2025 Tax Bill: What’s Included

The 2025 Tax Bill—officially titled the One Big Beautiful Bill Act (OBBBA)—has been signed into law, bringing major tax changes for individuals, families, and small businesses. At DuPage Tax Solutions, we’ve reviewed the final legislation and summarized the key tax provisions that could impact your finances starting this year.

Home » 2025 Tax Bill: What’s Included

July 10, 2025

Permanent Extension of 2017 Trump Tax Cuts

The 2017 Tax Cuts and Jobs Act (TCJA) introduced lower tax rates, expanded tax brackets, and a larger standard deduction. Presently, the 2025 tax bill makes them permanent. For example, the standard deduction is now as follows for the 2025 tax year:

$15,750 for single filers and married filing separately
$23,625 for head of household
$31,500 for married filing jointly

The 2025 Tax Bill Increases the SALT Deduction Cap

The OBBBA raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers earning under $500,000, beginning in 2025. Furthermore, this increased cap will phase out at higher income levels and revert to $10,000 in 2030. Even more, the cap and income threshold will also increase by 1% annually, making it more beneficial over time.

New Deductions for Tip and Overtime Income

The bill introduces new deductions available from 2025 through 2028 for workers who receive tips and overtime. Specifically, eligible workers may deduct:

Up to $25,000 in tip income
Up to $12,500 in overtime pay ($25,000 for joint filers)

Note that both deductions begin to phase out at $150,000 of income ($300,000 if filing jointly).

Auto Loan Interest Deduction Introduced by the 2025 Tax Bill

Thanks to the OBBBA, taxpayers can now deduct up to $10,000 per year in interest on loans for U.S.-assembled vehicles purchased between 2025 and 2028. Even better, you don’t need to itemize to qualify. However, the deduction phases out at incomes above $100,000 (single) or $200,000 (married filing jointly) and used vehicles do not qualify.

Senior Tax Break Under the 2025 Tax Bill

From 2025 through 2028, the 2025 tax bill allows individuals age 65 and over to claim an additional $6,000 standard deduction if they meet income limits ($75,000 for single filers, $150,000 for joint filers). This is in addition to the existing extra standard deduction of $2,000 for single filers and $1,600 for joint filers. Therefore, many retirees may benefit from a lower tax burden.

Higher Child Tax Credit

Beginning in 2025, the OBBBA increases the Child Tax Credit from $2,000 to $2,200 per child, with future adjustments for inflation and a one-time bonus for children born between 2025-2028. Moreover, the bill also makes the income thresholds of $200,000 (single) and $400,000 (married) permanent.

Back to 100% Bonus Depreciation

Bonus depreciation is now 100% for eligible business property placed in service on or after January 19, 2025. This provision is extended through 2031. As a result, business owners may recover asset costs more quickly.

Section 179 Deduction Expanded

Taxpayers may elect to expense qualifying I.R.C. § 179 property in the year it’s placed in service. Previously, for 2025, the deduction limit was $1,250,000 with a phaseout limit of $3,130,000—amounts established by the TCJA and adjusted annually.

Now, the new law permanently raises the Section 179 deduction limit to $2,500,000 and the phaseout threshold to $4,000,000 for tax years beginning after 2024 (indexed for inflation starting in 2026). Thus, more businesses can take full advantage of this provision.

Qualified Business Income (QBI) Deduction Made Permanent

The TCJA introduced the QBI deduction, allowing pass-through business owners to deduct 20% of qualified income. Under the 2025 tax bill, this deduction is now permanent. Additionally, starting in 2026, there is a new $400 deduction for taxpayers earning at least $1,000 in QBI and materially participating in the business.

Full R&D Expensing Under the 2025 Tax Bill

Before 2022, businesses could immediately deduct domestic research and development (R&D) expenses. However, those deductions had to be amortized over five years starting in 2022. The OBBBA reverses that rule and once again allows full expensing for qualifying domestic R&D expenses incurred after December 31, 2024.

What the 2025 Tax Bill Means for You

Overall, the 2025 tax bill delivers wide-reaching changes that may affect your personal and business finances for years to come. With more and higher deductions, extended credits, and permanent business provisions, this new law creates both opportunities and challenges. Now is the time to evaluate how the changes apply to your unique situation.

References

One big beautiful bill act: Tax deductions for Working Americans and seniors. Internal Revenue Service. https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors