 will be sticking around “permanently,” or at least as permanent as tax law ever gets! Previously, rates were set to revert to higher pre-2018 levels; however, the current brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) will remain in effect, potentially lowering your tax bill compared to past years. As always, remember these are marginal rates, with income taxed at ascending levels as it increases.
2. Standard Deduction Increases, Permanently
Another significant change is the permanent increase in the standard deduction. For 2025, single filers will see this rise to $15,750, heads of household to $23,625, and joint filers to $31,500. These higher deduction levels will continue to be indexed for inflation, but keep in mind that the personal exemption, once a staple of tax returns, remains permanently eliminated.
3. Temporary Senior Deduction
Seniors aged 65 and above can now benefit from a temporary additional deduction of $6,000 per taxpayer (up to $12,000 for joint filers) for those with incomes below certain limits. This deduction is available for tax years 2025 through 2028 and begins to phase out for incomes above $75,000 (single) and $150,000 (joint). Smart income planning will be more important than ever to ensure you don’t inadvertently reduce your eligibility for this valuable break, especially when considering Roth conversions or similar strategies.
4. Changes to the SALT Deduction
State and Local Taxes (SALT) deductions receive a sizable, but temporary, boost. The cap will rise from $10,000 to $40,000 per return for tax years 2025 through 2029, although this increase comes with income phaseouts starting at $500,000. This increase could make itemizing more advantageous, especially if you can collate deductions into a single year for maximum effect.
5. Limitations on Itemized Deductions for High Earners
For those in the top (37%) tax bracket, starting in 2026, itemized deduction benefits will be limited, with deductions offsetting income only up to the 35% rate. If you fall into the highest bracket, consider accelerating deductions into 2025.
6. Enhanced Child Tax Credit
Parents, take note: the child tax credit has increased to $2,200 per qualifying child, up from $2,000, and this change is permanent. The phaseout remains at $200,000 for singles and $400,000 for joint filers.
7. New Rules for Charitable Giving
Charitable donors will see two key changes starting in 2026. A new below-the-line deduction for charitable gifts (up to $1,000 single, $2,000 joint), even for those not itemizing, is good news for standard deduction takers. Plus, a new 0.5% of AGI “floor” for those itemizing, meaning the first portion of donations may not qualify for a deduction.
8. Expiring Clean Energy Credits
Thinking about buying an EV or installing solar panels? Most clean energy credits are set to expire, including EV credits for cars purchased after September 30, 2025, and residential improvement credits after the end of 2025. Act soon if you want to capture these savings.
9. New Deduction for Car Loan Interest
For 2025 – 2028, new car buyers earning below set income limits can deduct up to $10,000 in car loan interest (single incomes under $100k; joint under $200k, with phaseouts past those levels). Only loans for new, US-assembled vehicles apply.
10. Temporary Relief on Tips and Overtime
For industries where tipping is customary, up to $25,000 of tips may be exempt from federal income tax (although not FICA/social security or state taxes) in 2025 – 2028 for individuals with incomes below the specified limits. There’s also a similar, temporary deduction for overtime compensation.
With so much shifting, personalized planning matters more than ever. The Financial Symmetry team is tracking each change’s impact and is ready to help you map the smartest path forward. Please don’t hesitate to contact us with any questions.
Outline of This Episode
- [00:00] Summarizing the latest major legislation in 10 key tax provisions.
- [04:59] Be mindful of income limits for a taxpayer deduction.
- [08:05] Consider collating deductions into a single year to maximize tax benefits due to the temporary higher SALT limit.
- [11:44] Starting in 2026, non-itemizers can claim a permanent below-the-line deduction for charitable donations.
- [14:24] Many individual clean energy credits are being repealed.
- [18:16] Certain income isn’t subject to federal tax, but deductions vary by filing status.
