2025–2028 Tax Guide for Clients: What You Need to Know

This guide was created to help you understand the new tax changes from the One Big Beautiful Bill Act passed in July 2025. These updates apply to most individual taxpayers, small businesses, and LLC owners. The information below outlines the most important updates and how they may benefit you.

1. Higher Standard Deduction (Effective 2025)

The standard deduction—the amount you can deduct from your income without itemizing—has increased significantly:

• Single: $15,750
• Head of Household: $23,625
• Married Filing Jointly: $31,500

This change means more income is shielded from taxes automatically, which is especially helpful for middle-income households. If you previously itemized deductions but had fewer deductible expenses, the higher standard deduction might now give you a better tax break.

2. Child Tax Credit Increase (Effective 2025)

The Child Tax Credit is now $2,200 per qualifying child under age 17.

• It remains refundable, which means if your credit exceeds your tax owed, you may receive the difference as a refund.
• No major changes in income phase-out rules, but it still begins phasing out at $200,000 (single) or $400,000 (married).

This change provides additional support for families and helps lower the overall tax bill.

3. New Deductions You May Qualify For (2025–2028)

A. Tax-Free Overtime and Tips

• Up to $25,000 of income from cash tips or overtime pay is deductible each year.
• Applies to individuals with income under $150,000 (single) or $300,000 (married).
• This benefit phases out above those income levels.

B. Auto Loan Interest Deduction

• Deduct up to $10,000 in interest on a loan for a U.S.-assembled vehicle.
• Available for vehicles purchased from 2025 to 2028.
• Income phase-out applies after $200,000 (single) or $400,000 (married).

C. Senior Deduction (Age 65+)

• An extra $6,000 deduction if you're 65 or older.
• Phases out at income over $75,000 (single) or $150,000 (married).

4. Qualified Business Income (QBI) Deduction Extended Permanently

If you're self-employed or own a pass-through entity (like an LLC or S-Corp), you may deduct up to 20% of your qualified business income.

• Effective permanently starting in 2025
• The income thresholds to qualify have been increased:
• Full deduction available up to $150,000 (married) or $75,000 (single)
• Phase-outs apply for high earners

This is one of the most valuable tax benefits for small business owners.

5. Section 179 Expensing (Effective 2025)

Section 179 lets business owners deduct the full cost of qualified equipment or property in the year it's placed in service, rather than depreciating it over time.

• Deduction limit increased to $2.5 million
• Begins to phase out after $4 million in qualifying purchases

This means more immediate tax savings when your business buys equipment, furniture, computers, or certain vehicles.

6. Bonus Depreciation (Effective 2025–2030)

Bonus depreciation lets businesses deduct 100% of the cost of eligible property in the year it's placed in service.

• Reinstated for new and used assets
• Applies to machinery, equipment, and some building improvements
• Effective through December 31, 2030

You can use this alongside Section 179 to maximize deductions.

7. Clean Energy and Electric Vehicle (EV) Credits

Still Available in 2025 – Phasing Out by End of Year

• Up to $7,500 tax credit for new EVs assembled in the U.S.
• Up to $1,200–$2,000 for home energy improvements (solar, insulation, heat pumps)
• These credits are non-refundable (only reduce your tax, not a refund)

Important: If you're planning on buying an EV or making energy upgrades, consider doing so before the end of 2025 to lock in these benefits.

Need Help?

We can assist you with:

• Running tax projections for 2025 and beyond
• Evaluating which deductions or credits apply to you
• Planning your small business purchases
• Maximizing your family’s tax savings under the new rules

Let us know if you'd like to schedule a one-on-one planning session.

This guide is for informational purposes only and does not constitute legal or tax advice. Please consult your tax professional for personalized guidance.