The OBBBA was signed into law on July 4, 2025, that implemented numerous changes to the United States tax code which could affect how individuals manage their taxes and finances.
One of the key factors of the OBBBA was the permanent extension of the lower tax rates that were a part of 2017 Tax Cuts and Jobs Act (TCJA). These were set to expire at the end of this year if no further legislation was enacted. In addition to that, there were also changes to other credits and deductions individuals and families may claim on their tax return. Below are a few of them.
For All Tax Filers
- Lower tax rates, the higher standard deduction, and the estate and gift tax exclusion from TCJA are all extended permanently.
- The state and local tax (SALT) deduction cap will temporarily rise annually through 2029.
- Those that claim the standard deduction instead of itemizing them will be able to deduct charitable contributions up to $1,000 for single filers and $2,000 for married filing jointly.
- Green energy tax credits will be eliminated by September 30, 2025.
For Retirees
- For filers 65+, a temporary $6,000 deduction for single filers and $12,000 for married filing jointly if both are 65+ for tax years 2025-2028. These are adjusted depending on income but available to those who claim the standard deduction or itemize.
For Parents & Families
- The increased Child Tax Credit is permanently extended.
- A federal program provides a $1,000 contribution for children born after 2024 but before 2029.
- You may use your 529 funds for a wider range of education expenses.