“Men should not know how their laws or sausages are made.”
-Otto von Bismarck
On July 4, 2025, Donald Trump signed the One Big Beautiful tax bill. Frankly, we would have been happy with a mere open-ended extension of the 2017 tax cuts along with a couple of modest bells and whistles, but, at 887 pages, the 2025 OBB bill was much more than that. Ashlea Ebeling of the Wall Street Journal recently wrote a good Q&A-type recap, the highlights of which we paraphrase/summarize below.
1) What is the top income-tax rate for individuals?
The seven 2017 rates now are permanent, with a top rate of 37%. In 2025, that rate hits individuals with taxable income greater than $600,000.
2) What are the new standard deductions?
The 2017 law doubled the standard deduction to $15,000 for single filers and $30,000 for joint filers. The new standard deductions are, respectively, $15,750 and $31,500. More important, however, enactment of the OBB prevented this deduction from going back to pre-2017 levels.
3) What is the new state and local tax (SALT) deduction cap on federal returns?
The $10,000 maximum SALT deduction of 2017 now is $40,000, which phases out if income exceeds $500,000 and is good only through 2029 (the cap goes back to $10,000 in 2030).
4) If one takes the standard deduction, can he/she still get a charitable deduction for donations?
Yes, we’re talking cash donations and deductions up to $1,000 for single filers and $2,000 for joint filers. Previously, only those who itemized deductions could take the one.
5) What about the OBB and 529 savers?
Originally, the purpose of 529 plans was to help families pay for college. Over time, however, the definition of covered expenses has expanded, and the OBB expanded the definition even further. The definition now includes K-12 tutoring, the fees associated with college entrance exams, and K-12 books and supplies. (The annual limit for K-12 expenses is $20,000.)
6) Did the tax credit of up to $7,500 for leasing/buying an EV survive?
No, the OBB eliminates the elective vehicle credit altogether for transactions after September 30, 2025. And, along the same lines, the law ends tax breaks for solar panels and other energy-efficient home improvements after December 31.
7) What is the new maximum child tax credit?
The 2017 law doubled the credit to a maximum of $2,000 per child. The new law increases this maximum credit to $2,200, which then is adjusted for inflation in 2026 and beyond.
8) What about estate taxes?
The $14 million basic exclusion, established in 2017, has been increased to $15 million, which will be adjusted for inflation in 2027 and beyond. If the 2017 law had been allowed to expire, the basic exclusion would have reverted to $7 million.
9) Isn’t there something about new car loans?
Yes, taxpayers now can deduct up to $10,000 in interest on new car loans. As usual, however, there is some fine print. The deduction phases out for high-income filers, the vehicle must have at least two wheels, and, no surprise, the vehicle must have been assembled in the U.S.
10) Which of Donald Trump’s no-tax on [FILL IN THE BLANKS] promises made it into the OBB?
In all fairness — and this applies to both sides of the aisle — the batting average associated with campaign promises, both specific and vague, probably isn’t that high. Still, at stop-after-stop, Donald Trump focused on several, and two of those campaign promises made it into the OBB. Tip income up to $25,000 now can be deducted, as can overtime income up to $12,500 for single filers and $25,000 for joint filers. As usual, both forms of income and their deductibility phase out above certain income levels. Social Security? Not much except for a temporary bonus deduction ($6,000) for qualifying recipients.
That’s the One Big Beautiful bill in a nutshell. The 2017 tax bill was crafted carefully with plenty of incentives and, in general, a lot to like in both the individual taxpayer and corporate worlds. Most provisions in that bill were set to expire, so Job One from the standpoint of the Grand Old Party was not to let that happen. Mission accomplished, but accomplishing that mission came with baggage in the form of old-fashioned horse-trading, the overt dispensing of goodies, and the placating of a variety of constituencies. (To paraphrase Captain Renault, we were shocked, shocked (!) to learn that old-fashioned horse-trading and the dispensing of goodies were involved.) Accomplishing that mission also came with a probable worsening of the country’s long-term fiscal situation. Don’t get us wrong, though. The OBB may have lacked the careful crafting and narrow focus of the 2017 bill, but the alternative, i.e., letting the best of 2017 expire, seems to us to have been much worse. So, onward and upward. The sausages have been made.