New tax legislation can create meaningful planning opportunities—but only if you understand what changed and how it affects your income, deductions, and overall tax strategy.
The OBBBA introduces several provisions affecting individual taxpayers beginning in 2025, many of which run through 2028. Below is a practical overview of the ten most relevant provisions, explained in plain language, along with planning considerations to keep in mind. This summary is based on the Top Ten OBBBA Provisions for Individual Taxpayers reference document.
The Top Ten OBBBA Provisions for Individual Taxpayers
1. Personal Exemption Deduction for Seniors (2025–2028)
OBBBA allows a personal exemption deduction of up to $6,000 for taxpayers age 65 and older for tax years 2025 through 2028. The deduction begins to phase out when modified AGI exceeds $75,000 for single filers or $150,000 for married filing jointly.
2. AMT Exemption Amounts and Phaseouts
The increased Alternative Minimum Tax (AMT) exemption and phaseout thresholds from the Tax Cuts and Jobs Act are generally made permanent. However, beginning in 2026, the AMT exemption phaseout threshold for married filing jointly and surviving spouse filers reverts to the 2018 level of $1 million. The phaseout rate also increases from 25% to 50%, which may bring more high-income taxpayers back into AMT exposure.
3. SALT Limitation Increase (2025–2029)
The SALT deduction limit increases to $40,000 for the 2025 tax year and is adjusted upward by 1% annually through 2029. After 2029, the limit reverts to $10,000. The legislation does not change existing passthrough entity tax (PTET) treatment, which remains an important planning tool for certain taxpayers.
4. Disaster Relief Expansion
OBBBA retroactively extends enhanced personal casualty loss deductions for certain federally declared disasters occurring before September 2, 2025, provided the disaster incident period ends by August 3, 2025. Non-itemizers may claim qualified disaster losses, and the 10% of AGI threshold is waived. Beginning in 2026, casualty loss deductions may also apply to state-declared disasters.
5. Charitable Contribution Deduction Changes
Several charitable giving provisions are updated under OBBBA. Non-itemizers may deduct up to $1,000 ($2,000 for married filing jointly). The 60% AGI limit for cash contributions is made permanent, and a new 0.5% floor applies for individuals who itemize charitable deductions.
6. Child Tax Credit and Other Dependent Credit Updates
The Child Tax Credit increases to $2,200 beginning in 2025 and will be indexed for inflation. To claim the credit, the child and at least one parent must have a valid Social Security number.
7. No Tax on Tips (2025–2028)
OBBBA allows a deduction of up to $25,000 for reported cash tips received by workers in occupations that traditionally earn tips, as determined by the Treasury Secretary. Tips must be reported on a W-2 or 1099 to qualify. The deduction phases out for taxpayers with modified AGI above $150,000 ($300,000 for married filing jointly).
8. No Tax on Overtime (2025–2028)
A deduction of up to $12,500 ($25,000 for married filing jointly) is available for qualifying overtime pay during the 2025–2028 tax years. This deduction also phases out once modified AGI exceeds $150,000 ($300,000 for married filing jointly).
9. No Tax on Qualified Car Loan Interest (2025–2028)
OBBBA permits a deduction of up to $10,000 for interest paid on qualified passenger vehicle loans during 2025–2028. The loan must be incurred (or refinanced) after 2024. The deduction phases out for taxpayers with modified AGI above $100,000 ($200,000 for married filing jointly).
10. Student Loan Interest Provision
The legislation permanently extends the exclusion from income for student loans forgiven due to the borrower’s death or disability. It also confirms that the American Rescue Plan Act’s broader exclusion for student loan forgiveness is scheduled to sunset at the end of the 2025 tax year.
Planning Tips: What to Do Next
If you may qualify for any of these provisions, the key is planning early rather than waiting until filing time. Practical next steps include reviewing expected modified AGI to identify potential phaseouts, adjusting withholding or estimated tax payments if deductions change your liability, and carefully tracking tip or overtime income if applicable.
For higher-income taxpayers, it’s also important to revisit SALT planning, itemization strategies, and how these provisions interact with the rest of your financial picture.
Need Help Applying These Changes to Your Tax Plan?
Legislative changes like these can create meaningful opportunities, but only when they’re applied correctly to your specific situation. For high earners, business owners, and investors, the interaction between these provisions and existing income streams matters just as much as the provisions themselves.
If you’re looking for proactive planning based on the new OBBBA changes, contact me to set up a no-obligation consultation.
