2025 Tax Updates: Key Changes from the One Big Beautiful Bill Act (OBBA)

The One Big Beautiful Bill Act (OBBA) brings major tax changes in 2025 that impact both individuals and businesses. From new deduction limits to permanent extensions of key tax provisions, these updates could affect your tax bill, financial planning, and compliance requirements.

At LNH CPA PLLC, we’ve summarized the most important updates you need to know so you can stay informed and plan ahead.

Why the OBBA Matters for You

The OBBA isn’t just another bill—it has direct consequences for your finances.

• Affects your wallet and business: Updates to deductions, credits, and tax rates could save (or cost) you money.

• Prevents tax surprises: Staying informed means fewer shocks at filing time.

• Creates new opportunities: Savings, tax planning strategies, and employer credits are expanded.

• Adds compliance requirements: New reporting thresholds and limits mean it’s important to stay ahead.

• Eliminates or reduces some credits: Especially energy-related and personal exemptions.

Individual Tax Changes

Individuals will notice significant updates to deductions, credits, and rates.

Deductions & Exemptions

• Personal Exemptions Eliminated (except a temporary senior deduction).

• Tips & Overtime Deduction: Up to $25,000 for tips and $12,500 for overtime pay (2025–2028).

• Auto Loan Interest Deduction: Up to $10,000 for personal auto loans (2025–2028).

• Senior Bonus Deduction: Up to $6,000 per eligible taxpayer (2025–2028).

• Charitable Deduction for Non-Itemizers: Up to $1,000 for taxpayers who don’t itemize.

Tax Rates & Credits

• Lower Tax Rates Made Permanent: Avoids a 2026 tax hike under the 2017 TCJA.

• Higher Standard Deduction:

  • $15,750 for single filers

  • $31,500 for married couples

  • Indexed for inflation

• Child Tax Credit: Permanently increased to $2,200 per child.

• State & Local Tax (SALT) Deduction Cap: Temporarily raised from $10,000 to $40,000 (through 2029).

• QBI Deduction Made Permanent: Keeps the 20% deduction rate for qualified business income.

• Child Savings Accounts (“Trump Accounts”): $1,000 automatically funded for children born between 2025–2028.

Business Tax Changes

Businesses will see several new opportunities for tax savings along with updated compliance rules.

• Section 179 Expensing: Limit raised from $1.16 million to $2.5 million.

• 100% Bonus Depreciation Made Permanent: Full expensing available for qualifying assets acquired after January 19, 2025.

• Higher 1099 Reporting Thresholds: Increased from $600 to $2,000 for Forms 1099-NEC and 1099-MISC (effective for 2025 and beyond).

• C-Corporation Deduction Limits: Charitable contribution deductions capped at 1% of taxable income.

• Expanded Paid Family Leave Credit: Larger tax credits available to employers providing paid FMLA.

• R&D Expensing: Businesses can immediately expense research and development costs.

What the OBBA Means for Taxpayers

The 2025 OBBA tax updates bring both opportunities and challenges. With higher standard deductions, expanded credits, and permanent lower tax rates, many individuals and businesses stand to benefit. However, reduced exemptions, phased-out energy credits, and stricter reporting rules mean strategic tax planning is more important than ever.

At LNH CPA PLLC, we help clients:

• Maximize deductions and credits.

• Adjust tax strategies for 2025 and beyond.

• Stay compliant with new reporting rules.

Don’t Face the OBBA Alone

Tax laws are changing, but you don’t have to navigate them on your own.

📌 Follow us for expert tax tips, updates, and deadlines.
📩 Share this article with a friend or business owner who needs to know about the 2025 tax law changes.

At LNH CPA PLLC, we’ll make sure you’re prepared for the One Big Beautiful Bill Act and ready to take advantage of every opportunity it provides.