11 Jul Tax Changes for Individuals – What’s in the July 4, 2025 Bill

On July 4, 2025, Congress passed and the President signed into law a major piece of tax legislation known as the “One Big Beautiful Bill.” This new law includes a wide range of tax changes that will impact many individuals and families beginning in 2025 and beyond.

I’ve reviewed the provisions most relevant to personal finances and summarized them here in a clear, easy-to-understand format. This guide focuses on what’s changing, when it takes effect, and how it might impact your tax planning, deductions, savings, and estate strategy.

Whether you’re retired, raising a family, earning income through overtime or tips, or simply looking to stay informed—this summary is designed to help you stay ahead of the changes and make confident financial decisions.

Let’s take a look at what’s new.

CHANGES TAKING EFFECT IN 2025

DEDUCTIONS

• Standard Deduction Increased
  • $15,750 (Single)
  • $23,625 (Head of Household)
  • $31,500 (Married Filing Jointly)
• NEW: Senior Deduction (not a reduction in SS Taxes!)
  • $6,000 per person ($12,000 for joint filers)
  • For those age 65+
  • Phases out above $75,000 (single) / $150,000 (joint)
  • Available 2025–2028
• NEW: Above-the-Line Deductions for Workers (2025–2028)
  • Up to $25,000: Tips
  • $12,500 (single) / $25,000 (joint): Overtime pay
  • Interest on auto loans (for U.S.-made cars)
• SALT Deduction Cap Increased (2025–2029)
  • From $10,000 → $40,000 (married) / $20,000 (single)
  • Phases out above $500,000 AGI
• Savings Accounts for Newborns
  • $1,000 government seed deposit
  • Parents can contribute up to $5,000/year
  • For children born between Dec 31, 2024 – Jan 1, 2029

CHANGES TAKING EFFECT IN 2026

TAX RATES & DEDUCTIONS

• Lower Tax Brackets Made Permanent
  • Continuation of 2017 TCJA rates
  • Brackets remain lower than pre-TCJA levels
  • Indexed for inflation
• AMT (Alternative Minimum Tax) Reforms
  • Higher exemption thresholds made permanent
  • $88,100 for individuals and $137,300 for joint filers for the 2025 tax year. The income levels for exemption phaseout have also been adjusted upwards
• Itemized Deduction Changes
  • Many miscellaneous deductions eliminated, including investment expense, tax prep fees, moving, unreimbursed employee expenses, and hobby expenses.
  • Educator and medical expenses remain deductible subject to income

CREDITS

• Child Tax Credit Increase
  • From $2,000 → $2,200 per child
  • Indexed for inflation going forward

CHARITABLE AND ESTATES

• New Above-the-Line Charitable Deduction
  • $1,000 (Single) / $2,000 (Married Filing Jointly)
  • Allowed even if you don’t itemize
  • Kicks in starting 2026
• Estate Tax Exemption Increased
  • $15 million per individual
  • $30 million per couple
  • Applies to estates of decedents after Jan 1, 2026

WHAT’S BEING ELIMINATED

• IRS Direct File program ends in 2026
  • Most taxpayers will now need to file through a tax preparer or private software

LET’S TALK STRATEGY

We may want to adjust your:

• Withholding or estimated payments
• Charitable giving strategies
• Estate planning documents
• Contributions for kids or grandkids
• Tax planning for work bonuses, tips, or overtime

Please drop us a line if you’d like to schedule a check-in!