What the Big Beautiful Bill Means for Your Taxes: A Clear, Practical Breakdown for 2025–2026

Written By Muhammad Qizilbash

If you’ve been hearing about the “One Big Beautiful Bill” (OBBBA) and wondering what it means for your taxes, you’re not alone. Passed by Congress in July 2025 and signed into law on July 4, 2025, this sweeping tax and spending package introduces some of the most significant federal tax changes in years—impacting individual taxpayers, families, and small businesses alike.

At MAQ Advisors, our priority is helping you understand how these updates affect your tax planning and your bottom line. Here’s a straightforward overview of the most important provisions.

1. Expanded and Newly Permanent Tax Cuts

One of the centerpieces of the Big Beautiful Bill is the permanent extension of several tax cuts originally introduced under the 2017 Tax Cuts and Jobs Act (TCJA). These changes were originally set to expire but now extend indefinitely, providing stability for long-term planning.

Higher Standard Deduction — Permanently Increased

The standard deduction remains higher and receives an additional bump beginning in 2025:

  • Single / Married Filing Separately: $15,750

  • Head of Household: $23,625

  • Married Filing Jointly / Surviving Spouse: $31,500

This increase simplifies filing for millions of taxpayers and reduces the number of households itemizing deductions.

Tax Brackets Remain Lower

Lower individual tax brackets introduced under TCJA are preserved, helping maintain lower tax liabilities for most income earners. The extension of these brackets also reduces taxpayers’ concerns about “tax cliffs” previously expected after 2025.

Elimination of Personal & Dependent Exemptions

Personal exemptions remain permanently removed, aligning with the simplified larger standard deduction structure. Some seniors may still qualify for exceptions.

Impact for Taxpayers

These permanent rules allow for clearer long-term planning—whether you’re a family projecting future tax exposure or a retiree estimating annual taxable income.

2. “No Tax On…” Deductions: Tips, Overtime & Car Loan Interest

A highly publicized aspect of the bill is the introduction of special deductions that remove federal tax on certain types of income. These are designed to ease the financial burden for workers in service-based and hourly-paid industries.

No Tax on Tips

Tip workers—including restaurant staff, delivery drivers, and hospitality employees—can now exclude tips from taxable income. Taxpayers will claim this on the new Schedule 1‑A. This could drastically lower taxable income for millions of service employees.

No Tax on Overtime Pay

Hourly workers who frequently work beyond 40 hours per week will benefit from tax-free overtime pay. This boosts take-home earnings for retail workers, trades professionals, warehouse employees, and more.

No Tax on Auto Loan Interest

Borrowers paying interest on qualifying auto loans can exclude those interest payments from taxable income. This incentive is especially beneficial during periods of high interest rates.

What This Means for Workers

These “no tax on” deductions may lead to significant refund increases or reductions in tax owed—but accurate recordkeeping becomes essential.

3. New Benefits for Seniors

Seniors receive targeted tax relief through the bill’s senior bonus deduction, a new measure designed to offset Social Security taxes and reduce overall taxable income.

Senior Bonus Deduction

While details vary based on filing status and income level, this bonus acts as an additional deduction layered on top of the expanded standard deduction.

Social Security Impacts

The bill also addresses how Social Security benefits interact with taxable income, adding relief for many retirees through both direct and indirect changes.

Considerations for Older Taxpayers

With exemptions removed for most taxpayers but exceptions added for seniors, this demographic must pay close attention to qualification requirements to maximize benefits.

4. Expanded SALT Deduction & Higher Estate/Gift Tax Exemptions

Another important shift under the Big Beautiful Bill involves improvements to major itemized deductions and wealth transfer rules.

Increased SALT Deduction Cap

The state and local tax deduction cap—previously a major pain point for taxpayers in high-tax states—has been increased. This benefits homeowners in regions where property taxes or state income taxes are significant.

Higher Estate & Gift Tax Exemptions

OBBBA raises estate and gift tax thresholds, making it easier for families to transfer wealth over generations without immediately triggering high federal tax obligations.

Why This Matters

These expanded thresholds offer renewed opportunities for estate planning, trust strategies, advanced gifting, and multigenerational wealth transfers.

5. Pro‑Growth Business Tax Incentives

The One Big Beautiful Bill delivers some of its most substantial long‑term impacts through business‑focused tax provisions designed to spur investment and economic expansion.

Permanent 100% Bonus Depreciation

Under the bill, businesses can immediately expense 100% of the cost of qualifying assets, such as machinery, equipment, and certain improvements. This permanently extends a key part of the 2017 TCJA expensing rules, allowing companies of all sizes—especially small and mid-size—to accelerate write‑offs instead of depreciating assets over many years. This can create dramatic year‑to‑year tax savings and improve cash flow for reinvestment.

Enhanced R&D Expensing

Businesses regain the ability to fully expense research and development costs in the year they’re incurred. This reverses the recent shift toward amortization and strongly benefits startups, tech firms, and innovators investing heavily in new products.

Expensing for Structures & Real Property Improvements

The bill also adjusts rules for certain structural investments, allowing more types of building improvements to qualify for accelerated expensing. This can benefit retail, hospitality, medical practices, and real estate-heavy businesses.

Other Business Provisions

Several additional provisions impact business tax planning:

  • Refinements to interest deductibility and loss limitation rules — offering greater flexibility for leveraged businesses.

  • Phase‑downs or elimination of certain green energy credits — altering the incentives landscape for environmentally focused projects.

Taken together, these updates offer powerful tax‑planning opportunities but require careful timing and documentation.

6. New Tax‑Advantaged Savings Accounts for Children

One of the more forward‑looking additions in the Big Beautiful Bill is the creation of new tax‑advantaged savings accounts for children, designed to encourage long-term family wealth building.

Designed for Long‑Term Savings

These accounts function similarly to Roth-style vehicles, allowing families to set aside money that grows tax‑advantaged. While implementation details are still emerging, early outlines suggest:

  • Annual contribution limits set by the IRS

  • Tax‑free growth

  • Tax‑free or tax‑favored withdrawals for qualifying purposes

Potential Uses

Though the IRS will finalize exact parameters, anticipated eligible uses may include:

  • Education expenses

  • First‑time home purchases

  • Childcare or development needs

  • Future investment or milestone expenses

A Boost for Family Planning & Financial Literacy

By encouraging saving from infancy or early childhood, these accounts aim to help families build generational capital. Parents may also use them to teach children about money management and long-term goals.

Why This Matters for Clients

For households already using 529s, custodial accounts, or trusts, these new accounts offer an additional layer of tax efficiency. Families with varying income levels may also find them accessible—depending on how contribution limits and benefits are finalized.

7. Changes That May Increase Long‑Term Federal Deficits

Big tax cuts come with big fiscal implications. The Congressional Budget Office projects that the bill will increase federal deficits by approximately $4 trillion over the next decade, including $700 billion in additional interest costs.

Why This Matters

While this doesn’t change your immediate tax filing, it does:

  • Influence long‑term federal spending

  • Shape future tax proposals

  • Affect economic forecasting

Taxpayers should expect increased attention on spending cuts, entitlement reform, and potential future tax adjustments.

8. When These Changes Take Effect

Effective for 2025 Returns (Filed in 2026)

  • “No tax on” deductions

  • Expanded standard deduction amounts

  • Senior bonus deduction

Effective in 2026 and Beyond

  • Many business expensing changes

  • Additional structural tax adjustments

Permanent Provisions

  • Standard deduction increases

  • Elimination of personal exemptions

  • TCJA tax rate structures

These timelines are crucial for planning both short- and long-term tax strategies.

What This Means for You

The Big Beautiful Bill is complex, far-reaching, and filled with opportunities—if you plan correctly. Whether you're an individual tax filer, a parent planning for your child’s future, or a business owner looking to maximize deductions, these changes may significantly reshape your tax picture.

MAQ Advisors is here to guide you through every provision so you can take full advantage of the benefits available.

Need Help Navigating the New Tax Law?

Whether you're a business owner, a family, or an individual taxpayer, we’re here to help you understand your options and maximize your benefits.

Let’s set up a consultation and make sure you’re prepared for the 2025–2026 tax seasons.

Muhammad Qizilbash