Key Individual Tax Changes from Trump’s ‘Big Beautiful’ Tax Bill: What You Need to Know
A short summary of tax changes under the “Big Beautiful Bill” affecting individuals:
Congress has unveiled its 2025 proposed tax and spending measure, including sweeping revisions to the individual tax code. Touted by former President Trump as a “big beautiful” tax bill, the legislation introduces a range of tax breaks and adjustments aimed at benefiting working- and middle-class Americans. Here’s a breakdown of how the proposed changes compare to current law:
1. Standard Deduction
The standard deduction would see a modest increase:
Current law: $15,000 for single filers; $30,000 for married couples filing jointly in 2025
New proposal: $15,750 for single filers; $31,500 for married couples filing jointly in 2025
2. ‘Bonus’ Deduction for Older Adults
Seniors could see a significant bump in their additional deduction:
Current law: $1,600 for those age 65+; $2,000 for unmarried individuals not filing as a surviving spouse
New proposal: $7,600 for seniors; $8,000 for unmarried/not surviving spouses from 2025 through 2028
3. State and Local Tax (SALT) Deduction
One of the more debated changes is a major expansion to the SALT deduction:
Current law: $10,000 cap through 2025
New proposal: $40,000 cap for 2025, increasing by 1% annually through 2029, then reverting to $10,000 in 2030
4. Child Tax Credit
Families would receive a slight increase in the credit per child:
Current law: $2,000 per child (refundable portion up to $1,700)
New proposal: $2,200 per child (refundable portion remains at $1,700)
5. Estate and Gift Tax Exemption
Wealth transfers would get a small boost in exemption thresholds, along with clarity going forward as these changes are made “permanent”:
Current law: $13.99 million for individuals; $27.98 million for couples in 2025, set to expire in 2026
New proposal: $15 million for individuals; $30 million for couples starting in 2026
6. Tax Breaks for Tips, Overtime
Several new deductions target working-class earners:
Tips: New deduction of up to $25,000 annually from 2025 to 2028
Overtime Pay: Deduct up to $12,500 per taxpayer during 2025 to 2028
7. Trump Accounts for Child Savings
A new feature aimed at families with newborns:
Current law: No provision
New proposal: One-time $1,000 credit for children born between 2025 and 2028, deposited into a designated savings account
8. Charitable Deduction for Non-Itemizers
A revived benefit for those who don’t itemize their taxes:
Current law: No deduction after 2021
New proposal: $1,000 for individuals and $2,000 for married couples filing jointly—made permanent starting in 2025
9. Qualified Business Income Deduction made permanent at a 20% income offset for certain business income.
10. Elimination of certain green energy tax breaks. Current law unchanged.
- The EV credit for new and used vehicles expires after Sept. 30, 2025.
- Energy-efficient home improvement credits expires after Dec. 31, 2025.
11. Deduction for certain auto loan interest.
New Proposal: Provides a tax break for vehicle owners: an above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest each year (Tax years 2025-2028).
- The deduction phases out for those with a modified AGI of over $100,000 ($200,000 for joint filers) and not all passenger vehicles are eligible.
12. Bonus Depreciation
Current law: The bonus depreciation rules from the TCJA will phase out after 2026.
New Proposal: Brings back 100% bonus depreciation for qualifying property placed in service on or after Jan. 20, 2025, and before Jan. 1, 2030.
12. K-12 Education from 529 Plans
Current law: withdraw $10,000 per year for k-12 education tuition per child
New proposal: Increases to $20,000 for tuition and other permissible withdrawals beyond just tuition to cover many other expenses (e.g. exam fees, books, certain therapies and certain tutoring)
Bottom Line
The proposed tax changes offer a mix of tax relief and new deductions, particularly benefiting ultra-high net worth, business owners, seniors, parents, and hourly workers, and making permanent or extending some tax provisions set to expire. Consult your professional advisors before taking any action in connection with this information. Not tax advice. Not updated with any future tax law changes.
Elyse W. Germack, Attorney & CPA