One Big Beautiful Bill - What Tax Laws Change in 2025 and 2026

The One, Big, Beautiful Bill was signed on July 4.

The biggest things to know

1. The state and local tax cap is raised to $40,000 through 2029.

2. Bonus depreciation for business property is once again 100%.

3. Electric vehicle credits end Sept 30 and energy credits now end on December 31.

4. Taxpayers in the 37% tax bracket now only receive a 35% tax savings on itemized deductions.

5. There is a floor on both individual and corporate charitable contributions.

Some provisions are effective immediately in 2025 or after the date of enactment.

Provisions starting in 2025 include:

·       Enhanced standard deduction

·       Bonus $6,000 deduction for seniors

·       $40,000 state and local tax cap

·       Domestic Research deduction in year one

·       $2,200 child tax credit (up $200 from current law)

·       No tax on tips up to $25,000

·       No tax on overtime up to $12,500 per taxpayer ($25,000 joint)

·       Auto loan interest deduction up to $10,000 on certain new autos

·       $1,000 Trump account contribution by Treasury for newborns

·       $1,000 ($2,000 joint) charitable contribution for non-itemizers

·       100% Bonus depreciation (for assets acquired on or after Jan 20, 2025)

Provisions starting in 2025 AFTER date of enhancement include:

 ·        529 plan expense enhancements for more types of eligible expenses

·       Qualified small business stock exclusion 3 year rule

Provisions starting in 2026 include:

·       Trump accounts beginning July 5, 2026

·       Private mortgage insurance treated as interest expense

·       529 plan K-12 expense limit increased from $10,000 to $20,000

·       1099-MISC and 1099-NEC threshold raised to $2,000

·       1% Remittance tax on overseas transfers

·       AMT phaseout rules change

·       0.5% floor on individual charitable contributions

·       1% floor on corporate charitable contributions

·       90% gambling loss limit

·       $1,000 ($2,000 joint) charitable deduction for non-itemizers

·        Casualty losses include state disasters approved by Treasury Secretary

·       $7,500 (up from $5,000) dependent care assistance

·       Enhanced child and dependent care credit

·       Itemized Deductions limited to a 35% benefit