Key Tax Changes for Individuals Under the One Big Beautiful Bill

The One Big Beautiful Bill (OBBB) includes several key provisions for U.S. taxpayers. While some of these provisions impact specific groups of taxpayers (such as those who work for tips or receive overtime pay), others apply more broadly. Going forward, it will be important for all taxpayers to ensure that they have a clear understanding of how the OBBB impacts their tax liability—as improperly claiming credits, exemptions, or deductions could trigger an IRS audit. Learn more from Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

What Massachusetts Taxpayers Need to Know About the One Big Beautiful Bill

One important aspect of the OBBB is that, while many of its provisions are effective immediately, others are not. As a result, taxpayers in Massachusetts need to be careful to ensure that they do not rely on the OBBB’s individual tax provisions prematurely. Similarly, many of the tax benefits for individuals under the OBBB are set to expire shortly after the next presidential election. So, going forward, taxpayers will need to be careful to ensure that they do not improperly claim tax benefits under the OBBB as well.

With these considerations in mind, here are some of the key changes for individual taxpayers under the OBBB:

• Standard Deduction – Beginning this year, the standard deduction is increasing to $31,500 for joint filers, $23,635 for heads of household, and $15,750 for all other taxpayers.
• Senior Deduction – The OBBB creates a temporary “senior deduction” for taxpayers at 65 and older. Seniors with modified adjusted gross income of less than $75,000 can deduct up to $6,000 from 2025 through 2028.
• State and Local Tax (SALT) Deduction – The state and local tax (SALT) deduction is increasing to $40,000 for 2025 and will increase by one percent per year through 2029. This is subject to a phase-out for taxpayers who earn $500,000 or more.
• Charitable Deductions – Itemized deductions for charitable contributions are now subject to a 0.5 percent floor and a $1,000 above-the-line deduction ($2,000 for joint filers).
• Green Energy Credits – The current electric vehicle and residential energy efficiency credits will be repealed within a year of the OBBB’s enactment.
• Tips and Overtime – From 2025 through 2028, up to $25,000 in tip income and up to $12,500 in overtime pay ($25,000 for joint filers) is tax deductible. These are subject to phase-outs for taxpayers who earn $150,000 or more ($300,000 for joint filers).
• Estate and Gift Tax Exemption – Beginning next year, the estate and gift tax exemption is increasing to $15 million for individuals and $30 million for joint filers.

This list is not exhaustive. Additionally, the OBBB includes several key tax changes for businesses as well, and some of these changes have the potential to impact individual business owners’ personal tax liability. As a result, a comprehensive and cautious approach to tax compliance remains essential, and all taxpayers will want to make sure they can substantiate the contents of their federal returns so that they are prepared to defend against an IRS audit if necessary.

Request a Confidential Consultation with Boston Tax Lawyer Kevin E. Thorn

Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, represents Massachusetts taxpayers in all IRS-related matters. If you have concerns about tax compliance in 2025 (or beyond), you can call 617-692-2989 or contact us online to request a confidential consultation.