A sweeping update to the U.S. tax code was signed into law late last week under the One Big Beautiful Bill (OBBB).
This legislation introduces a wide range of changes that will affect nearly every American taxpayer—from extending the 2017 tax cuts to introducing new deductions for car loan interest. In this article, we’ll break down what we feel are the most impactful provisions.
Extension of the 2017 Tax Cuts
The tax reforms introduced in 2017 were originally set to expire at the end of 2025. However, under the OBBB, these provisions are now permanent—with one major addition: a temporary expansion of the State and Local Tax (SALT) deduction.
- SALT Deduction Increase: The SALT deduction cap will rise from $10,000 to $40,000 starting in 2025. This increase will phase out after four years, reverting to the $10,000 cap in 2029. The new cap will also increase by 1% annually during its effective period.
Other permanent provisions include:
- Reduced tax rates across most income brackets, with adjusted thresholds.
- Elimination of personal exemptions and a near doubling of the standard deduction.
- Child Tax Credit increased from $1,000 to $2,000, and further raised to $2,200 per child (indexed for inflation after 2025).
- Elimination of many itemized deductions (e.g., unreimbursed employee expenses, tax prep fees).
- Federal estate tax exemption remains at $13.99 million per individual.
- Mortgage interest deduction preserved for up to $750,000 of new acquisition debt.
- Medical expenses exceeding 7.5% of AGI remain deductible.
- Repeal of the Pease limitation on itemized deductions remains in effect.
New Deduction for Car Loan Interest
Taxpayers can now deduct up to $10,000 in interest on car loans annually, provided the vehicle is assembled in the U.S. This deduction phases out for individuals earning between $100,000–$150,000 and joint filers earning between $200,000–$250,000. The car must be new, you must be the original owner, and it must be for personal use.
Senior Tax Deduction
While Social Security income remains partially taxable, the OBBB introduces a new $6,000 deduction for taxpayers over age 65. This deduction phases out starting at $75,000 for individuals and $150,000 for joint filers and is set to expire in 2029.
Green Energy Rollbacks
The $7,500 electric vehicle tax credit, passed in September 2025, has been repealed under the OBBB.
Reduced Taxes on Tips
The first $25,000 in tips will be tax-deductible for eligible workers (e.g., servers, beauticians), subject to income limits of $150,000 (individual) and $300,000 (joint).
Reduced Taxes on Overtime
Up to $12,500 in overtime pay will also be tax-deductible under the same income thresholds.
New Savings Accounts for Children
The OBBB establishes a new savings account program for children born between 2025 and 2028:
- Each eligible child receives a new account with a $1,000 government-funded seed deposit.
- Parents can contribute up to $5,000 annually.
- Accounts are invested in a U.S. stock market index and function similarly to IRAs.
- Withdrawals are allowed starting at age 18, with penalties for early withdrawals (pre-59½) unless used for qualifying expenses.
Final Thoughts
The Big Beautiful Bill introduces significant changes to the tax landscape. At Schneider Downs Wealth Management Advisors, we’re here to help you navigate these updates and make taxes less complicated. Please reach out to your trusted advisor with any questions.
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https://taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes
https://www.cbsnews.com/news/whats-in-trump-big-beautiful-bill-senate-version/
https://millancpa.com/insights/one-big-beautiful-bill-act-official-tax-policy-key-provisions
Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
