Congress has passed the One Big Beautiful Bill Act of 2025, a sweeping tax reform law that permanently extends many provisions of the 2017 Tax Cuts and Jobs Act and introduces new credits and deductions that could significantly impact your future tax returns. Here are the highlights of some relevant changes for individuals and families:
New Deduction for taxpayers over 65
Effective starting in 2025, individuals aged 65 or older may claim an additional deduction of $6,000 or $12,000 for married couples. This deduction is in addition to the larger current standard deduction in place for those 65 and older. This deduction begins to phase out at income levels above $75,000 for single filers and $150,000 for married filing joint filers
Child Tax Credit Expansion
Starting in 2025, the Child Tax Credit has been enhanced to $2,200 per qualifying child (under the age of 17), up from $2,000. The credit for other dependents remains at $500 per dependent.
Dependent Care Credit Improvements
Starting in 2026, the Child and Dependent Care Credit increases the potential credit amount and income thresholds. Previously the credit was based on a percentage ranging from 20% to 35% of expenses up to $3,000 per child (or $6,000 for multiple children). In 2026, this percentage ranges increases to a maximum 50% of expenses while also significantly increasing the income levels that certain percentages are available at.
Auto Loan Interest Deduction
Starting in 2025, interest on new personal auto loans may be deductible—up to $10,000 annually for loans originated after December 31, 2024. This above-the-line deduction applies even if you don’t itemize, but only for new vehicles used personally and assembled in the U.S.
Increase in SALT Limitation
For taxpayers who have itemized in recent years, the amount of deduction for state and local taxes (sales tax, property taxes, vehicle licensing taxes, etc.) has been limited to a maximum of $10,000. Under this new bill, that annual limitation jumps to $40,000 for 2025.
Need Help Navigating These Changes?
We’re here to help you understand how these updates affect your unique situation. Contact our office at 307-577-4040 or email us to see how these changes may affect you.
