One Big Beautiful Bill Act: Summary of key tax provisions for individuals

On July 4, 2025, President Trump signed the new law commonly known as the One Big Beautiful Bill Act (OBBBA). This sweeping Act extends or makes permanent many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) while introducing many new tax provisions. Below are some key highlights of the OBBBA’s tax provisions impacting individuals.

Transfer taxes: Estate, gift and generation-skipping transfer (GST) tax exemptions are permanently set at $15 million per individual (indexed for inflation after 2026).

Income tax rates: The ordinary income tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% implemented under TCJA are made permanent.

Deductions:

• Standard deduction: This deduction increases to $15,750 (individuals) and $31,500 (joint filers) starting in 2025, indexed for inflation after 2025.
• SALT cap: The deduction for state and local tax (SALT) is temporarily raised to $40,000, reverting to $10,000 in 2030.
  • The increased SALT deduction phases down for adjusted gross income (AGI) over $500,000 for both single filers and joint filers. However, the available deduction will not be less than $10,000.
  • The $40,000 deduction and $500,000 phasedown threshold both increase by 1% in each year through 2029. For example, in 2026, the deduction will be $40,400 and phasedown threshold will be $505,000.
• Mortgage interest deduction: The $750,000 cap for this deduction is made permanent.
• Charitable contributions:
  • Individuals who do not itemize their deductions may deduct $1,000 ($2,000 for joint filers) for charitable gifts in addition to the standard deduction starting in 2026.
  • I ndividuals who do itemize deductions may deduct their charitable contributions, but only the amount that exceeds 0.5% of their contribution base (AGI without regard to operating losses).
  • In addition, the deduction limitation of 60% of AGI for cash contributions to public charities was made permanent.
• Miscellaneous itemized deductions: These deductions are permanently repealed. This includes investment advisory fees and tax preparation fees, for example.

New temporary deductions (2025–2028):

• Tip income: Workers in certain tipped industries may deduct up to $25,000, with phaseouts starting at income of $150,000 ($300,000 for joint filers).
• Overtime pay: Overtime pay may be deducted up to $12,500 ($25,000 for joint filers), with phaseouts starting at income of $150,000 ($300,000 for joint filers).
• Auto loan interest: A deduction of up to $10,000 is allowed for interest on loans to purchase American-made passenger cars, with income phaseouts starting at income of $100,000 ($200,000 for joint filers).
• Seniors: Individuals aged 65 and older may deduct $6,000 ($12,000 for joint filers) with phaseouts for modified AGI above $75,000 ($150,000 for joint filers).

Other notable changes:

• Personal exemptions remain at $0.
• The child tax credit will be increased to $2,200 per child (indexed for inflation after 2025).
• Tax-free withdrawals from 529 plans are permitted for additional elementary and secondary school expenses and for certain certifications and licensing programs. (Note: Each state may have its own rules that could impact the state tax treatment of these types of withdrawals from 529 plans.)
• Trump Accounts:
  • Starting in 2026, the government will contribute $1,000 into tax-favored Trump Accounts for U.S. citizens born between 2025 and 2028.
  • Additional contributions can be made to those accounts by individuals up to $5,000 annually (adjusted for inflation after 2027) until the child is 18 years old. Employers can also make contributions up to $2,500 per year on behalf of their employees’ dependent children.
• The gain exclusion for qualified small business stock was increased to $15 million, adjusted for inflation after 2026, for such stock issued after the date of enactment.
• The Section 199A qualified business income deduction of 20% for pass-through entities was made permanent.

These are just some of the provisions included in the OBBBA, and we expect more guidance from the Treasury Department. Due to the complexity of these issues, it is important that you talk with your qualified tax and legal advisors about the impact of the OBBBA on your specific situation.

Lucy Bickford is a senior wealth strategist for CIBC Private Wealth in Chicago, with over 10 years of industry experience.