Key Questions: What Are the Top 10 Provisions in the 'One Big Beautiful Bill Act' that Will Impact Individuals?

The One Big Beautiful Bill Act was signed into law on July 4 by President Trump. The bill extends many of the expiring provisions of the Tax Cuts and Jobs Act (TCJA). It also addressed many of Trump’s other tax priorities. Many of the provisions start after 2025.

1. Permanent extension of higher federal estate tax exemption — $15 million per person in 2026 and indexing it to inflation.
2. 2017 Tax Cuts & Jobs Act Extension
   • Individual tax rates — Makes the lower individual TCJA rates permanent. All brackets are indexed for inflation after 2025. The top bracket is 37%.
   • Standard deduction — The higher standard deduction was made permanent. For tax years beginning after 2024, the standard deduction increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married individuals filing jointly. The standard deduction will be adjusted for inflation after that. These changes have been made retroactive to include 2025. (Note: There is also a new $6,000 deduction for seniors from 2025 through 2028).
   • Alternative minimum tax exemption — The bill permanently extends the TCJA’s increased individual alternative minimum tax (AMT) exemption amounts and reverts the exemption phaseout thresholds to their 2018 levels of $500,000 ($1 million in the case of a joint return), indexed for inflation. The bill increases the phaseout of the exemption amount from 25% to 50% of the amount by which the taxpayer’s alternative minimum taxable income exceeds the threshold amount.
   • Mortgage interest deduction — The bill permanently extends the TCJA’s provision limiting the qualified residence interest deduction to the first $750,000 in home mortgage acquisition debt. It also makes permanent the exclusion of interest on home-equity indebtedness from the definition of qualified residence interest. The bill also treats certain mortgage insurance premiums on acquisition indebtedness as qualified residence interest.
   • Miscellaneous itemized deductions — The bill makes permanent the TCJA’s suspension of the miscellaneous itemized deductions but removes unreimbursed employee expenses for eligible educators from the list of miscellaneous itemized deductions.
   • Pease Limitation — The bill permanently removes overall limitation on itemized deductions (known as the Pease limitation) and replaces it with a new overall limitation on the tax benefit of itemized deductions. The amount of itemized deductions otherwise allowable would be reduced by 2/37 of the lesser of (1) the amount of the itemized deductions or (2) the amount of the taxpayer’s taxable income that exceeds the start of the 37% tax rate bracket.
3. SALT (State and Local Tax) cap — increased from $10,000 to $40,000 (and adjusts it for inflation). In 2026, the cap will be $40,400, and then will increase by 1% annually through 2029. Starting in 2030, it will revert to the current $10,000. It will phase out for modified adjusted gross income (MAGI) over $500,000 (threshold indexed for inflation through 2029). Phaseout is from $500,000 to $600,000, a 30% reduction of the amount the taxpayer’s MAGI exceeds the threshold, but not below $10,000. So, the deduction falls from $40,000 to $10,000 for those over the MAGI. The same SALT deduction is available for nongrantor trusts. (Note that there is no limitation for specified service trades or businesses (SSTBs) and there is no limit to the usefulness of the pass-through entity taxes (PTETs).
4. Qualified Business Income (QBI) deduction — Keeps the deduction at 20%. Starting in 2026, it expands the deduction limit phase-in range for SSTBs) and other entities subject to the wage and investment limitation by increasing the $50,000 amount for non-joint returns to $75,000 and the $100,000 amount for joint returns to $150,000. The bill also introduces an inflation-adjusted minimum deduction of $400 for taxpayers who have at least $1,000 of QBI from one or more active trades or businesses in which they materially participate.
5. Opportunity Zone (QZ) investing — QZ will return in 2027 and provide a significant tax advantage investment strategy with deferral and eventually tax-free capital gains.
6. Car loan interest deduction — This is seen as a way to incentivize buying U.S. assembled vehicles.
   • Temporary interest deduction of up to $10,000 per year in interest paid on qualifying loans.
   • Eliminated for individuals earning more than $100,000 or couples making over $200,000.
   • Purchases made in 2025–2028 (3 years).
   • Won’t have to itemize to get the deduction, even if they claim the standard deduction.
   • To qualify, the car must be new and assembled in the United States — a rule some industry manufacturers say would exclude many popular imports.
7. Trump Savings Accounts — This is a form of individual retirement account (IRA) for the exclusive benefit of individuals under 18. It Lets parents, relatives, and others contribute $5,000 annually (adjusted for inflation after 2027) for a child’s future qualified expenses such as education, home ownership, and entrepreneurial expenses, until the beneficiary turns age 18. There will be a new Trump account pilot program that provides a $1,000 tax credit for opening a Trump account for a child born after December 31, 2024, and before January 1, 2029. Savings would grow tax-exempt until child reaches 18.
   • Eligible investments would generally be mutual funds or ETFs.
   • 50% available after age 18.
   • After age 25, remaining amount would be available for qualified expenses.
   • After reaching age 30, full access for any purpose.
   • Distributions for “qualified purposes” would be taxed as long-term capital gain.
   • Non-qualified distributions taxed at ordinary income tax brackets with a 10% penalty.
   • Various other conditions apply.
8. Student Loans (Most of the changes won’t go into effect until July 1, 2026)
   • Consolidates repayment plans — Eliminates multiple income-driven repayment plans and replaces them with a standard repayment plan, an income-based repayment plan, or the new Repayment Assistance Plan (RAP). (Eliminates the following repayment plans — Saving on a Valuable Education (SAVE), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR)).
   • Graduate student loan caps — Limits the amount graduate students can borrow, capping Direct Graduate PLUS loans at $100,000 for master’s degrees (annual limit of $20,500) and $200,000 for doctoral, medical, or professional degrees (annual limit of $50,000).
   • Cap Parent PLUS loans at $65,000 per student ($20,000 per year).
   • Phases out the Graduate PLUS loan program.
   • Eliminates deferments and forbearance periods due to economic hardship or unemployment.
9. Charitable contribution deduction. The bill creates a charitable contribution deduction for taxpayers who do not elect to itemize, allowing nonitemizers to claim a deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for certain charitable contributions. For itemizers, the bill imposes a 0.5% floor on the charitable contribution deduction: The amount of an individual’s charitable contributions for a tax year is reduced by 0.5% of the taxpayer’s contribution base for the tax year.
10. Overtime pay/tip income
    • No tax on tips: The bill provides a temporary deduction of up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. The deduction would be an above-the-line deduction and, therefore, available for taxpayers who claim the standard deduction or itemize deductions. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). This temporary deduction will be available for tax years 2025 through 2028.
    • No tax on overtime: The bill provides a temporary above-the-line deduction of up to $12,500 ($25,000 in the case of a joint return) for qualified overtime compensation received by an individual during a given tax year. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). This temporary deduction will be available for tax years 2025 through 2028.