The One Big, Beautiful Bill Chapter 1: Providing Permanent Tax Relief for Middle-Class Families and Worker
On July 4th, 2025, The One Big Beautiful Bill (BBB) became law after passing the Senate, the House, and the President. This bill includes a section pertaining to finance and tax (Title VII-Finance).
Our team has reviewed the bill and have drafted these posts to provide you with relevant information and explanations about what this means for you. We will separate chapters from the bill into shorter blog posts for specificity and clarity. Please note that this is not a complete list of changes, just ones we have found to be relevant to our clients.
Chapter 1: Providing Permanent Tax Relief for Middle-Class Families and Workers
Reduced tax rates from the 2017 Tax Cuts and Jobs Act are made permanent. This section also modifies the inflation adjustment only for the purposes of determining whether tax brackets higher than 12% end and brackets higher than 22% begin. This applies to taxable years after Dec 31, 2025
The increased standard deduction from the 2017 Tax Cuts and Job Act is made permanent and is additionally increased. This applies to taxable years after Dec 31, 2024
$24,000 to $31,500 for MFJ and surviving spouses
$18,000 to $23,625 for HOH
$12,000 to $15,750 for individuals and MFS
The general deduction for personal exemption is essentially terminated
A temporary senior deduction is created. A deduction of $6,000 is available for seniors who will turn 65 within the tax year being filed (taxable years before Jan 1, 2029). The deduction is reduced by 6% if the taxpayers modified adjusted gross income (MAGI) is over $75,000 ($150,000 for joint filers).
Another senior deduction is created to exclude Social Security benefits from taxation (this is a substitute for eliminating tax on Social Security). The taxpayer must be 65 by year-end, even if they have not elected to take social security benefits. The deduction is not linked to the taxable amount of social security benefits.Note that even though taxpayers can receive Social Security at 62, the deduction only applies to 65+.
The child tax credit increase is permanently extended. The credit is increased from $2,000 to $2,200. A SSN is required for the taxpayer and the child being claimed. Inflation adjustments are also included in the credit. This change is applied to tax years after Dec 31, 2024.
The taxable income limitation phase-in amount is increased for the qualified business income deduction from $50,000 ($100,000 joint) to $75,000 ($150,000 joint).
The basic exclusion amount for estate and gift tax purposes is increased from $5,000,000 to $15,000,000. This applies to tax years after Dec 31, 2025.
Miscellaneous itemized deductions are terminated. A permanent deduction for “educator expense” is created. This applies to tax years beginning after Dec 31, 2025.
The increased limitations on contributions to ABLE accounts are extended and enhanced. Rollovers from 529 plans to ABLE accounts are permanently allowed.
The Saver’s credit is extended and enhanced to include ABLE account contributions. The maximum credit amount is increased from $2,000 to $2,100. The extension and repeal apply to tax years after Dec 31, 2025. The increased credit amount applies to tax years beginning after Dec 31, 2026.
Limitations on state and local tax deductions (SALT) are made permanent. However, it modifies the deduction limit by replacing the fixed amount with a new applicable limitation amount.
The applicable limitation amounts are:
$40,000 for tax years beginning in 2025
$40,400 for tax years beginning in 2026
101% of the preceding years amount for tax years beginning after 2026 and before 2030
$10,000 for tax years beginning after 2029
If you have any questions or would like a deeper explanation of any of the changes described above, please contact info@wbcpafirm.com to schedule an appointment with Cameron. For a complete breakdown of the BBB, see Congress’ official website.
Source Documents used:
HR1-119th Congress- Enrolled Bill
ISCPA’s “One Big Beautiful Bill Act- What is in the New Law?”