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2025 Tax Law Changes (OBBBA) – Key Provisions, Limits & Phaseouts
Use this quick-reference to understand the most important 2025 tax law changes enacted under OBBBA (H.R.1). For details, download the full guide or contact Aldaris CPA for personalized planning.
Standard Deduction (2025)
- Single / MFS: $15,750
- Head of Household: $23,625
- MFJ / QSS: $31,500
Senior deduction: +$6,000 per taxpayer age 65+ (phases out when MAGI exceeds $75,000; $150,000 MFJ).
Itemized Deductions – SALT Cap
The SALT deduction is limited to $40,000 ($20,000 MFS), reduced by 30% of the excess of modified AGI over $500,000 ($250,000 MFS), but not below $10,000 ($5,000 MFS). At or above $600,000 MAGI ($300,000 MFS), the cap is $10,000 ($5,000 MFS).
Credits Updated for 2025
- Child Tax Credit: $2,200 per qualifying child under 17. SSNs for the taxpayer/spouse and child are required by the return due date.
- Adoption Credit: Up to $5,000 is refundable starting in 2025.
Energy Credits – Last Year
- Clean Vehicle Credits: No credit for vehicles acquired after Sept 30, 2025 (includes used/previously-owned and commercial clean vehicles).
- Energy Efficient Home Improvement Credit: Ends for property placed in service after Dec 31, 2025.
- Residential Clean Energy Credit: Ends for property placed in service after Dec 31, 2025.
529 Plans (QTP) – Expanded Uses
For distributions after July 4, 2025, qualified K–12 expenses now include curriculum materials (including online), tutoring/classes outside the home, standardized/AP test fees, dual-enrollment fees, and certain therapies for students with disabilities. Certain required postsecondary credentialing expenses qualify as higher-education expenses.
New Deductions (2025)
- Qualified tips deduction: Up to $25,000 (phases out over $150,000 MAGI; $300,000 MFJ).
- Overtime pay deduction: Up to $12,500 ($25,000 MFJ), phases out over $150,000 MAGI ($300,000 MFJ).
- Vehicle loan interest deduction: Up to $10,000 on qualifying personal-use vehicles (loan incurred after 2024; phases out over $100,000 MAGI; $200,000 MFJ).
Business & Depreciation
- Section 179 limit: $2,500,000; phaseout begins at $4,000,000.
- Special depreciation allowance: 100% for property placed in service after Jan 19, 2025 (40% election available).
- Domestic R&E costs: Fully deductible beginning in 2025 (no amortization).
Provisions Effective in 2026 or Made Permanent
- Current (lower) individual tax rates remain; the standard deduction is permanently increased; and personal exemptions are repealed.
- Mortgage interest deduction limited to $750,000 acquisition debt (permanent); home-equity interest disallowed unless buy/build/improve; mortgage insurance premiums treated as qualified residence interest.
- Miscellaneous itemized deductions subject to 2% AGI floor are permanently repealed (except for educator expenses).
- Casualty loss limitation to certain disasters is permanent/expanded; overall itemized deduction limit for 37% bracket taxpayers; AMT higher exemption/phaseouts permanent with 50% phaseout rate.
- Qualified business income deduction (QBI) made permanent and expanded.
- 1099 reporting threshold increases from $600 to $2,000.
- Multiple energy-related incentives end in 2026 (e.g., refueling credit, new energy-efficient home credit, commercial building deduction for projects beginning after June 30, 2026).
- Trump accounts: Tax-deferred IRA-type accounts for individuals under 18; contributions not deductible; no contributions before July 4, 2026. Pilot program: $1,000 IRS payment for eligible children born 2025–2028 (see guide for details).
Download the 2025 OBBBA Tax Facts & Figures Guide or contact us to see how these changes affect your 2025 return and planning.