🏛️ The One Big Beautiful Bill (P.L. 119-21) permanently enacts many of the 2017 TCJA tax cuts, introduces new family- and business-friendly tax benefits, and refines several existing provisions. Below is a breakdown of the major changes:

💵 Permanent Reduction in Income Tax Rates

✅ Individual & Trust Brackets (Post-2025):

• Retains 7 individual rates: 10%, 12%, 22%, 24%, 32%, 35%, 37%
• Retains trust/estate brackets: 10%, 24%, 35%, 37%

✅ Marriage Penalty Relief:

• Keeps the doubled brackets for joint filers (except for the 37% rate).

📉 Capital Gains & Dividends:

• Retains 0%, 15%, and 20% rates. Keeps TCJA breakpoints permanently.

📈 Inflation Indexing Updated:

• For lower brackets (10%, 12%): CPI chained to 2016.
• For others: CPI chained to 2017.

📌 Ref: Act Sec. 70101, Code Sec. 1(j)

🧾 Standard Deduction – Increased & Indexed

New Base Amounts (post-2024):

• 👨‍👩‍👧‍👦 Joint filers: $31,500
• 👤 Head of household: $23,625
• 🧍‍♂️ Single/MFS: $15,750

🔄 Inflation Adjustment:

• CPI chained to 2024 instead of 2017.

📌 Ref: Act Sec. 70102, Code Sec. 63(c)(7)

👶 Child Tax Credit (CTC) & Other Dependents Credit

👧 CTC – Permanent Expansion

• Increased to $2,200/child, indexed for inflation (from 2026).
• Must include both parent and child SSNs.

👵 Other Dependents Credit

• $500 nonrefundable credit made permanent (e.g., for older children, parents).

⚠️ IRS can now automatically reject credits without valid SSNs (treated as a clerical error).

📌 Ref: Act Sec. 70104, Code Sec. 24(h), 6213(g)(2)(I)

🏘️ State and Local Tax (SALT) Deduction Cap

📈 Raised Cap:

• 2025: $40,000
• 2026: $40,400 ➕ 1%/year until 2029

⚠️ Phaseout for high earners:

• Begins at MAGI > $500,000 (2025), increases 1%/year
• Max 30% reduction, but deduction won’t go below $10,000

📌 Ref: Act Sec. 70120, Code Sec. 164(b)(6)

⚰️ Estate & Gift Tax – Higher Basic Exclusion

📈 Increased to $15 million (from $10M) starting 2026

• Indexed annually for inflation
• Spousal exclusion continues

📌 Ref: Act Sec. 70106, Code Sec. 2010(c)(3)

🚫 Pease Limitation Repealed

Previously reduced itemized deductions by 3% of income over certain thresholds.

📉 New rule: 2/37 reduction of the lesser of:

• Itemized deductions OR
• Income exceeding the 37% bracket threshold

✅ Exemption: Sec. 199A (QBI deduction)

📌 Ref: Act Sec. 70111, Code Sec. 68

🧮 Alternative Minimum Tax (AMT) – Higher Exemption

✅ Exemption thresholds permanently increased for individuals & joint filers

• $70,300 (single) / $109,400 (joint) ➕ inflation-adjusted
• Phaseouts start at $1,000,000

📌 Ref: Act Sec. 70107, Code Sec. 55(d)(4)

🚑 Premium Tax Credit (PTC) – Repayment Cap Removed

🧾 Previously, taxpayers had a cap on repaying excess PTCs based on income level.

🚨 Now: All taxpayers must repay the full excess advance PTC, regardless of income.

📌 Ref: Act Sec. 71305, Code Sec. 36B(f)(2)

🏭 Business & Energy Highlights

• ✅ Full expensing for R&D and capital investments made permanent
• 🌆 Opportunity Zones – incentives extended
• ❌ EV tax credits for commercial vehicles eliminated
• ⚛️ Nuclear & domestic energy incentives added

💵 Permanent Reduction in Income Tax Rates

✅ Individual & Trust Brackets (Post-2025):

• Retains 7 individual rates: 10%, 12%, 22%, 24%, 32%, 35%, 37%
• Retains trust/estate brackets: 10%, 24%, 35%, 37%

✅ Marriage Penalty Relief:

• Keeps the doubled brackets for joint filers (except for the 37% rate).

📉 Capital Gains & Dividends:

• Retains 0%, 15%, and 20% rates. Keeps TCJA breakpoints permanently.

📈 Inflation Indexing Updated:

• For lower brackets (10%, 12%): CPI chained to 2016.
• For others: CPI chained to 2017.

📌 Ref: Act Sec. 70101, Code Sec. 1(j)

🧾 Standard Deduction – Increased & Indexed

New Base Amounts (post-2024):

• 👨‍👩‍👧‍👦 Joint filers: $31,500
• 👤 Head of household: $23,625
• 🧍‍♂️ Single/MFS: $15,750

🔄 Inflation Adjustment:

• CPI chained to 2024 instead of 2017.

📌 Ref: Act Sec. 70102, Code Sec. 63(c)(7)

👶 Child Tax Credit (CTC) & Other Dependents Credit

👧 CTC – Permanent Expansion

• Increased to $2,200/child, indexed for inflation (from 2026).
• Must include both parent and child SSNs.

👵 Other Dependents Credit

• $500 nonrefundable credit made permanent (e.g., for older children, parents).

⚠️ IRS can now automatically reject credits without valid SSNs (treated as a clerical error).

📌 Ref: Act Sec. 70104, Code Sec. 24(h), 6213(g)(2)(I)

🏘️ State and Local Tax (SALT) Deduction Cap

📈 Raised Cap:

• 2025: $40,000
• 2026: $40,400 ➕ 1%/year until 2029

⚠️ Phaseout for high earners:

• Begins at MAGI > $500,000 (2025), increases 1%/year
• Max 30% reduction, but deduction won’t go below $10,000

📌 Ref: Act Sec. 70120, Code Sec. 164(b)(6)

⚰️ Estate & Gift Tax – Higher Basic Exclusion

📈 Increased to $15 million (from $10M) starting 2026

• Indexed annually for inflation
• Spousal exclusion continues

📌 Ref: Act Sec. 70106, Code Sec. 2010(c)(3)

🚫 Pease Limitation Repealed

Previously reduced itemized deductions by 3% of income over certain thresholds.

📉 New rule: 2/37 reduction of the lesser of:

• Itemized deductions OR
• Income exceeding the 37% bracket threshold

✅ Exemption: Sec. 199A (QBI deduction)📌 Ref: Act Sec. 70111, Code Sec. 68

🧮 Alternative Minimum Tax (AMT) – Higher Exemption

✅ Exemption thresholds permanently increased for individuals & joint filers

• $70,300 (single) / $109,400 (joint) ➕ inflation-adjusted
• Phaseouts start at $1,000,000

📌 Ref: Act Sec. 70107, Code Sec. 55(d)(4)

🚑 Premium Tax Credit (PTC) – Repayment Cap Removed

🧾 Previously, taxpayers had a cap on repaying excess PTCs based on income level.

🚨 Now: All taxpayers must repay the full excess advance PTC, regardless of income.📌 Ref: Act Sec. 71305, Code Sec. 36B(f)(2)

👵 Senior Deduction Replaces Personal Exemptions

❌ Personal Exemptions Permanently Eliminated

• Pre-2018 deduction no longer returns

✅ New Senior Deduction (2025–2028):

• $6,000 per qualifying taxpayer age 65+
• Phased out at AGI over $75,000 ($150,000 joint)

📌 Must include SSN on return to qualify 📌 Clerical error rules apply for missing SSNs📌 Ref: Act Sec. 70103, Code Sec. 151(d)(5), 6213(g)(2)

🚗 New Car Loan Interest Deduction (2025–2028)

🆕 Up to $10,000 per year in interest deduction

✅ Conditions:

• Vehicle must be new, personal-use, U.S.-assembled, under 14,000 lbs
• Secured by first lien loan
• VIN must be reported
• Phaseout begins at $100,000 MAGI ($200,000 joint)

📌 Lenders must report interest to IRS 📌 Ref: Act Sec. 70203, Code Sec. 613(h), 6050AA

👶 Enhanced Child & Dependent Care Credit

💰 Credit rate increased to 50%, phased down to 35%, then to 20% for higher incomes

✅ Maximum qualifying expenses:

• $3,000 (1 dependent)
• $6,000 (2+ dependents)

📌 Effective for tax years after 2025 📌 Ref: Act Sec. 70405, Code Sec. 21

🎓 $1,700 Scholarship Credit for Donations

💳 Credit for donations to state-approved scholarship-granting organizations

✅ Max $1,700 credit/year ✅ Only available in participating states ✅ Excess credit can be carried forward 5 years⚠️ Cannot double-count as a charitable deduction 📌 Ref: Act Sec. 70411, Code Sec. 25F, 139K

🌪️ Disaster Loss Deduction Extended

🚨 Victims of natural disasters can:

• Claim losses without itemizing
• Use increased $500 per-casualty threshold
• Add net disaster loss to standard deduction

📌 Ref: Act Sec. 70438, Code Sec. 165(h)

🧑‍🎓 SSN/EIN Requirement for Education Credits

✅ To claim AOTC/Lifetime Learning Credit:

• Must include student SSN
• Must include school EIN for tuition payments

📌 Missing SSNs/EINs treated as clerical errors 📌 Ref: Act Sec. 70606, Code Sec. 25A, 6213

💵 Permanent Reduction in Income Tax Rates

✅ Individual & Trust Brackets (Post-2025):

✅ Marriage Penalty Relief:

• Retains 7 individual rates: 10%, 12%, 22%, 24%, 32%, 35%, 37%
• Retains trust/estate brackets: 10%, 24%, 35%, 37%

• Keeps the doubled brackets for joint filers (except for the 37% rate).

📉 Capital Gains & Dividends:

• Retains 0%, 15%, and 20% rates. Keeps TCJA breakpoints permanently.

📈 Inflation Indexing Updated:

• For lower brackets (10%, 12%): CPI chained to 2016.
• For others: CPI chained to 2017.

📌 Ref: Act Sec. 70101, Code Sec. 1(j)

🧾 Standard Deduction – Increased & Indexed

New Base Amounts (post-2024):

• 👨‍👩‍👧‍👦 Joint filers: $31,500
• 👤 Head of household: $23,625
• 🧍‍♂️ Single/MFS: $15,750

🔄 Inflation Adjustment:

• CPI chained to 2024 instead of 2017.

📌 Ref: Act Sec. 70102, Code Sec. 63(c)(7)

👶 Child Tax Credit (CTC) & Other Dependents Credit

👧 CTC – Permanent Expansion

• Increased to $2,200/child, indexed for inflation (from 2026).
• Must include both parent and child SSNs.

👵 Other Dependents Credit

• $500 nonrefundable credit made permanent (e.g., for older children, parents).

⚠️ IRS can now automatically reject credits without valid SSNs (treated as a clerical error).📌 Ref: Act Sec. 70104, Code Sec. 24(h), 6213(g)(2)(I)

🏘️ State and Local Tax (SALT) Deduction Cap

📈 Raised Cap:

• 2025: $40,000
• 2026: $40,400 ➕ 1%/year until 2029

⚠️ Phaseout for high earners:

• Begins at MAGI > $500,000 (2025), increases 1%/year
• Max 30% reduction, but deduction won’t go below $10,000

📌 Ref: Act Sec. 70120, Code Sec. 164(b)(6)

⚰️ Estate & Gift Tax – Higher Basic Exclusion

📈 Increased to $15 million (from $10M) starting 2026

• Indexed annually for inflation
• Spousal exclusion continues

📌 Ref: Act Sec. 70106, Code Sec. 2010(c)(3)

🚫 Pease Limitation Repealed

Previously reduced itemized deductions by 3% of income over certain thresholds.

📉 New rule: 2/37 reduction of the lesser of:

• Itemized deductions OR
• Income exceeding the 37% bracket threshold

✅ Exemption: Sec. 199A (QBI deduction)📌 Ref: Act Sec. 70111, Code Sec. 68

🧮 Alternative Minimum Tax (AMT) – Higher Exemption

✅ Exemption thresholds permanently increased for individuals & joint filers

• $70,300 (single) / $109,400 (joint) ➕ inflation-adjusted
• Phaseouts start at $1,000,000

📌 Ref: Act Sec. 70107, Code Sec. 55(d)(4)

🚑 Premium Tax Credit (PTC) Changes

❌ Full Repayment of Excess APTC Required

• No income-based cap; entire excess must be repaid.
• 📌 Ref: Act Sec. 71305, Code Sec. 36B(f)(2)

👤 Some Lawfully Present Aliens Now Ineligible

• PTC only allowed for “eligible aliens” (e.g., green card holders, COFA residents, Cuban/Haitian entrants).
• 📌 Ref: Act Sec. 71301, Code Sec. 36B(e)

✅ Exchange Verification Required

• PTC only allowed after eligibility verified by Exchange
• Pre-enrollment verification process required by August 1
• 📌 Ref: Act Sec. 71303, Code Sec. 36B(c)

🚫 No PTC for Lawfully Present Aliens Below Poverty Line

• Eliminates Medicaid exception for such aliens
• 📌 Ref: Act Sec. 71302, Code Sec. 36B(c)(1)

❗️ No PTC for Certain Special Enrollment Plans

• Disqualifies plans enrolled via income-only SEPs

📌 Ref: Act Sec. 71304, Code Sec. 36B(c)(3)(A)

👵 Senior Deduction Replaces Personal Exemptions

❌ Personal Exemptions Permanently Eliminated

• Pre-2018 deduction no longer returns

✅ New Senior Deduction (2025–2028):

• $6,000 per qualifying taxpayer age 65+
• Phased out at AGI over $75,000 ($150,000 joint)

📌 Must include SSN on return to qualify 📌 Clerical error rules apply for missing SSNs

📌 Ref: Act Sec. 70103, Code Sec. 151(d)(5), 6213(g)(2)

🚗 New Car Loan Interest Deduction (2025–2028)

🆕 Up to $10,000 per year in interest deduction

✅ Conditions:

• Vehicle must be new, personal-use, U.S.-assembled, under 14,000 lbs
• Secured by first lien loan
• VIN must be reported
• Phaseout begins at $100,000 MAGI ($200,000 joint)

📌 Lenders must report interest to IRS 📌 Ref: Act Sec. 70203, Code Sec. 613(h), 6050AA

👶 Enhanced Child & Dependent Care Credit

💰 Credit rate increased to 50%, phased down to 35%, then to 20% for higher incomes

✅ Maximum qualifying expenses:

• $3,000 (1 dependent)
• $6,000 (2+ dependents)

📌 Effective for tax years after 2025 📌 Ref: Act Sec. 70405, Code Sec. 21

🎓 $1,700 Scholarship Credit for Donations

💳 Credit for donations to state-approved scholarship-granting organizations

✅ Max $1,700 credit/year ✅ Only available in participating states ✅ Excess credit can be carried forward 5 years

⚠️ Cannot double-count as a charitable deduction 📌 Ref: Act Sec. 70411, Code Sec. 25F, 139K

🌪️ Disaster Loss Deduction Extended

🚨 Victims of natural disasters can:

• Claim losses without itemizing
• Use increased $500 per-casualty threshold
• Add net disaster loss to standard deduction

📌 Ref: Act Sec. 70438, Code Sec. 165(h)

🧑‍🎓 SSN/EIN Requirement for Education Credits

✅ To claim AOTC/Lifetime Learning Credit:

• Must include student SSN
• Must include school EIN for tuition payments

📌 Missing SSNs/EINs treated as clerical errors 📌 Ref: Act Sec. 70606, Code Sec. 25A, 6213

🧾 Miscellaneous Deductions Eliminated, Educator Deduction Added

❌ Permanent end to miscellaneous itemized deductions ✅ New deduction for educators’ unreimbursed expenses under Code Sec. 67(b)

📌 Ref: Act Sec. 70110, Code Sec. 67(g)

🍼 New Trump Investment Accounts for Children

🏦 Tax-deferred accounts for U.S. citizen children with SSNs

✅ $5,000/year limit (inflation-adjusted) ✅ $1,000 newborn pilot deposit (2025–2028 births) ✅ Grows tax-deferred in index fund ✅ No withdrawals before age 18 (with exceptions)

📌 IRS will auto-open account if not done by first tax filing 📌 Ref: Act Sec. 70204, Code Secs. 530A, 128, 139J, 6434

🧑‍🍼 Adoption Credit Made Partly Refundable

✅ Up to $5,000 refundable portion, inflation-adjusted from 2025 ❌ Refundable portion not eligible for carryforward

📌 Ref: Act Sec. 70402, Code Sec. 23

🎒 Expanded 529 Plan Benefits

✅ K–12 Uses Expanded:

• Tuition, books, curriculum, online materials, tutoring, exams, dual enrollment, therapies
• Annual limit raised to $20,000

📌 Ref: Act Sec. 70413, Code Sec. 529(c)(7)

✅ Postsecondary Credentialing Expenses Qualified:

• Tuition, books, fees for certification, licenses, apprenticeships
• Applies to recognized programs listed by federal/state agencies

📌 Ref: Act Sec. 70414, Code Sec. 529(f)

💝 Charitable Deduction Rules Tightened

🔻 New 0.5% AGI Floor:

• Deduction reduced by 0.5% of AGI
• Contributions ordered & tracked

🔼 60% AGI Limit for Cash Gifts Made Permanent

• Applies to gifts to “50% charities”

📌 Ref: Act Sec. 70425, Code Sec. 170

⚖️ Casualty Loss Deduction: Disaster-Only Rule Now Permanent

What Changed:

• Before: You could deduct personal casualty losses (like fire, storm, theft) even if not federally declared disasters, beginning 2026.
• Now: Deduction permanently limited to federally or some state-declared disasters only.

Effective: For tax years after December 31, 2025
Reference: Code Sec. 165(h), Act Sec. 70109

✨ New Charitable Deduction for Non-Itemizers

Who Benefits: Individuals who take the standard deduction.

Deduction Limit:

• $1,000 for individuals
• $2,000 for joint filers

Conditions:

• Cash-only gifts
• To public charities
• Must meet Code Sec. 170(p) criteria

Effective: For tax years after December 31, 2025
Reference: Code Sec. 170, 63(b)(4); Act Sec. 70424

🌐 1% Excise Tax on International Money Transfers

Who Pays: U.S. senders of money to recipients in foreign countries

Tax Rate: 1% of transfer amount

Collected By: Remittance transfer providers (e.g., Western Union)

Exceptions:

• Transfers from banks under Title 31
• U.S.-issued debit/credit card funded transfers

Anti-Avoidance: Anti-conduit rules apply

Effective: Transfers after December 31, 2025
Reference: Act Sec. 70604

♦️ Gambling Loss Deduction Limited

Old Rule: Deductible up to gambling gains
New Rule: Deductible only up to 90% of gains

Effective: For tax years after December 31, 2025
Reference: Code Sec. 165(d); Act Sec. 70114

🏠 Moving Expenses: Deduction Permanently Disallowed

Before: Suspended for most (2018–2025)

Now: Suspension made permanent

Exceptions:

• Active-duty military
• Now includes U.S. intelligence employees

Effective: Starting 2026 tax year
Reference: Code Sec. 217, 132(g); Act Sec. 70113

♻ ABLE Accounts: Permanent Boost for Disability Savings

Key Benefits:

• More contributions allowed (inflation-indexed)
• Saver’s Credit applies permanently
• Tax-free rollovers from 529 college savings plans

Effective: Most changes apply after December 31, 2025
Saver’s Credit boost: After December 31, 2026
Reference: Code Sec. 25B, 529A; Act Secs. 70115–70117

📈 Qualified Business Income (QBI) Deduction Expanded

New Thresholds:

• 20% deduction remains
• Minimum deduction: $400
• Minimum QBI to claim: $1,000

Phase-in Limits Increased:

• From $50K to $75K (single filers)
• From $100K to $150K (joint filers)

Effective: Tax years after December 31, 2025
Reference: Code Sec. 199A; Act Sec. 70105

⚡ 100% Bonus Depreciation Made Permanent

Before: Phasing out over time Now: Permanently set at 100% (a.k.a. full expensing)

Applies To: Property acquired after Jan. 19, 2025
Reference: Code Sec. 168(k), 460; Act Sec. 70301

🌎 GILTI Renamed + Deduction Allocation Reworked

New Name: “Net CFC Tested Income”

New Rules:

• No R&D or interest deductions allocated to this income category
• Those expenses reallocated to U.S. taxable income

Effective: For tax years after December 31, 2025
Reference: Act Secs. 70311, 70323

❤️ Corporate Charitable Contributions: New 1% Floor

New Rule: Deductions only allowed if contributions exceed 1% of taxable income

Still Applies: 10% of income limit and 5-year carryforward

Effective: For tax years after December 31, 2025
Reference: Code Sec. 170(b)(2), (d)(2); Act Sec. 70426

⛏ Increased Section 179 Expensing

New Limits:

• $2.5M deduction cap
• $4M phaseout threshold
• Indexed for inflation

Effective: Property placed in service after December 31, 2024
Reference: Code Sec. 179; Act Sec. 70306

🏗 Real Property Expensing for U.S. Production Activities

New Deduction: 100% depreciation for buildings used in qualifying production

Applies To:

• Manufacturing, agriculture, chemical refining
• Construction must begin Jan 20, 2025 – Dec 31, 2029

Placed in Service Deadline: Before Jan 1, 2031

10-Year Recapture Period AppliesReference: Code Sec. 168(n), 1245; Act Sec. 70307

📊 Interest Expense: Coordination with Capitalization

New Rule:

💸 Adjusted Taxable Income Redefined for Interest Deduction

New Add-Backs:

• Sec. 951(a), 951A(a), 78 gross income
• Deductions under 245A and 250 related to foreign income

Effective: For tax years after December 31, 2025
Reference: Act Sec. 70342, Code Sec. 163(j)(8)