760-320-2107 bh@healeycpas.com

Loopholes

What Every Individual Taxpayer Should Know Now About The One Big Beautiful Bill

October 21, 2025

by: Austin Hughes, CPA

On July 4, 2025, fireworks lit up the sky for more than just Independence Day. That same day, H.R. 1 – officially titled the “One Big Beautiful Bill” or OBBBA – was enacted, presenting a sweeping rewrite of the individual tax code with implications for millions of Americans.

If you pay taxes (and let’s face it, you do), this bill matters to you. Some changes bring welcome relief. Others introduce complexity, but all of them underscore one point: understanding these updates isn’t optional. It’s essential.

At Healey & Associates, we’ve unpacked the bill’s key provisions for individual and joint filers and outlined what they mean in real terms – for you, your family, and your finances!

The Basics: What’s Staying, What’s Changing

The 2017 Tax Cuts and Jobs Act (TCJA) brought big shifts to individual taxes, including lower rates, a doubled standard deduction, and the elimination of personal exemptions. But those changes were temporary. Without new legislation, they would have expired at the end of this year.

H.R. 1 makes most of those changes permanent.

What stays locked in:

  • The current seven tax brackets, ranging from 10% to 37%
  • A nearly doubled standard deduction: $15,750 for singles, $31,500 for married couples filing jointly
  • No return of the personal exemption, though a new temporary $6,000 exemption is available for qualified individuals aged 65 and older

For the average taxpayer, this means no sudden tax hike in 2026 and future stability in the tax law that opens the door for some planning opportunities.

Austin Hughes, CPA

Austin Hughes, CPA – Manager
Healey & Associates, Certified Public Accountants and Consultants

SALT Cap: Relief for High-Tax State Residents (For Now)

One of the most prolific changes is the temporary increase in the SALT (state and local income tax) deduction cap, which is the limit on how much you can deduct in state and local taxes. That cap rises from $10,000 to $40,000 starting in 2025.

There’s more to it than that, however. The $40,000 cap gradually phases down for households with income over $500,000 and is slated to revert to $10,000 in 2030. Still, if you live in a high-tax state like California, this window offers substantial savings and an opportunity for strategic planning, but be sure to watch for possible Alternative Minimum Tax (AMT) application since AMT allows no deduction for SALT!

More Support for Families: Bigger Credits, Easier Rules

Raising a family is expensive, and this bill recognizes that.

  • The Child Tax Credit is now $2,200 per child, with $1,700 of it refundable (i.e., you get it even if you owe no tax).
  • The Adoption Credit can now be partially refunded up to $5,000.
  • Contributions to K–12 scholarships are now eligible for a tax credit of up to $1,700 (starting 2026).

Bottom line, if you’re raising kids, adopting, or contributing to education, these benefits can directly reduce your tax bill.

New Deductions for Tip Earners and Overtime Workers

For the first time in decades, the IRS is acknowledging the hustle.

H.R. 1 allows a new above-the-line deduction – up to $25,000 – for qualified tips and overtime pay. This applies to industries where tipping and extra shifts are common, like food service, hospitality, retail, and healthcare. The U.S. Treasury recently released a draft of the 68 occupations that qualify.

The deductions start in 2025 and run through 2028. If you or your spouse are earning tips or putting in long hours, these deductions could make a real difference in your refund.

529 Plans and Education: More Ways to Use Tax-Free Funds

Planning for education just got more flexible and more generous.

Previously, 529 plans were mostly for college. Now, you can take out up to $20,000 per year tax-free for private K–12 education – including curriculum, books, and online learning.

Also:

  • Student loan forgiveness due to death or disability remains non-taxable.
  • Employer education assistance (up to $5,250/year) is now permanently excluded from your income. This includes tuition reimbursement programs and Student Loan repayment assistance!

Trump Accounts: A New Tool for Kids’ Financial Futures

One of the bill’s most headline-grabbing features is the creation of Trump Accounts, which are tax-free growth accounts for minors.

Each eligible child can receive:

  • $5,000/year in contributions, plus
  • $1,000 in government seed money for kids born between 2025 through the end of 2028

Funds grow tax-free until the child turns 18, and distributions are taxed at favorable capital gains rates. If you’re a parent or grandparent, this may be a new piece of your legacy planning strategy.

Estate Planning: Higher Exemption, Bigger Opportunity

Without H.R. 1, the federal estate and gift tax exemption was set to be slashed in half. Instead, the bill raises the exemption to $15 million (from $13.99 million), with no expiration – a significant win for those with substantial assets.

This opens the door to more flexible gifting strategies and more simplified estate planning for many families.

Other Highlights Worth Noting

  • Auto loan interest is now deductible (up to $10,000/year through 2028) for qualified vehicles
  • Casualty losses are now deductible for state-declared disasters, not just federal ones
  • The Alternative Minimum Tax (AMT) exemption and phaseout thresholds are now permanent and indexed for inflation, keeping many middle- and upper-middle-income households out of their reach
  • You can now deduct only 90% of your gambling losses against your winnings. Previously, 100% of losses could be deducted, up to the amount of winnings

New Excise Tax on Remittances

Sending money overseas? A 1% excise tax now applies to physical remittances over $15 unless the sender proves U.S. citizenship. Although there’s a refundable credit for eligible taxpayers, this provision may disproportionately affect immigrant communities and deserves close attention.

What You Should Do Now

This tax law offers a mix of opportunities and challenges, and your response should depend on your individual circumstances.

  • If you earn tips, work overtime, or send money abroad, there’s something new to navigate.
  • If you’re raising children, funding education, or planning for retirement, there are new opportunities to save.
  • If you have significant wealth or own a business, the new estate and interest rules demand attention.

The worst thing you can do is assume “nothing has changed.” Almost everything has, and even familiar provisions now come with new rules, thresholds, and expiration dates.

Final Thought:

H.R. 1 doesn’t just rewrite the tax code. It reshuffles incentives, realigns planning priorities, and redefines what it means to be tax-savvy.

If you’re unsure what this means for you, or you’re wondering what steps to take next, we can help. At Healey & Associates, Certified Public Accountants and Consultants, we’ve been following every paragraph of this bill, and we’re ready to turn that knowledge into actionable guidance tailored to you.

Need help decoding what H.R. 1 means for you?

Contact Austin Hughes, CPA, manager at Healey & Associates, Certified Public Accountants and Consultants, to schedule a tax strategy session.

Email:    ah@healeycpas.com

Phone: (760) 320-2107.

Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as legal, tax, or accounting advice. Tax situations are often complex and highly specific to the individual or business. You should contact a qualified tax expert directly to discuss your particular circumstances. Nothing herein is intended to, nor does it, create an attorney-client or advisor-client relationship. For individual guidance, please contact us directly.