Mid-Year Financial Check-In
June 16, 2025
Big changes are coming to the tax code—many of which could directly impact your individual or family tax strategy. The newly proposed tax legislation, nicknamed the “Big Beautiful Bill”, includes a mix of extensions, amendments, and brand-new deductions aimed at reshaping how Americans approach their annual tax filings. Below, we’ve summarized the highlights to help you understand what’s coming from the Big Beautiful Bill and how you might benefit—or need to prepare.
Key Provisions for Individuals under the Big Beautiful Bill
Individual Income Tax Rates Made Permanent
EXTENDED: Makes permanent TCJA income tax rate and threshold decreases for individuals, estates, and trusts. Applies inflation adjustment to 10%, 12%, and 22% brackets. EFFECTIVE 1/1/2026
Standard Deduction Increases
EXTENDED WITH AMENDMENTS: Permanently increases standard deduction from $12,000 to $15,750 for individuals and from $18,000 to $23,625 for head of household. EFFECTIVE 1/1/2025
Family and Dependent Benefits
Child & Dependent Care
AMENDED: The credit amount for child and dependent care expenses is increased from 35% to 50%. This percentage is gradually reduced, but not below 35%, by 1% for every $2,000 by which the taxpayer’s adjusted gross income (AGI) exceeds $15,000. Additionally, the credit is further reduced, though not below 20%, by 1% for each $2,000 ($4,000 for joint filers) by which AGI exceeds certain thresholds. EFFECTIVE 1/1/2026
Dependent Care Assistance Program
AMENDED: Increases the dependent care service exclusion to from $5,000 to $7,500 ($3,750 for married filing separate) for expenses paid or incurred by employer under qualified dependent care assistance program. EFFECTIVE 1/1/2026
Child Tax Credit
EXTENDED WITH AMENDMENTS: Increases the child tax credit to $2,200 per qualifying child, indexed annually for inflation. Makes permanent the refundable portion and higher phaseout thresholds. EFFECTIVE 1/1/2025
Deductions You Should Know
Mortgage Interest Deduction
EXTENDED: Permanently disallows mortgage interest deduction for home equity indebtedness and limits mortgage interest deductions for acquisition indebtedness to $750,000 ($375,000 for married filing separately). EFFECTIVE 1/1/2026
Charitable Contributions
REINSTATED: Permanently reinstates the non-itemizer partial charitable contribution deduction and increases it to a maximum of $1,000 ($2,000 for joint returns). EFFECTIVE 1/1/2026
State and Local Tax (SALT) Cap
EXTENDED WITH AMENDMENTS: Increases limitation on SALT deduction to $40,000 For 2025 and $40,400 for 2026, increasing to 101% of previous year’s cap for 2027, 2028, and 2029, and reverting to $10,000 for 2030 and beyond. MAGI phaseout begins at $500,000 for 2025 and $505,000 for 2026, increasing to 101% of the previous year’s threshold for 2027, 2028, and 2029. EFFECTIVE 1/1/2025
Tax Benefit of Itemized Deductions
AMENDED: Reduces itemized deductions by 2/37 of the lesser of: (i) itemized deduction amount; or (ii) amount of taxable income exceeding the 37% tax bracket. EFFECTIVE 1/1/2026
New Tax Deductions and Credits
Deduction for Overtime Pay
NEW: Creates deduction for qualified overtime compensation (not including qualified tips), excluding highly compensated employees, for taxable years 2025 through 2028. Limits deduction to $12,500 of qualified overtime income ($25,000 for joint returns). EFFECTIVE 1/1/2025
Deduction for Tip Income
NEW: Creates deduction of up to $25,000 for qualified tips for individuals in traditionally and customarily tipped industries. Excludes highly compensated employees by phasing out deduction for joint filers with AGI over $300,000 ($150,000 for others). EFFECTIVE 1/1/2025
Scholarship Granting Organization Credit
NEW: Allows a credit of up to $1,700 for cash contributions to organizations that grant scholarships for qualified elementary or secondary education expenses. Allows carry forward of credit up to five years. Creates income exclusion for qualified elementary and secondary education. EFFECTIVE 1/1/2027
Enhanced Deduction for Seniors
NEW: Creates a deduction for seniors (age 65 before the end of the taxable year) equal to $6,000 reduced (not below zero) by 6% of AGI exceeding $75,000 ($150,000 joint). EFFECTIVE 1/1/2025
Trump Accounts
NEW: The legislation provides for tax-exempt “Trump Accounts” for qualifying children, which are treated similarly to individual retirement accounts (IRAs) under IRC Section 408(a). Annual contributions to these accounts are limited to $5,000 and will be indexed annually for inflation, with certain exceptions for exempt contributions. Employer contributions to Trump Accounts are excluded from the employee’s income. EFFECTIVE 1/1/2026
Special Industry Notes with the Big Beautiful Bill
Wagering Losses
EXTENDED: Includes otherwise-allowable deductions incurred in carrying on a wagering transaction within “losses from wagering transactions.” Limits deduction to 90% of losses and to the extent of gains from wagering transactions. EFFECTIVE 1/1/2026
Final Thoughts
While this summary includes many of the headline items from H.R.1 (the “Big Beautiful Bill”), it is not all-inclusive. Certain provisions of H.R.1 (the “Big Beautiful Bill”) were terminated or excluded from this summary. If you’re wondering how these changes may affect your specific tax situation, our team at Anderson, Adkins & Crawford is here to help.
Contact us at info@augustacpas.com or 706-288-2000 to schedule a personalized consultation.
