Signed into law on July 4, 2025, the One Big Beautiful Bill (H.R. 1) introduces some of the most significant federal tax changes since the 2017 Tax Cuts and Jobs Act. Whether you’re a parent, small business owner, or hourly employee in a high-tax state, this 2025 tax reform law could dramatically impact your bottom line.
RC CPA & Business Advisors is here to guide you through the key tax changes, new deductions, and planning strategies you should consider before the law takes effect on January 1, 2026.
Why the One Big Beautiful Bill Matters
The new tax law extends core provisions of the 2017 TCJA and adds several new tax benefits aimed at working families, middle-class earners, and business owners.
Key features include:
- A larger SALT deduction cap for high-tax states
- A new savings tool called Trump Accounts
- Tax-free treatment of tips and overtime pay
- A new auto loan interest deduction
- An increase in the child tax credit
Most changes are temporary, applying through 2029, which makes proactive tax planning essential.
Key Tax Changes at a Glance
- Federal Tax Rates Stay Low
The top individual tax rate remains at 37%, and the corporate rate stays at 21%. The Qualified Business Income (QBI) deduction is extended through 2029. - Expanded Child Tax Credit
Increased to $2,500 per child through 2028, with partial refundability. - American Family Freedom Accounts (“Trump Accounts”)
New child-focused savings accounts: up to $5,000 per year in contributions, a $1,000 refundable credit, and federal matching on qualified withdrawals (subject to income limits). - Tax-Free Tips and Overtime (Starting 2026)
Hourly workers won’t pay federal income tax on tips or overtime pay though FICA taxes still apply. Benefit phases out for incomes over $120,000. - Quadrupled SALT Deduction Cap
The state and local tax deduction cap rises from $10,000 to $40,000, retroactive to 2025 boosting deductions for high earners in states like NY, NJ, and CA. - Auto Loan Interest Deduction Returns
Taxpayers can deduct up to $10,000 of interest on U.S.-assembled vehicles (under $55,000 MSRP), purchased after Jan 1, 2026, with AGI limits ($180K MFJ / $90K Single). - Temporary Window for Planning
Most provisions sunset after 2029. Now is the time to:
Max out AFFA contributions
• Consider Roth conversions
• Time major deductions and gifts
• Monitor depreciation phaseouts and estate thresholds
Final Thoughts: What This Tax Law Means for You
The 2025 tax law changes under the One Big Beautiful Bill offer significant new savings if you plan for them.
At RC CPA & Business Advisors, we make it easy to turn these changes into real results.
Follow our blog series as we break down the One Big Beautiful Bill and what it means for you. Each post will focus on a different area – individuals, businesses, wealth planning, and compliance – so you can stay informed and ahead!
