What the “Big Beautiful Bill” Means for Your Taxes: A Breakdown of the 2025 Tax Overhaul

posted July 13, 2025

On July 4, 2025, President Donald Trump signed into law the “One Big Beautiful Bill Act,” a sweeping tax and spending package that reshapes the U.S. tax landscape for individuals, families, and businesses. At nearly 900 pages, the bill is packed with provisions—some immediate, others phased in over time. Here’s what you need to know about the most impactful tax changes:

💸 Key Tax Cuts and Deductions

• No Tax on Tips and Overtime: Workers can now deduct up to $25,000 in tips and $25,000 in overtime pay from taxable income. This provision is temporary and expires December 31, 2028.
• Child Tax Credit Boost: The credit increases from $2,000 to $2,200 per child starting in 2025 and will be indexed to inflation thereafter.
• Standard Deduction Increase: The standard deduction rises to $31,500 for married couples filing jointly, $23,625 for heads of household, and $15,750 for single filers. These amounts will adjust annually for inflation.
• SALT Deduction Expansion: The cap on state and local tax (SALT) deductions increases from $10,000 to $40,000 starting in 2025, phasing out for incomes over $500,000. It reverts to $10,000 in 2030.
• Senior Tax Relief: Seniors aged 65+ can claim a $6,000 deduction (or $12,000 for couples) through 2028, provided their income is under $75,000 (or $150,000 jointly).

· Auto Loan Deduction: Up to $10,000 in interest on U.S.-assembled car loans is deductible, with phaseouts starting at $100,000 for individuals and $200,000 for joint filers.

🏛️ Broader Economic Impacts

• Permanent Extension of 2017 Tax Cuts: The bill locks in the lower tax brackets and rates introduced under the 2017 Tax Cuts and Jobs Act, avoiding a major tax hike that would have occurred in 2025.
• Tariff Revenue as Offset: To fund the bill’s provisions, the administration plans to use increased tariff revenue, a move that has sparked debate among economists.

🧾 Small Business Impacts: Stability, Savings, and Strategic Planning

The “Big Beautiful Bill” delivers several key wins for small businesses:

• Permanent 20% Small Business Deduction: The Qualified Business Income (QBI) deduction—originally set to expire in 2025—is now permanent. This allows eligible pass-through businesses to deduct up to 20% of their income, leveling the playing field with large corporations.
• Bonus Depreciation and Expensing: The bill extends and enhances bonus depreciation rules, allowing businesses to immediately expense qualified property and investments. This encourages reinvestment and growth.
• Simplified Compliance: By locking in tax brackets and deductions, the bill provides long-term clarity, making it easier for small businesses to plan ahead and avoid disruptive tax code shifts.

⚠️ What to Watch

• Medicaid and SNAP Cuts: The bill includes significant reductions in Medicaid and food assistance programs, with new work requirements starting in 2027.
• Temporary Nature of Many Benefits: Several deductions and credits—including those for tips, overtime, and seniors—expire by 2028, meaning future tax planning will be essential.

This legislation is poised to affect nearly every American household. Whether you’re a working parent, a retiree, or a small business owner, understanding these changes is key to maximizing your tax benefits and preparing for what’s ahead. The “Big Beautiful Bill” offers both opportunities and complexities.