THE ONE BIG BEAUTIFUL BILL ACT (OBBBA) - Key U.S. Tax Rate and Deduction Changes

Sep 19, 2026

THE ONE BIG BEAUTIFUL BILL ACT (OBBBA) permanently extends current individual tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%, while estates and trusts receive rates of 10%, 24%, 35%, and 37%. It raises the standard deduction for inflation and permanently ends the personal exemption. For tax years 2025–2028, it introduces a senior deduction up to $6,000 for eligible taxpayers, plus deductions for qualified tips and qualified overtime pay, and expands SALT limits to $40,000 in 2025.

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OBBBA Overview

Individual Tax Rates and Basic Changes

Deductions and Credits (2025–2028)

Senior Deduction

Child Tax Credit

Qualified Business Income Deduction

Qualified Tips and Overtime Pay

Estate, Gift, and Other Tax Rules

Exemptions and Limits

SALT and Reporting Thresholds

Indiana Tax Credit (Elderly)

THE ONE BIG BEAUTIFUL BILL ACT (OBBBA) Tax Rates: OBBBA permanently extends the current tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37% for individuals. The rates are 10%, 24%, 35% and 37% for estates and trusts. Standard Deduction: These have been raised for inflation to the following amounts for 2025 : MFJ $31,500; Single $15,750; HOH $23,625; MFS $15,750 Personal Exemptions: The new law permanently terminates the personal exemption deduction. Senior Deduction: For tax years 2025 through 2028, there is a new deduction for seniors. This is for taxpayers that have reached the age of 65 before the end of the year. The deduction can be as much as $6,000 for each qualified taxpayer if their modified adjusted gross income (MAGI) does not exceed $75,000 ($150,000 MFJ) . The deduction can reduce the amount of taxable social security benefits. Child Tax Credit: For 2025, the child tax credit is $2,200 for each qualifying child under the age of 17. After 2025, that credit will be adjusted for inflation. Qualified Business Income Deduction: This has been made permanent. It is 20% of business income subject to phaseouts. Cannot be less than $400. Estate and Gift Tax Exemption Amount: For 2025, the amount is $13,990,000 . For 2026, that amount will increase to $15,000,000 . This amount will be adjusted annually for inflation. For 2025 and 2026, the annual gift tax exclusion amount is $19,000 . Casualty Loss Deduction Limitation: For 2025, can only be used for a federal declared disaster area. Beginning in 2026, a state declared disaster can also be used. Gambling Losses: After 2025, gambling losses will be limited to 90% of gambling losses up to gambling winnings. State and Local Tax Deduction (SALT): Previously this was limited to $10,000 . For 2025, the limit is $40,000 and raises thereafter until 2029. After that, the deduction goes back to $10,000 . Deduction for Qualified Tips: For tax years 2025 through 2028, a deduction is allowed equal to the qualified tips a taxpayer receives that are included on a statement furnished by the employer. This amount is limited to $25,000 . This deduction is an income tax deduction. Employment taxes must still be paid on this tip income. Deduction for Qualified Overtime Pay: For tax years 2025 through 2028, a deduction is allowed for qualified overtime compensation received during the tax year that is included on statements furnished to the taxpayer by the employer. This deduction is limited to $12,500 per taxpayer. The overtime that is deductible is the overtime premium. Overtime is usually time and a half of hourly wage amounts. The premium amount is the “and a half”. We will need to see the last paystub for theyear to be able to take this deduction. Deduction for Qualified Passenger Vehicle Loan Interest: This is limited to $10,000 . The vehicle must be new, is made to run on roads and streets, has at least 2 wheels, and has a gross vehicle weight rating of less than 14,000 pounds. This vehicle must have the final assembly in the United States. The VIN number must be included on the tax return. TRUMP Accounts: A new type of individual retirement account may be set up by parents and guardians for their children under the age of 18. There is a $5,000 per year limit on the contribution. A pilot program where a contribution of $1,000 for children born between January 1, 2025 , and December 31, 2028 , will be made to a TRUMP Account by the government. This will require the use of the Tax Form 4547. The government contribution will not be made until July of 2026. Bonus Depreciation: For 2025, the Bonus Depreciation was schedule to be 40% . Now, for property acquired after January 19, 2025, the property can be expense d at 100% . Charitable Contributions: Beginning in 2026, taxpayers can deduct up to $1,000 ($2,000 MFJ) of cash charitable contributions without itemizing their deductions. Third Party Network Transactions: For all tax years after 2023, the threshol

FAQs

What key tax rates does OBBBA extend for individuals and for estates/trusts?

OBBBA permanently extends individual tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For estates and trusts, it uses rates of 10%, 24%, 35%, and 37%.

What happens to the personal exemption under the new law?

The new law permanently terminates the personal exemption deduction.

What deductions and limits apply to seniors, tips, and overtime for tax years 2025–2028?

For 2025–2028, eligible seniors receive a deduction up to $6,000 per qualified taxpayer (subject to MAGI limits). Qualified tips are deductible up to $25,000, and qualified overtime compensation is deductible up to $12,500 per taxpayer, limited to the overtime premium.

Sep 19, 2026

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