Current Tax Reform & How It Impacts You

Banner image with text overlay about 2025 tax changes under the One Big Beautiful Bill Act (OBBBA)

What’s carrying over from 2017?

Lower Tax Rates & Bigger Standard Deduction

The lower individual tax rates and income tax brackets set to expire in 2025 are now made permanent by OBBBA. The increased standard deduction set to expire in 2025 has been made permanent and increased to $15,750 for single filers and $31,500 for joint filers for 2025.
Child Tax Credit Expanded

The Child Tax Credit was set to default to $1,000 after 2025, however, the OBBBA increased the Child Tax Credit to $2,200 for every qualifying child starting in 2025. The credit amount will be adjusted annually for inflation starting in 2026.
Increased State and Local Tax (SALT) Deduction Cap

The $10,000 SALT deduction limit was set to expire in 2025, however the OBBBA increased the cap to $40,000 for 2025 for those with incomes up to $500,000. This increased cap will rise by 1% annually through 2029 and default back to $10,000 in 2030.
Expanded Pass-Through Business Deduction

The 20% pass-through business income deduction was set to expire in 2025, but the OBBBA made it permanent. The bill also created a minimum deduction of $400 for businesses with at least $1,000 of income.

What’s new for 2025?

No Taxes on Overtime

Effective for 2025 through 2028, the OBBBA introduces a deduction for qualified overtime pay, meaning overtime income won’t be taxed the same way as regular wages. This is designed to boost take-home pay for hourly and salaried workers.
No Taxes on Tips Deduction

Effective for 2025 through 2028, qualifying taxpayers may deduct tips up to $25,000 per year. This deduction applies to those making less than $150,000 ($300,000 for joint filers).
Enhanced Deduction for Seniors

Effective for 2025 through 2028, individuals who are 65+ may claim an additional deduction of $6,000 per individual ($12,000 total for a married couple where both spouses qualify). This new deduction is in addition to the current additional standard deduction and for both itemizing and non-itemizing taxpayers.
Car Loan Interest Deduction

Effective for 2025 through 2028, qualifying taxpayers may deduct up to $10,000 per year for new, qualifying vehicles.

Learn about the other Big Beautiful Bill tax changes

Zack & Kara
OVERTIME WORKERS

Image of tags describing Zack and Kara's situation: Married filing jointly, Ages 40, Two Children under 20, Overtime Pay, Homeowners, New Car

Zach and Kara are a married couple with two children, filing jointly with a combined adjusted gross income (AGI) of $144,000. Thanks to the new OBBBA, they qualified for $20,000 in overtime pay deductions, $5,000 in car loan interest deductions, and a $200 increase in the child tax credit. They also benefited from a higher SALT deduction cap of $23,520. These changes reduced their taxable income by $37,520, allowed them to itemize instead of taking the standard deduction, and lowered their tax bracket from 22% to 12%, saving them a total of $6,407.

What does this mean for you?

If you have children, work overtime, or live in a high-tax state, these updates could significantly reduce your tax bill.

Julia
TIP-BASED WORKER

Illustration describing Julia's situtation Single, Age 21, Waitress, Received Tips

Julia is a single waitress with an adjusted gross income (AGI) of $30,000, including $20,000 in tips. Thanks to the new OBBBA, she qualified for an increased standard deduction of $750 and a full deduction of her $20,000 in tips. These changes lowered her taxable income enough to move her from the 12% tax bracket to the 0% bracket, saving her $1,562 in taxes.

What does this mean for you?

If you earn tip income or have a similar financial profile, you might see tax savings too.

Luis
GIG WORKER

Illustration descriptiong Luis' situation: Single, Age 24, W-2 income, Rideshare driver, Student, Received Tips, New Car

Luis is a gig worker with an adjusted gross income (AGI) of $70,294, plus $3,300 in tips. Thanks to the new OBBBA, he qualified for a higher standard deduction and $5,550 in new deductions from tip and car loan interest. These changes drop him from the 22% to the 12% tax bracket. Since Luis’ deducted his tips, he experiences a $660 reduction in his qualified business income deduction, however, he still saves $1,069.

What this means for you:

If you earn income through gig work or tips, these updates could lower your tax bill.

Nikki
PARENT

Illustration describing Nikki's situation: Head of household, age 37, two children under 17, teacher

Nikki is a teacher who has two children and files as Head of Household with an adjusted gross income (AGI) of $57,700. Thanks to the new OBBBA, her standard deduction increased by $1,125 and her child tax credit went up by $400. These changes lowered her taxable income and total tax bill, saving her a total of $535.

What does this mean for you?

If you’re a parent or file as Head of Household, you might benefit from similar updates.

Maggie
SENIOR

Maggie is a 70-year-old single retiree with an adjusted gross income (AGI) of $57,000. Thanks to the new OBBBA, she received an increased standard deduction of $750 and a new senior deduction of $6,000. These changes reduced her taxable income, saving her a total of $810.

What does this mean for you?

If you're retired or over 65, the new deductions may lower your taxable income and increase your refund.

Hunter & Addie
ADOPTIVE PARENTS

Illustration describing Hunter and Addie's situtation: Married filing jointly, ages 40, W-2 income, one child under 17, business income, overtime pay

Hunter and Addie are a married couple, filing jointly with a combined adjusted gross income (AGI) of $69,000. Thanks to the new OBBBA, they qualified for $10,000 in overtime pay deductions and $5,000 in car loan interest deductions—plus a refundable adoption credit of $4,263. These changes lowered their taxable income, moved them to a lower tax bracket, and resulted in $5,000 in total tax savings, including a refund for adoption expenses.

What does this mean for you?

If you’re married, have adoption expenses, or work overtime, these updates could lead to meaningful savings.

H&R Block Tax pros Michael O and Antoinette P. — We’re here to help

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Additional Deductions	$38,520
Additional Credits	$200

Additional Deductions	$16,500
Additional Credits	$4,263

What does the new tax reform mean for you?

What’s carrying over from 2017?

The OBBBA includes tax changes such as:

What’s new for 2025?

The OBBBA includes new 2025 tax changes such as:

Who might be affected by the new tax laws?

Stay up-to-date with tax changes

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