On July 4, 2025, the One Big Beautiful Bill was signed into law — the largest tax reform since the 2017 Tax Cuts and Jobs Act.
Unlike many tax laws that take years to roll out, this one is already in effect for
2025 tax filings.
Some provisions are permanent. Others are temporary. But whether you’re filing as an
individual or running a
business, the way you plan this year will determine whether you save thousands or hand it over in taxes.
👤 How the Bill Affects Individuals
1. Standard Deduction & Rates
The bill makes the higher standard deduction permanent. For 2025:
- Single filers: $16,550
- Married filing jointly: $33,100
- Head of household: $23,800
This simplifies filing for many households but means fewer taxpayers will itemize. It’s critical to review whether itemizing (mortgage interest, charitable giving, medical expenses) still benefits you.
2. SALT Deduction (State & Local Taxes)
The old $10,000 SALT cap is temporarily raised for 2025–2026:
- $40,000 cap for taxpayers with income up to $500,000
- $20,000 cap for married filing separately
- For higher earners, the cap begins to phase down
For California and other high-tax states, this is a big deal. More of your property and state income taxes can now reduce your federal taxable income — but the window is limited.
3. “No Tax on Overtime” Deduction
The bill introduces a new deduction for qualified overtime pay (the premium portion above 40 hours/week under federal law). Key rules:
- Maximum deduction: $12,500 (single) / $25,000 (married filing jointly)
- Income limits: Phases out after $150,000 MAGI (single) / $300,000 MAGI (joint)
- Exclusions: Not available to executives, administrative/professional employees, computer/tech roles, or outside sales staff. Only overtime mandated by the FLSA counts.
- Other requirements: Must include a valid Social Security number; married couples must file jointly to qualify.
For middle-income workers who consistently log overtime, this deduction could mean thousands in savings. But eligibility matters — if you’re unsure, let’s review your W-2s and income levels together.
4. Other Updates for Individuals
- Vehicle Loan Interest Deduction: Interest on a loan for a qualified personal vehicle may now be deductible.
- Seniors & Retirees: Expanded medical expense deductions and updated contribution rules for retirement accounts.
🏢 How the Bill Affects Businesses
1. Pass-Through Entities (S Corps, Partnerships, Sole Proprietors)
- The
20% Qualified Business Income (QBI) deduction remains, but thresholds and phaseouts changed. Some owners may see reduced benefits.
- IRS is cracking down on “reasonable compensation” for S Corp owners. Paying yourself incorrectly could cost you.
2. C Corporations
- The flat
21% corporate tax rate is locked in.
- Stricter limits on interest expense deductions require careful financing reviews.
3. Expensing & Depreciation
- Bonus Depreciation: Still 100% in 2025, but phases down starting in 2026.
- Section 179 Expensing: Limit increased to
$1.29 million (phase-out begins at $3.22 million). This makes 2025 an ideal year for equipment, software, and qualifying vehicle purchases.
4. Payroll & HR
- Employers need to adjust payroll reporting to align with new overtime/wage deduction rules.
- In California, federal changes layer on top of state HR laws — compliance is key to avoid penalties.
⏰ Why Planning Now Matters
The One Big, Beautiful Bill doesn’t give you until 2026 to adapt — it’s already live. Waiting until tax season to react means lost opportunities.
Here’s what you can do
before year-end:
- Individuals: Adjust withholding, evaluate standard vs. itemized deductions, maximize retirement contributions, and plan charitable giving.
- Business owners: Revisit entity structure, review compensation strategies, and time purchases to maximize deductions.
- Fiduciaries: Reassess estate and trust planning while exemptions and thresholds remain favorable.
🚀 Take Back Control
The One Big, Beautiful Bill has reset the rules of the game. Whether you benefit — or end up paying more — depends entirely on how you plan today.
If you’re unsure how these changes affect you or your business, let’s talk it through together.
👉 Book your tax planning session: https://outlook.office.com/book/TeamSchedulerNCB@ncbusinessgroup.com/
