As 2025 comes to a close, we wanted to share a few highlights from the “One Big, Beautiful Bill Act” signed into law on July 4. While the headlines can make tax changes sound overwhelming, several of the updates are straightforward and potentially beneficial for many taxpayers.
The best news aecting all of us is that the favorable income tax brackets and rates that we have become accustomed to over the last several years are now permanent while the standard deduction has increased. Also, businesses will benefit from the permanence of 100% expensing of certain depreciable assets.
A new deduction of up to $6,000 per qualifying senior replaces the once promised “no tax on social security.” If you or your spouse is 65 or older, this is something we will automatically review as part of your return.
Another notable change is the elimination of federal income tax on certain types of earnings. Tips are no longer subject to federal income tax, which may benefit individuals working in service-based industries. In addition, overtime premiums are now excluded from federal income tax, meaning extra hours worked could result in more take-home pay and a lower overall tax bill.
For those who purchased a new vehicle during 2025, there is also good news. Interest paid on qualifying car loans may now be deductible, providing a new opportunity for tax savings that did not exist in recent years.
If you are thinking of making a charitable deduction, the new law may change the timing for you depending on whether you itemize or take the standard deduction. Feel free to contact your preparer for guidance.
As always, these changes may impact each taxpayer dierently depending on income, filing status, and overall circumstances. Our role is to make sure these new rules are applied correctly and to help you take full advantage of any benefits available to you.
If you’ve experienced a change this year — a new job, retirement, vehicle purchase, or changes in household income — please let us know. We’re happy to talk through how these updates may affect you and answer any questions as we head into tax season.
Thank you for trusting us with your tax planning and preparation. We appreciate the opportunity to work with you and look forward to serving you again this year.
Eaton, Babb & Smith
