Big changes are coming to individual taxes, thanks to the recently passed One Big Beautiful Bill Act. While many headlines have focused on the bill’s impact on small businesses, there are several important changes that will directly affect individual taxpayers—including many of our clients.
First and foremost, the bill makes permanent the 2017 individual tax rate cuts, which were originally set to expire after 2025. Without this change, many taxpayers would have seen their marginal tax rates rise next year. By locking in the current lower rates, the bill provides new opportunities for tax planning. This change alone could impact your effective tax rate and how much you might want to withhold or pay in estimated taxes for 2025 and beyond.
Another major change: the standard deduction has been increased by an additional $1,150 for single filers and $2,300 for married couples filing jointly. For many taxpayers, this will mean more income shielded from taxation—even if you don’t itemize. But here’s where planning comes in: with an increased standard deduction, itemizing may no longer make sense for some people who currently do. However, it may still be advantageous for others—particularly if your mortgage interest, charitable giving, or state and local taxes are high. This is a great example of where smart tax planning matters, because the benefit of one provision often depends on how it interacts with others.
There’s also good news for families: the child tax credit has been increased. This means that more families could receive a larger credit—even if they don’t owe any tax. But if your income is near the phaseout threshold, additional income (say, from a side business or stock sales) could reduce your eligibility. Planning how and when to recognize income could help preserve this benefit.
Here are just a few of the other changes that are part of the bill but we don’t have room to cover in detail:
* The expanded Alternative Minimum Tax exemption
* Adjustments to the capital gains exclusion on home sales
* Expanded 529 plan qualified expenses
* Modifications to the Earned Income Tax Credit and retirement account contribution limits
While the bill provides many taxpayer-friendly provisions, it’s important to understand how they may—or may not—apply to your individual situation. Tax law is complex, and the provisions of this bill interact with each other in ways that could impact your filing status, deductions, and credits. That’s why now is a great time to schedule a tax planning session. We can help you understand how these changes will affect you, and how to make the most of them before the next tax season arrives.
If you’d like to discuss how this new law may impact your 2025 return—or how to optimize your tax position going forward—reach out to us at help@sbsaccountants.com or 706-632-7850.