In today’s climate, nearly everything seems to spark political debate—and the new tax reform law, officially titled the One Big Beautiful Bill, is no exception. From its introduction, the bill generated strong opinions on both sides of the aisle and underwent several revisions before reaching its final form.

But here at DLAK, we’re setting the politics aside. Our goal is to focus on what matters most to you: understanding how these new tax provisions could impact your income, deductions, estate planning, and overall financial strategy moving forward.

Tax Rates & Deductions: What’s Changing

1. Permanent Income Tax Rates + Adjustments
   Extends the Trump-era rate and bracket changes permanently and adds one extra year of inflation adjustment for the 10%, 12%, and 22% brackets.
2. Enhanced Standard Deduction
   Beginning in 2025, the standard deduction increases to:

• $31,500 (joint filers)
• $23,625 (head of household)
• $15,750 (all others)
  Adjusted annually for inflation.

3. New Senior Deduction
   A temporary $6,000 deduction for individuals 65+ (itemizers and non-itemizers), phasing out at MAGI over $75,000 (single) or $150,000 (joint). Available from 2025 through 2028.

This provision echoes the campaign promise to eliminate taxes on Social Security—not a full repeal, but a step toward targeted relief.

4. SALT Deduction Expansion
   Temporarily increases the SALT deduction cap to $40,000 in 2025, with a 1% annual increase through 2029. A phaseout applies to MAGI above $500,000. The cap drops back to $10,000 afterward.

5. Itemized Deduction & Tax Credit Adjustments

• Caps itemized deduction value at $0.35 per dollar for top-bracket filers.
• Maintains limits on casualty losses, moving expenses, and misc. deductions.
• Locks in $750,000 mortgage interest cap.
• Makes permanent: elimination of the personal exemption.
• Child tax credit set at $2,200 starting 2026, adjusted for inflation.
• New car loan interest deduction for U.S.-assembled vehicles.

Earned Income & Wage-Based Relief

6. Temporary Income Deductions (2025–2028):

• Tip income deduction: up to $25,000, regardless of filing status (phased out for high earners).
• Overtime deduction: up to $12,500 (single) / $25,000 (joint).

-Income phase out for deduction is $150,000 (single)/$300,000 (joint).

-Every $1,000 above income threshold, the deduction is reduced by $100.

Education & Investment Provisions

7. Education

• Student loans: Caps total loan debt; Undergraduates get up to $57,500, Graduates get up to $100,000, Professionals get up to $200,000, simplifies repayment, eliminates most forgiveness programs. Plenty of variables exist within these numbers, like subsidized vs. unsubsidized amounts, any questions please let us know and we can show how it can pertain to you individually.
• K–12 vouchers: Federal tax credit (~$1,700) for private school donations.

8. Investments & Savings

• MAGA Savings Accounts: $1,000 for newborns, earmarked for future use (education, housing, retirement).
• Retirement Portability: Mandates automatic rollovers between employer plans.

9. Charitable Contribution Reform

• Itemizers: Only contributions above 0.5% of AGI are deductible.
• Example: With $200,000 AGI, the first $1,000 of giving is non-deductible.
• Standard Deduction Filers: Can deduct $1,000 ($2,000 joint) for direct charitable giving.
• Note: Excludes donor-advised funds and supporting orgs.

10. Estate & Gift Tax Reform

• Increases lifetime exemption to:
• $15 million (single)
• $30 million (joint)
  Effective 2026, with inflation indexing.

What it All Means for You

While much of the bill locks in prior reforms—especially around tax rates and deductions—it also introduces targeted benefits for seniors, wage earners, and charitable donors. Some provisions are permanent, while others expire after 2028, making strategic planning even more important.

At DLAK, we’re closely tracking these changes to provide the most accurate, relevant guidance possible. If you’ve met with us recently, you’ve likely already seen how these updates are shaping our advice. And if your situation is impacted, rest assured—we’ll proactively address it in your next meeting. (Source: whitehouse.gov/obbb/)