One Big Beautiful Bill: Key Tax Changes, Comparisons, and How to Protect Yourself with Strategic Tax Planning

One Big Beautiful Bill: Key Tax Changes, Comparisons, and How to Protect Yourself with Strategic Tax Planning

By Juan V. Fanti, MBA, CAA, PA
General Manager & CEO – Two Hundred Global Financial Solutions

Introduction

January 1, 2025, marks the beginning of a new tax era in the United States with the implementation of the "One Big Beautiful Bill", a comprehensive tax reform that significantly modifies various provisions of the federal tax code. This legislation was enacted to align the tax system with current economic realities, though its impact will vary widely depending on each taxpayer’s financial profile.

At Two Hundred Global Financial Solutions, as experts in tax planning, accounting, and business advisory services, we believe it is essential to evaluate how these changes will benefit or affect our clients—both individuals and businesses—and what the consequences would have been had the bill not passed.

📌 Key Provisions of the “One Big Beautiful Bill”

(Effective January 1, 2025)

1. Increase in the Standard Deduction

Previous (2024):

• Single filers: $13,850

• Married filing jointly: $27,700

New Law (2025):

• Single filers: $15,000

• Married filing jointly: $30,000

📈 Benefit:
Fewer taxpayers will need to itemize deductions. This adjustment reduces taxable income automatically, leading to lower tax liability for most middle-income filers.

📉 If not enacted:
The standard deduction would have only increased marginally due to inflation, offering little actual relief. This change constitutes a real and direct improvement.

2. New 39.6% Tax Bracket for High-Income Earners

Previous (2024):

• Top marginal rate: 37% on income over $578,125 (individual) or $693,750 (married filing jointly)

New Law (2025):

• New 39.6% bracket on income above:

  • $500,000 (individuals)

  • $1,000,000 (married couples)

📉 Impact:
Business owners, professionals, and high-net-worth individuals will experience an increase in their marginal tax rate.

📊 Comparison:
This partially reverses the individual income tax cuts introduced under the 2017 Tax Cuts and Jobs Act (TCJA).

3. Child Tax Credit (CTC)

Previous (2024):

• $2,000 per qualifying child under 17

• Only $1,600 was refundable

New Law (2025):

• Increased to $2,500 per child

• Fully refundable

📈 Benefit:
Families, especially those with low or moderate income, will receive greater financial relief—even if they owe no taxes.

🛑 If not enacted:
The credit would have automatically decreased in 2025 due to TCJA sunset provisions, significantly reducing support for families.

4. Limitations on the 20% Qualified Business Income (QBI) Deduction

Previous (2024):

• Up to 20% deduction on passthrough business income (LLCs, S-Corps, sole proprietors)

• No strict income threshold for many professions if certain conditions were met

New Law (2025):

• Deduction capped for income below $400,000

• Professionals in fields like accounting, law, medicine, and consulting lose access if income exceeds threshold

📉 Impact:
Successful professionals will see a notable increase in their taxable income. Many existing tax strategies must be reevaluated.

📊 Comparison:
This is among the most restrictive provisions of the reform, removing a significant benefit for small business owners and high-income service professionals.

5. Reduction of Bonus Depreciation

Previous (2024):

• 100% immediate bonus depreciation on qualified capital expenditures

New Law (phased from 2025):

• 2025: 60%

• 2026: 40%

• 2027: 20%

• Eliminated in 2028

📉 Negative Impact:
Businesses will no longer be able to fully expense capital investments in the year of acquisition, complicating investment and asset planning.

📊 Comparison:
This change reverts to a slower cost recovery model, potentially discouraging new capital investments.

6. Reinstated Cap on State and Local Tax (SALT) Deductions

Previous (2024):

• $10,000 SALT deduction cap

• Workarounds existed for passthrough entities in some states

New Law (2025):

• Maintains the $10,000 cap, adjusted slightly for inflation

• Closes passthrough workarounds (SALT cap bypass)

📉 Impact:
Taxpayers in high-tax states (e.g., California, New York, New Jersey) will continue to face limited deductibility of state and local taxes.

📊 Comparison:
This confirms the continuation of TCJA policies, disappointing taxpayers expecting broader deductions.

💭 What If the Law Had Not Passed?

Had the "One Big Beautiful Bill" not been enacted, most provisions of the TCJA were scheduled to expire automatically at the end of 2025, creating uncertainty and abrupt tax increases:

• Immediate tax hikes for families and businesses

• Reduction or elimination of child tax credits

• Loss of passthrough business deductions

• Automatic return to higher pre-2017 tax brackets

Inaction would have had widespread negative consequences for all taxpayers.

✅ Conclusion: Strategic Tax Planning is More Essential Than Ever

This new tax framework demands a personalized evaluation. What may benefit one taxpayer could create significant burdens for another.

The best way to protect your wealth is not to guess—it's to plan.

At Two Hundred Global Financial Solutions, we work closely with individuals and business owners to develop tailored tax optimization strategies that comply with federal and state regulations.

🔍 Reviewing your business structure, income streams, available deductions, and applicable credits is not only advisable—it is imperative in today’s evolving tax environment.

Signed,

Juan V. Fanti, MBA, CAA, PA
General Manager & CEO
Two Hundred Global Financial Solutions
www.200GFS.com

One Big Beautiful Bill Act: Tax deductions for working Americans and seniors

 One Big Beautiful Bill Act: Tax deductions for working Americans and seniors

FS-2025-03, July 14, 2025

Below are descriptions of new provisions from the One Big Beautiful Bill Act, signed into law on July 4, 2025, as Public Law 119-21, that go into effect for 2025.

“No Tax on Tips”

• New deduction: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.
  • “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.
  • Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.
  • Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
• Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
  • Self-employed individuals in a Specified Service Trade or Business (SSTB) under section 199A are not eligible. Employees whose employer is in an SSTB also are not eligible.
  • Taxpayers must:
    • include their Social Security Number on the return and
    • file jointly if married, to claim the deduction.
  • Reporting: Employers and other payors must file information returns with the IRS (or SSA) and furnish statements to taxpayers showing certain cash tips received and the occupation of the tip recipient.
  • Guidance: By October 2, 2025, the IRS must publish a list of occupations that “customarily and regularly” received tips on or before December 31, 2024.
    • The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and payors subject to the new reporting requirements.

“No Tax on Overtime”

• New deduction: Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation -- that is required by the Fair Labor Standards Act (FLSA) and that is reported on a

Form W-2, Form 1099, or other specified statement furnished to the individual.

• Maximum annual deduction is $12,500 ($25,000 for joint filers).
• Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

• Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
• Taxpayers must:
  • include their Social Security Number on the return and
  • file jointly if married, to claim the deduction.
• Reporting: Employers and other payors are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.
• Guidance: The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.

“No Tax on Car Loan Interest”

• New deduction: Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)
  • Maximum annual deduction is $10,000.
  • Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers). 

• Qualified interest: To qualify for the deduction, the interest must be paid on a loan that is:
  • originated after December 31, 2024,
  • used to purchase a vehicle, the original use of which starts with the taxpayer (used vehicles do not qualify),
  • for a personal use vehicle (not for business or commercial use) and
  • secured by a lien on the vehicle.

If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

• Qualified vehicle: A qualified vehicle is a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that has undergone final assembly in the United States.
• Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
  • The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on the tax return for any year in which the deduction is claimed.
• Reporting: Lenders or other recipients of qualified interest must file information returns with the IRS and furnish statements to taxpayers showing the total amount of interest received during the taxable year.
• Guidance: The IRS will provide transition relief for tax year 2025 for interest recipients subject to the new reporting requirements.

Deduction for Seniors

• New deduction: Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.
  • The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify).
  • Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
• Qualifying taxpayers: To qualify for the additional deduction, a taxpayer must attain age 65 on or before the last day of the taxable year.
• Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
  • Taxpayers must:
    • include the Social Security Number of the qualifying individual(s) on the return, and
    • file jointly if married, to claim the deduction.