New 2025 Tax Law Changes

Posted on January 13, 2026

The One Big Beautiful Bill Act (OBBBS) made many noteworthy changes to the federal tax regulations, including new deductions for American workers and borrowers, and increased tax credits and deductions. The law also eradicated a number of tax breaks. Signed into law on July 4, 2025, the legislation makes many provisions from the 2017 Tax Cuts and Jobs Act permanent while introducing new temporary deductions and adjustments.

Here are the key tax law changes:

• Federal tax brackets now permanent
• Standard deduction amounts increased for 2025
• New $6,000 bonus deduction for seniors age 65 and older
• Deduction for tip income up to $25,000
• Deduction for overtime pay up to $12,500 for single filers or $25,000 for joint filers
• Car loan interest deduction up to $10,000 for qualifying new vehicles
• Child tax credit increased to $2,200 per qualifying child
• State and local tax (SALT) deduction cap raised to $40,000
• Clean energy credits phased out or eliminated
• Estate and gift tax exemption increased to $15 million per individual starting in 2026

With that being said here are 3 ways to save on your taxes in 2026.

1. Choose between standard and itemized deductions. Calculate whether your itemized deductions (mortgage interest, property taxes, charitable contributions and medical expenses) exceed the standard deduction.

2. Contribute to a health savings account (HSA). If you have a high-deductible health plan, HSA contributions reduce your taxable income. For 2025, you can contribute up to $4,300 for individual coverage or $8,550 for family coverage ($1,000 extra if you're 55 or older).

3. Maximize your retirement savings. Contributing to a traditional 401(k) or individual retirement account (IRA) reduces your taxable income for the year. In 2025, you can contribute up to $23,500 to a 401(k), or $31,000 if you're 50 or older. IRA contributions are limited to $7,000, or $8,000 if 50 or older.

In essence The One Big Beautiful Bill Act made significant changes to federal tax law, with some being permanent and others temporary. Many of the temporary deductions, including the overtime and tip deductions, car loan interest deduction and senior bonus deduction, expire after 2028. Consider consulting with a tax professional to realize how these changes directly affect your tax situation. A tax professional can assist with increases in deductions as well as credits to keep you in line with tax codes.