On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act was signed into law introducing tax law changes for both individuals and corporations.

Most of these measures make permanent several provisions previously introduced under the 2017 Tax Cuts and Jobs Act (TCJA).This article outlines some of the key provisions of the 2025 tax act for individuals.

Individual income tax rates and brackets

The OBBB Act extends the 2017 TCJA individual federal income tax rates and brackets.

The amendments made by this section shall apply to taxable years beginning after December 31, 2025. Rates of 12%, 22%, 24%, 32% and the highest tax bracket at 37% remain unchanged.

Increase in standard deduction

The OBBB Act increases the standard deduction 2025 to $15,750 for individuals ($31,500 for joint filers).

SALT Deduction

Temporarily raises the $10,000 cap on SALT (state and local tax) deductions to $40,000 (through 2029). It is important to note that the SALT limit is $40,000 for single taxpayers and married taxpayers filing jointly and $20,000 for married taxpayers filing separately. The SALT deduction comes with a phaseout that begins for taxpayers with MAGI (modified adjusted gross income between $500,000 and $600,000. Above the $600,000 limit the SALT deduction is capped at $10,000.

Child tax credit

The OBBB Act maintains and increases the child tax credit and raises the credit to from $2,000 to $2,200 per qualifying child.

No tax on tips

This provision allows workers that customarily and regularly receive cash tips to deduct up to $25,000 in qualified tips per taxable year. The deduction phases out by $100 for every $1,000 over the adjusted gross income threshold of $150,000 ($300,000 for a joint return). For example, the deduction will completely phase out for married taxpayers filing jointly if their adjusted gross income exceeds $550,000. This provision is set to expire after 2028.

No tax on overtime

The Act allows for a deduction of overtime from taxable income not exceeding $12,500 ($25,000 in the case of a joint return). For joint returns, the deduction begins to phase out at an adjusted gross income of $300,000, while for individual returns, the threshold is $150,000. For every $1,000 above these thresholds, the deduction is reduced by $100. For example, the deduction will completely phase out for joint filers if their adjusted gross income exceeds $550,000. Total qualified overtime compensation shall be reported on form W-2. This provision is set to expire after 2028.