In July 2025, Congress passed—and the President signed—an influential tax reform measure known informally as the One Big Beautiful Bill Act (OBBBA). This new tax law makes some of the largest changes to the U.S. tax code in years, with effects beginning in tax year 2025 and beyond. IRS+1
1. Big Deductions and Credits for Individuals
Standard Deduction Increases
The standard deduction—the base amount taxpayers can reduce from taxable income—was raised for 2025. For example, married couples filing jointly can now claim $31,500, and single filers can claim $15,750. These amounts are adjusted annually for inflation. IRS
Child Tax Credit Goes Up
Parents can now claim a child tax credit of up to $2,200 per qualifying child—a bump from previous law—and part of this credit may be refundable. IRS
2. A Major Boost to SALT Deductions
State and local tax (SALT) deductions—on income, sales, and property taxes—were capped at $10,000 for many years. The new law increases that cap up to $40,000 for 2025, with slightly different phase-outs at higher incomes. Wikipedia
This change helps taxpayers in high-tax states (like New York, California, and New Jersey) deduct more of their local taxes on federal returns—at least through 2029. TurboTax
3. New Deductions You Haven’t Seen Before
Overtime and Tips
For tax years 2025–2028, employees may be able to deduct part of their overtime pay as a special above-the-line deduction, potentially reducing their taxable income. Investopedia
Senior Deduction
Taxpayers age 65 and older can claim an extra $6,000 deduction (subject to income limits), easing taxes for older adults.
