The Big, Beautiful Tax Bill: What It Means for You

Okay, let’s break down “The One Big, Beautiful Bill” into simpler, easier-to-understand terms.

Washington just passed a huge new tax law called the “One Big, Beautiful Bill” (OBBB). It changes a lot of tax rules and affects almost everyone – workers, retirees, business owners, investors, and even those planning their estates.

Here’s the simplified rundown of what’s inside:

1. Your Income Tax Rates are Now Permanent: Good news for predictability! The current income tax rates (from 10% to 37%) that were supposed to end in 2025 are now set in stone for good. This means you know what to expect for your income taxes in the future.
2. New Filing Rules + Extra Deductions for Seniors: The way you figure out if you need to file taxes has changed. But if you’re a senior (65+), there’s a temporary bonus: you can deduct an extra $6,000 from your income each year from 2025 to 2028. This deduction will phase out for higher income earners.
3. Bigger Break on Estate & Gift Taxes: If you’re wealthy and planning to pass on money or property, you can now give away or leave up to $15 million (before inflation adjustments) without it being subject to estate or gift taxes. This makes it easier for high-net-worth individuals to plan their estates.
4. Special Deductions for Tipped and Overtime Workers (Temporary):
   • Tips: If you work in a job where you get tips, you can deduct up to $25,000 of your tip income each year from 2025 to 2028.
   • Overtime: If you earn overtime pay, you can deduct up to $12,500 (or $25,000 for married couples filing jointly) of that income each year from 2025 to 2028.
   • Heads up: These deductions start to shrink and are potentially eliminated if your income is too high.
5. Temporary Relief for State and Local Taxes (SALT): The limit on how much state and local taxes you can deduct on your federal return is temporarily raised to $40,000 for 2025 (and adjusts yearly until 2029). However, if you earn a lot, this new limit might be reduced to $10,000 for you. After 2029, it goes back to $10,000 unless Congress changes it again.
6. Gambling Losses are More Limited: If you gamble, you can now only deduct 90% of your gambling losses that are more than your winnings in a year. So, if you win $100 and lose $200, you can only deduct $90 of that $100 in extra losses.
7. Child Tax Credit Gets a Boost and Stays Permanent: The Child Tax Credit is increasing to $2,200 per child under 17 starting in 2025, and it will go up with inflation in the future. Other important parts of this credit are also now permanent, making it more predictable for families.
8. Good News for Businesses: Easier Expensing and R&D Deductions:
   • Equipment & Property: Businesses can deduct more costs for new equipment and property right away.
   • Bonus Depreciation: The ability to deduct 100% of the cost of certain asset purchases in the first year is back.
   • Research & Development (R&D): Businesses can immediately deduct costs for R&D done in the U.S. again.
9. Small Business (QBI) Deduction is Now Permanent: The 20% deduction for qualified business income (QBI) is now a permanent fixture. There is also new minimum deduction for smaller active businesses.
10. Businesses Can Deduct More Interest: The rules for how businesses deduct interest on loans are more generous, especially for companies that use a lot of borrowed money.
11. Higher 1099 Reporting Threshold: Starting in 2026, businesses won’t have to send you a 1099 tax form for contract work or services unless they pay you $2,000 or more (up from $600). This will reduce paperwork for many small payments.

In a Nutshell:

This “Big, Beautiful Bill” brings a mix of long-term stability (like permanent tax rates), temporary perks (like the senior deduction or the tip & overtime deductions), and some changes that affect specific groups. It aims to make things simpler for individuals and restore some business-friendly tax rules.

However, it’s still a complex law. To make the most of it, you’ll need to pay attention to your income, keep good records, and understand how the new rules apply to your specific situation. When in doubt, it’s always smart to talk to your tax advisor!

The One Big, Beautiful Bill FAQs

How will individuals be impacted by the new tax bill?

Individuals may see significant changes in how they file and calculate taxes. For example, standard deduction amounts may increase, while itemized deductions such as state and local taxes may be limited. Certain credits could expand, benefiting families, while others may disappear. For many taxpayers, this creates a new landscape where prior strategies may no longer be effective. JAK helps clients evaluate how the changes apply to their specific situation, identify new opportunities for savings, and avoid surprises at tax time. Proactive adjustments in withholding, timing of deductions, and charitable contributions can help individuals adapt smoothly to the new rules. 

What does the bill mean for small and medium-sized businesses?

The new bill introduces a wide range of changes for businesses, including updates to expense deductions, depreciation rules, and pass-through income treatment. For small and medium-sized businesses, these provisions may alter tax liabilities, cash flow planning, and decisions about reinvestment or growth. In some cases, the bill may create new incentives for capital investment or hiring, while in others, it could increase reporting complexity. JAK helps business owners analyze the changes, model potential outcomes, and adjust strategies accordingly. With tailored guidance, businesses can maximize benefits, stay compliant, and plan for sustainable growth in the evolving tax landscape.

How soon will these changes take effect?

The timing depends on the specific provision. Some updates are already in effect for the current tax year, while others will be phased in over the next several years. A few provisions may even expire unless renewed by Congress. This staggered timeline makes proactive planning essential. Waiting until changes are fully active could limit opportunities for savings. JAK monitors implementation closely and helps clients adapt strategies as each phase of the law comes into effect. By staying ahead, businesses and individuals can avoid costly mistakes and position themselves to take advantage of the opportunities created by the bill. 

How can I make the most of the new tax rules?

To benefit from the new tax bill, proactive planning is critical. Individuals may need to reassess whether itemizing still makes sense or whether changes to credits affect their filing strategy. Businesses may want to adjust depreciation schedules, shift timing of expenses, or reconsider entity structures to maximize savings. JAK works with clients to evaluate scenarios and implement strategies tailored to their needs. With ongoing guidance, taxpayers can minimize liabilities, optimize deductions, and avoid compliance pitfalls. The key is not waiting until filing season, planning throughout the year ensures you’re well-positioned to make the most of the new tax rules.