Tax Bucks Inc.

Welcome to Tax Bucks, Inc.

9/20/25

OBBB One Big Beautiful Bill Act of 2025 Key Changes

“One-B-3”

Individual Tax Changes:

  • The current tax brackets were permanently extended.
  • Standard Deduction increased and are now indexed to inflation. MFJ 31,500, Single/MFS 15,750, HOH 23,625
  • New Senior exemption of $6,000 ($12,000 for marrieds that qualify) for those 65 or older by the end of the year with income under 75k Single/150k Married. Phased out at 6% of MAGI that exceeds thresholds.
  • Child tax credit is increase to $2,200 per child and now indexed to inflation.
  • Estate Tax exemption increased to 15 million and now indexed to inflation.
  • Itemized Deductions limitation now begins at the start of the 37% tax bracket at a rate of approximately 5.4%.
  • Gambling loss deduction now capped at 90% and must itemize to capture deduction.
  • New State and Local Tax Deduction (SALT) increased from 2025-2029 to $40,000 max for 2025. (half for MFS) Deduction reduced by 30% of income over MAGI if income exceeds 500k. (250k Married Separate)
  • New Qualified Tips. Up to 25k deduction qualified tips. Should be itemized on W2.  Phases out with income over 150k single/HOH and 300k MFJ.  Also works for self employed, but limited to net profit.  Specified service trade or businesses are disallowed.
  • New Overtime Pay deduction. $12,500 ($25,000 for MFJ) Needs to be itemized on furnished statements from employer to taxpayer.  Begins to phase out with income over 150k ($300k for MFJ)
  • New Passenger Vehicle Loan Interest deduction. Up to 10,000 in interest may be deducted.  Must be a new vehicle, phase out if income exceeds $100,000 ($200,000 MFJ), primary use for public streets, gross weight rating under 14,000 lbs & final assembly must be in the US.
  • New Trump Accounts. A type of an IRA for children under 18.  Up to $5,000/yr contributions allowed, no deduction.  No distributions until 18 or older.   Pilot program allows for the IRS to make an initial $1,000 contribution to accounts for kids born between 12/31/24 and 1/1/29.
  • 529 College Savings Accounts. As of 1/1/26, can now withdraw up to $20,000 per year tax free for K-12 schooling.  Costs expanded to include tuition, curriculum materials, online studying, books, tutoring, advanced placements tests & exams related to college admission & therapies for students with disabilities.
  • Adoption Credit. Up to $5,000 of the adoption credit is refundable and is now adjusted for inflation as of 1/1/25.
  • Child and Dependent Care Tax Credit. Typically called daycare.  Effective as of 1/1/26 the credit is expanded for lower incomes and the maximum credit amounts are increased to $1,050 for one dependent and $2,100 for to or more dependents.  Dependent care FSA limits increase to $7,500 per year as of 1/1/26.
  • New Charitable Contributions. As of 1/1/26 taxpayers can now deduct up to $1,000 ($2,000 Married Filing Joint) without itemizing deductions.  Also a new floor of .5% on contributions for itemizers and non itemizers.  Only donations that exceed .5% of the taxpayers AGI can be deducted.  Disallowed deductions are carried forward.
  • Termination of Clean Vehicle and Energy Efficient Credits. Electric car tax credits expire for vehicles purchased after 9/30/25.  Solar and other home energy credits  expire after 12/31/25.
  • Premium Tax Credit (PTC). Obama care insurance credits are reduced as of 1/1/26.  Advance payments that are required to be paid back are no longer limited.

Business Tax Changes:

  • Qualified Business Income Deduction made permanent. New minimum deduction of $400 for businesses with $1,000 or more in net income.
  • Special Depreciation Allowance now made permanent for property with a life of 20 years or less. 100% expensing of all property eligible for bonus depreciation acquired after 1/19/25.  Taxpayers may elect prior law and apply 40% limit.
  • Section 179 Deduction. As of 1/1/25 the deduction limit is 2.5 million and now adjusted annually for inflation.
  • New Special Deduction Allowance for Qualified Production Property. Effective for property placed into service after 7/4/25 a new class of property is eligible for 100% of it’s adjusted basis rather than depreciating over 39 years.   Qualified property must be:  Non residential,  used by the taxpayer as an integral part of a qualified production activity in the US, Original use must begin with the taxpayer, Construction of the property must begin after 1/19/25 and before 1/1/29.  Several other rules apply.
  • R&D Credit – Domestic Research or Experimental Expenditures. Now allowed as a current year deduction beginning 1/1/25. Deduction is taken in full without the need to amortize as previously required.  Taxpayer may elect to amortize over 60 months.  Any unamortized amounts under previous law may now be deducted for business under 31 million or less in average annual receipts.
  • Business Meals. Meals provided to employees for the convenience of the employer are no longer deductible as of 1/1/26.  Exception- Meals are provided at a facility where goods or services are sold by the taxpayer.
  • Charitable Contributions by C Corporations. Now subject to a 1% floor on deductions.  Only deductions that exceed 1% of the corporations taxable income are allowed and still limited to 10% of the corporations taxable income.
  • Information Reporting Returns (1099’s). Currently, payments $600 or more need to be reported on form 1099.  As of 1/1/26, the threshold is increased to $2,000.
  • Qualified Small Business Stock. As of 7/4/25 capital gains taxes are partially excluded (50-75%) for stock held three or four years and up to 15 million or up to 10 times basis of gains can be fully excluded if held for five years or more.  Must be C corporation stock, original issuance and other rules apply.

 

Reasons to become an accountant: