Is the Big Beautiful Bill a Big Beautiful Tax Break?

It’s official—Trump’s “Big Beautiful Bill” was signed into law on July 4th, 2025, ushering in one of the most sweeping tax overhauls in recent memory. Touted as a victory for American families and business owners, the new law makes elements of the Tax Cuts and Jobs Act of 2017 (TCJA) permanent while introducing bold changes aimed at stimulating growth and rewarding investment. In this article, we will highlight some of the changes that will go into effect as early the as 2025 tax year.

(1) Standard Deduction Adjustments

The standard deduction, a cornerstone of individual tax returns, is set to increase for both single and married filers. For the 2025 tax year, single filers will see their standard deduction rise to $15,750, while married couples filing jointly will benefit from a $31,500 deduction.

Old Law	New Law ('Big Beautiful Bill')
$15,000 for single; $30,000 for married filing jointly for 2025	$15,750 for single; $31,500 for married filing jointly for 2025

✅ This will benefit tax payers that claim the standard deduction and do not itemize.

(2) Bonus Deductions for Older Adults

The new law increases the 'bonus' deduction for individuals aged 65 and older. For the 2025 tax year, eligible seniors can claim an additional $6,000. The deduction phases out when modified adjusted gross income exceeds $75,000 for single or head of household, and $150,000 for married filing jointly.

This bonus deduction will be available from 2025 through 2028, providing a four-year window for older taxpayers to benefit from this extra relief. It's a targeted measure designed to ease the financial burden on retirees and older Americans.

Old Law	New Law ('Big Beautiful Bill')
$1,600 for each married filing jointly taxpayer age 65 and older for 2025; $2,000 for single or head of household for 2025	$6,000 for each taxpayer age 65 and older; from 2025 through 2028

✅ This will benefit older adults that are below the income limits for this deduction.

(3) Tax on Tips and Overtime

The new tax law introduces favorable treatment for overtime pay and tips. Taxpayers will be able to deduct up to $12,500 of overtime pay from 2025 through 2028. Both of these deductions phase out at a 10 percent rate when adjusted gross income exceeds $150,000 ($300,000 for joint filers).

Additionally, a separate provision allows for the deduction of up to $25,000 per year in tips from 2025 through 2028. This change is particularly beneficial for workers in service industries where tips constitute a significant portion of income.

These deductions can substantially reduce taxable income for eligible workers. However, it's important to maintain accurate records of overtime and tip income to fully benefit from these provisions.

Old Law	New Law ('Big Beautiful Bill')
No provision.	Deduct up to $25,000 of tips per year from 2025 through 2028. Deduct up to $12,500 of overtime per tax payer from 2025 through 2028.

❓ This will benefit hourly workers and those in the service business that receive tips. Since the provision applies to federal income tax only, and not Social Security, Medicare, or State taxes the benefit is controversial since small businesses will not see a difference in the amount they have to pay in payroll taxes. (Federal Income Tax is paid by the employee only). In other words, it has a limited benefit for employees, and no benefit to the employer.

(4) Auto Loan Interest

The new law provides for a auto loan interest deduction for new automobiles with final assembly in the U.S.A. for tax years 2025 through 2028. The deduction caps at $10,000 and phases out at a 20 percent rate when income exceeds $100,000 for single filers and $200,000 for joint filers.

Old Law	New Law ('Big Beautiful Bill')
No provision.	Deduct up to $10,000 of annual interest on new car loans from 2025 through 2028.

❌ The benefit of this provision is controversial because of the cap and income limits. It is expected to have a very minor effect on an individual's actual tax return, unless lower income tax payers purchase very expensive vehicles at a high interest rate.

(5) Trump Accounts for Child Savings

A novel addition to the tax code is the introduction of Trump Accounts for child savings. This provision offers a one-time $1,000 credit per child born between 2025 and 2028.

These accounts are designed to encourage long-term savings for children's future needs, such as education or healthcare. The credit is directly deposited into the designated account, providing a head start on savings.

Parents and guardians should explore how to set up and manage these accounts to maximize their benefits. It's an opportunity to kickstart savings for a child's future with a tax-advantaged boost.

Old Law	New Law ('Big Beautiful Bill')
No provision.	One-time $1,000 credit to the account of a child born between 2025 through 2028.

✅ The children that will receive this benefit may grow their wealth significantly over their lives. It is an unprecedented opportunity.

(6) Charitable Deduction for Non-Itemizers

After 2021, taxpayers who take the standard deduction were no longer able to claim an additional deduction for charitable contributions. The new law now provides a new charitable contribution deduction of $1,000 for taxpayers filing as single, and $2,000 for married filing jointly.

Old Law	New Law ('Big Beautiful Bill')
No provision since 2021.	$1,000 for single; $2,000 for married filing jointly; no expiration means it is a permanent provision starting on 2025.

✅ The impact on a given year will be minimal, however, since this is a permanent deduction, the aggregated savings over many years could be significant.

(7) Child Tax Credit

The Child Tax Credit, a vital support for families, is undergoing notable changes. The maximum credit per child will increase to $2,200, providing additional financial relief for parents and guardians.

Of this amount, $1,700 will be refundable for the 2025 tax year. This means that even if a taxpayer's liability is reduced to zero, they can still receive up to $1,700 as a refund.

These modifications aim to provide more substantial support for families, particularly those in lower income brackets. However, it's essential to understand the eligibility criteria and phase-out limits to maximize the benefit of this credit.

Old Law	New Law ('Big Beautiful Bill')
Max credit of $2,000 per child through 2025; refundable portion $1,700 for 2025.	Max credit of $2,200 per child; refundable portion $1,700 for 2025.

✅ Families with eligible children will benefit from this provision.

(8) Estate and Gift Tax Exemption

The estate and gift tax exemption is set to increase significantly and permanently, offering more flexibility for wealth transfer. Starting in 2026, the exemption will rise to $15 million for single filers and $30 million for married couples filing jointly. Future years will be inflation-indexed.

This substantial increase provides an opportunity for high-net-worth individuals to transfer more assets to their heirs tax-free. It's a critical consideration for estate planning and generational wealth transfer strategies.

Old Law	New Law ('Big Beautiful Bill')
$13.99 million for single; $27.98 million for married filing jointly for 2025.	$15 million for single; $30 million for married filing jointly for 2026.

✅ This change will benefit high-net-worth individuals to transfer more assets to their heirs tax-free.

(9) SALT Deduction Limitations

The State and Local Tax (SALT) deduction, a contentious issue in recent years, will see changes under the new legislation. The new SALT deduction for 2025 will be $40,000. From 2026 to 2029, this limit will increase by 1% annually. However, in 2030, it's set to revert to the $10,000 cap. This gradual increase provides some relief for taxpayers in high-tax states, albeit temporary.

Taxpayers should consider these changes when planning their tax strategies, especially those in states with high property taxes or state income taxes. It may influence decisions about property purchases or state residency.

Old Law	New Law ('Big Beautiful Bill')
$10,000 limit for 2025.	$40,000 limit for 2025; increases by 1% through 2029; reverts to $10,000 in 2030

❓ This change will primarily benefit tax payers that live in states with high State and Local taxes.

(10) Electric Vehicle Credits

As of September 30, 2025, the electric vehicle credits are no more.

Old Law	New Law ('Big Beautiful Bill')
$7,500 for qualifying electric vehicles	Eliminated. Tough luck Elon.

❓ This is a controversial change.

(11) Qualified Business Income (QBI) Deduction

The QBI was set to expire at the end of 2025. This 20% deduction on qualified income from a pass-through business, such as a sole proprietorships, partnerships, S corporations, and some trusts and estates, has become a permanent.

✅ This change makes the QBI permanent for all future years.

These are just some of the changes the Big Beautiful Bill will enact. With significant tax changes on the horizon, it's essential to start preparing now, especially if you operate a business, are planning large transactions, or will retire in 2025. Tax planning is not a one-size-fits-all process. Consult with a tax professional to develop a strategy tailored to your unique financial situation and goals.

GP Advisory, P.C. is a boutique tax controversy firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, sales and use tax, corporate tax compliance, trust tax compliance, and payroll tax matters. Firm founder, Gustavo E. Paredes, holds a Bachelor of Science in Management, a law degree (Juris Doctor), and the Enrolled Agent credential by the United States Department of the Treasury. Enrolled Agents are federally authorized, have unlimited practice rights before the Internal Revenue Service and State tax agencies, and may practice in all 50 States.

For further information, or to schedule a consultation please contact: GP Advisory, P.C.

Tel: 707-820-7002 (Sonoma County)

Tel: 888-927-7775 (Nationwide)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified tax professional for specific guidance related to your circumstances.