News & Updates

One Big Beautiful Bill Act (OBBBA) — Key Changes for 2025 Tax Year

The One Big Beautiful Bill Act (H.R. 1, P.L. 119-21), signed July 4, 2025, made sweeping changes to federal tax law. Many provisions from the 2017 Tax Cuts and Jobs Act have been made permanent, and significant new tax benefits have been added — most retroactive to January 1, 2025.

Key Provisions for Individuals:

• Standard Deduction (Permanent): $15,750 (single), $23,625 (head of household), $31,500 (married filing jointly)
• SALT Cap Increase: State and local tax deduction limit raised to $40,000 (from $10,000), with phasedown beginning at $500,000 MAGI
• Child Tax Credit: Increased to $2,200 per child for 2025, indexed for inflation
• New Deduction for Tips: Up to $25,000 in reported voluntary tip income can be excluded from taxable income (claimed on Schedule 1-A)
• New Deduction for Overtime: Up to $12,500 ($25,000 joint) of qualified FLSA overtime pay is deductible (claimed on Schedule 1-A)
• Senior Deduction: New above-the-line deduction of up to $6,000 ($12,000 joint) for taxpayers age 65+ (2025–2028), subject to income limitations
• Car Loan Interest Deduction: New deduction for interest on qualified U.S.-assembled passenger vehicle loans (claimed on Schedule 1-A)
• Trump Accounts: New IRA-type savings accounts for children. $1,000 pilot contribution from Treasury for eligible children born Jan. 1, 2025 – Dec. 31, 2028. Contributions begin July 4, 2026. See trumpaccounts.gov

Important Note for Workers Claiming Tips & Overtime Deductions:

Because the OBBBA passed mid-year, employers were not required to separately report qualified tips or overtime on 2025 W-2 forms (IRS Notice 2025-69). Workers must use their own pay stubs and records to calculate these deductions on the new Schedule 1-A. Starting with the 2026 tax year, employers will be required to report these amounts separately on W-2s.

Note: Mandatory service charges do not qualify as tips. Only voluntary tips in occupations that customarily received tips as of December 31, 2024, are eligible.

If you hold foreign financial accounts with a combined value exceeding $10,000 at any point during 2025, you must file FinCEN Form 114 (FBAR) by April 15, 2026. An automatic six-month extension to October 15, 2026 is available — no form required.

The OBBBA did not change FBAR rules. However, penalties for non-compliance remain severe: up to $16,536 per account for non-willful violations, and up to $165,353 or 50% of account balance for willful violations.

In addition to FBAR, taxpayers with specified foreign financial assets may need to file Form 8938 (FATCA) with their income tax return. The thresholds differ from FBAR and depend on filing status and whether you live in the U.S. or abroad.