One Big Beautiful Bill

• Extension and Enhancement of Reduced Income Tax Rates
  • Starting in 2026, lower income tax rates that were put in place in 2018 (from 3% to 37%) were set to expire and the law made the lower rates permanent.
  • Capital Gains tax rates (0%, 15%, 20%) stay the same.

• Extension and Enhancement of Increased Standard Deduction
  • For 2025 and after:
    • $31,500 for couples
    • $23,625 for heads of household
    • $15,750 for singles
  • The amount of the deduction will be adjusted each year for inflation

• Extension and Enhancement of Increased Child Tax Credit (CTC)
  • Child Tax Credit is now $2,200 per child under age 17 and will go up with inflation.
  • There’s a $500 credit for other dependents (like older children or relatives).

• Individual SALT Limitation
  • The State and Local Tax (SALT) itemized deduction cap rises from $10,000 to $40,000 in 2025.
  • In 2026, the cap increases to $40,400 and continues to grow by 1% annually until 2029.

• Extension and Increase of Basic Exclusion Amount
  • Estate and gift tax exclusion is $10 million (2018-2025); rises to $15 million starting in 2026, adjusted for inflation.
  • Unused exclusion from a deceased spouse can be added to the survivor’s amount.

• If you participate in the Affordable Care Act for your health insurance you can pay lower monthly premiums because taxpayers can elect to receive advance payments of the Premium Tax Credit (PTC) directly to their insurer from the IRS.
  • The amount of the tax credit ( and premium reduction) is based on an estimate of your income. The final credit amount is calculated on your tax return at the end of the year. If your income was higher than you estimated and you got more in advance payments than your final credit amount, you’ll need to pay back the extra as additional income tax at tax time.
  • Previously there was a payback cap based on your income and with the new law the repayment cap for extra Premium Tax Credit payments is gone so you may have to pay back the full amount, no matter your income. This takes effect in 2026 so please be do not underestimate your income when you renew your insurance.

• Termination of Deduction for Personal Exemptions Other Than Temporary Senior Deduction
  • For tax years 2025–2028, seniors (age 65+) and their spouses can claim a temporary $5,000 deduction per qualified person.
  • This senior deduction starts to phase out for incomes over $75,000 (or $150,000 for joint filers).

• No Tax on Car Loan Interest
  • Deduct up to $10,000 per year in interest on loans for new cars (2025–2028)
  even if you do not itemize.
  • Loan must be for a new, U.S.-assembled personal vehicle bought after 12/31/2024; report the VIN.

• Enhancement of Child and Dependent Care Credit (CDCC) for child daycare.
  • Claim up to $3,000 for one person or $6,000 for two or more.Claim up to $1,700 per year, starting after December 31, 2026.
  • If your credit exceeds your income tax, then the excess credit can be carried forward for five years.

• Miscellaneous Itemized Deductions Terminated, Educator Expenses Excepted
  • Miscellaneous itemized tax deductions will no longer be allowed after 2025—they are permanently ended.
  • Teachers and other eligible K-12 school staff (including coaches and counselors) can still deduct certain work expenses.

• Permanent Non-Itemizers’ Charitable Deduction for Individuals
  • You can deduct up to $1,000 as an individual, or $2,000 if you file jointly.
  • Donations must be made in cash to a public charity.

• Limitation on Wagering Losses
  • From 2026, you can only deduct up to 90% of your gambling losses, and only up to the amount of your winnings.

• Extension and Enhancement of Deduction for Qualified Business Income
  • Deduct 20% of Qualified Business Income (QBI) if you’re a partnership, S corp, or sole proprietor.
  • Must have at least $1,000 active QBI; minimum deduction is $400.
  • Income limits for deduction rise to $75,000 (single) and $150,000 (joint) after 2025.

• Bonus Depreciation Made Permanent at 100%
  • Bonus depreciation stays at 100% for property bought after January 19, 2025.
  • Businesses can fully deduct qualifying property costs.

• No Tax on Tips
  • Deduct up to $25,000 tips per year; amount reduces at higher incomes.
  • Employers in beauty services get an expanded tip credit.

• No Tax on Overtime
  • Deduct up to $12,500 (single) or $25,000 (joint) for qualifying overtime.
  • Deduction phases out for incomes above $150,000 (single) or $300,000 (joint).

• Enhancement of Employer-Provided Child Care Credit
  • Child care credit rises to 40% (regular), 50% (small business); max credit now $500,000/$600,000.
  • Expanded to include third-party/joint care centers.

• Termination of Energy Incentives
  • Energy tax breaks for solar, wind, and fuel cell projects end after 2024.
  • No more special 5-year tax depreciation for new projects starting in 2025.

If you have any questions, we would be happy to consult with you or set up an appointment with Thomas M. Crane, P.A., Certified Public Accountant. Please contact us at either info@crane.cpa or (813) 960-0006.