One Big Beautiful Bill Act: Key 2025 Tax Changes Explained

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, ushering in some of the most significant tax changes in recent years. If you’re curious about how the OBBBA could impact your taxes, you’re not alone!

This OBBBA summary highlights how the new law makes the lower tax rates introduced in 2017 permanent, increases the standard deduction and introduces several new credits and deductions that could benefit families, seniors and charitable givers.

Whether you’re interested in the updated child tax credit, the expanded State and Local Tax (SALT) deduction or the brand-new Trump Accounts for children, here’s some highlights about the 2025 tax changes and how they might affect your financial planning.

1. Lower Tax Rates Made Permanent

The tax brackets established under the 2017 Tax Cuts and Jobs Act, set to expire in 2025, were made permanent under the OBBBA.

2. Standard Deduction Permanently Increased and a Temporary Additional Deduction for Those Age 65+ Established

• Single filers will have a standard deduction of $15,750, head of household filers $23,625 and married filing jointly $31,500 — all adjusted for inflation.
• From 2025 through 2028, individuals aged 65 and older can claim an additional temporary deduction of $6,000 for single filers or $12,000 for joint filers. This deduction is subject to income phaseouts and is on top of the standard age-based deduction of $2,000 for single filers (or when only one spouse qualifies) or $3,200 for married filers when both spouses are eligible.
• Contrary to statements made before the new law was enacted, standard rules for the taxation of Social Security benefits still apply.

3. State and Local Tax (SALT) Deduction Increased Temporarily

• The cap on SALT deduction has been raised from $10,000 to $40,000 for single and joint filers (for 2025 through 2029).
• Married filing separately has a limit of 50% of the other filer’s limit. The limits will increase 1% per year through 2029 and then revert to $10,000 in 2030.
• There is a phase-down of the deduction to a $10,000 minimum for those with higher incomes.

4. Key Updates to Charitable Giving

• Effective for tax years beginning in 2026, standard deduction filers who do not itemize may deduct up to $1,000 for single filers and $2,000 for married filing jointly filers. To qualify for this deduction, the donation must be made in cash and must go to an operating charitable organization. The donation may not be made to a supporting organization (e.g., a private foundation) or be made to establish or maintain a donor-advised fund (DAF).
• Taxpayers who itemize must exceed a 0.5% adjusted gross income (AGI) floor before contributions are deductible.
• The OBBBA also made permanent the 60% of AGI deductibility limit on cash contributions to public charities.

5. Child Tax Credit Increased

• The OBBBA permanently increased the credit from $2,000 to $2,200, and beginning in 2026, it will be indexed to inflation.
• The additional child tax credit (which is refundable) remains at $1,700 for 2025, indexed for inflation.

6. Estate Tax Exemption

The OBBBA made permanent the estate tax exemption of $15 million per person ($30 million for a married couple), indexed for inflation.

7. Automobile Interest Deduction

• The OBBBA created a new “qualified passenger vehicle loan interest” deduction from 2025 through 2028.
• The loan must have been taken after December 31, 2024, and is limited to $10,000 (of interest) per year.
• The vehicle must be new and for personal use and must be assembled in the U.S.
• There is a phase-out of the deduction for single filers with modified adjusted gross income (MAGI) over $100,000 and joint filers over $200,000.

8. Clean Energy Credits

The OBBBA rolled back clean energy tax credits for clean vehicles, energy-efficient home improvements, residential clean energy and alternative fuel vehicle refueling/charging.

9. Trump Accounts Created

• Trump Accounts are federally backed, tax-deferred savings accounts for U.S. children, designed to grow like an IRA, offering a one-time $1,000 government contribution for newborns (2025-2028).
• Effective July 2026, contributions of up to $5,000 (indexed for inflation) may be made each year on behalf of a beneficiary who has not yet reached the year in which they turn age 18.
• Contributions made by parents or other individuals are not deductible.
• Entities such as federal, state, or local governments, or 501(c)(3) organizations may also contribute to an account. This contribution does not count toward the limit or the beneficiary’s income.
• Employers may contribute to Trump Accounts on behalf of an employee’s dependents up to a $2,500 annual limit, adjusted for inflation. This contribution counts toward the $5,000 annual limit but not to the beneficiary’s income.
• If the individual is eligible for both a Trump Account and a Traditional or Roth IRA, the contribution limits for these accounts do not count against the limit for the other.
• Before age 18, Trump Accounts may not be rolled over to IRAs (Traditional or Roth), and there may be no distributions from a Trump Account (except a limited rollover to a 529A ABLE account is permitted only in the calendar year the beneficiary turns 17). After age 18, the account is treated as a traditional IRA and standard IRA transfer/rollover (and Roth conversion) rules apply.*
• Trump Accounts will have a pilot program for any U.S. citizen born in 2025, 2026 or 2027, whereby the U.S. Government will contribute $1,000 to the account for the beneficiary. The parents will elect to have this credit paid to the child’s Trump Account. Currently, it is unclear how the mechanics of this will work.

10. Adoption Tax Credits

The OBBBA makes up to $5,000 of the adoption tax credit refundable.

Explore the OBBBA Details for Yourself

These highlights just scratch the surface of what the OBBBA covers. For a deeper dive into all the OBBBA tax changes and to see how the 2025 tax law updates might affect you, access the full text of the OBBBA online.

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For more information, contact us at Info@GuideStone.org or 1-888-98-GUIDE (1-888-984-8433) Monday through Friday, 7 a.m. to 6 p.m. CT, to speak with a customer solutions specialist.

*https://www.irs.gov/pub/irs-drop/n-25-68.pdf

This information is provided for educational purposes only. This should not be considered tax advice. You should consult a tax professional to discuss your unique situation.