What the One Big Beautiful Bill Act Means for Your Individual Taxes in 2025 and Beyond

When Congress passed the One Big Beautiful Bill Act signed into law on July 4, 2025, it triggered the most sweeping overhaul of the U.S. tax system since 2017. While headlines focused on Trump Accounts and repealed EV credits, the bill quietly reshaped the rules for everyday taxpayers—introducing new deductions, revising old ones, and locking in key provisions that affect how millions of Americans will file in the years ahead. Here is a high-level summary that breaks down the major individual income tax changes that could shape your bottom line from 2025 through 2028—and beyond.

TAX RATES

The new law retains the current individual income tax rate structure that ranges from 10% to 37%. The income ranges these apply to are permanently adjusted for inflation each year.

STATE AND LOCAL TAX DEDUCTION

The “SALT” itemized deduction cap was raised from $10,000 to $40,000 in 2025, then increases 1% annually through 2029, before dropping back to $10,000 in 2030. However, if your modified adjusted gross income (MAGI) is over $500K, the deduction is reduced by 30% of the excess over $500K, but can’t fall below $10,000.

SENIOR BONUS DEDUCTION

The bill provides an additional standard deduction of up to $6,000 per person for seniors ages 65+ in tax years 2025-2028. The deduction is reduced by 6% of MAGI that exceeds $75K (single) and $150K (joint), which means that the senior bonus deduction phases out completely when MAGI reaches $175K single and $250K married filing jointly. You don't have to be receiving Social Security benefits to receive the deduction.

So for example, if your MAGI is $100K and you are single, you will receive an additional tax deduction in 2025 of $4,500 ($6,000 less 6% of the excess of $100K over $75K).

STANDARD DEDUCTION

The standard deduction in 2025 is $15,750 for single/married filing separately, $23,625 for head of household, and $31,500 for married filing jointly, up from $14,600, $21,900, and $29,200, respectively, in 2024. There is a regular extra standard deduction for 65+ seniors of $2,000 single and $3,200 married filing jointly (both 65+; $1,600 if one spouse is 65+), up slightly from $1,950, $3,100, and $1,550 in 2024. The standard deduction will be indexed for inflation annually.

Here’s another example. If you are married, both 65+ with income of $150K or less in 2025, you will be receiving a standard deduction of $46,700 ($31,500 base deduction + $3,200 extra 65+ deduction + $12,000 bonus 65+ deduction). Of course, if your itemized deductions are greater than your standard deduction of $46,700, we should still take the higher of the two on your 2025 return.

TIP INCOME DEDUCTION

Workers in traditionally tipped industries, such as food service, salons, and spas, can deduct up to $25,000 in tips per year from 2025 to 2028. The deduction phases out for AGIs exceeding $150K single, $300K joint filers.

OVERTIME PAY DEDUCTION

From 2025 to 2028, there is an overtime pay deduction of up to $12,500 in overtime pay per person ($25,000 for joint filers). The deduction phases out $100 for every $1,000 over MAGI of $150K single, $300K joint filers. Only the overtime premium (e.g. the extra pay above your regular hourly rate) is deductible.

PERSONAL CAR LOAN INTEREST

Taxpayers can deduct up to $10,000 in car loan interest for new cars purchased between 1/1/25 and 12/31/28 that were assembled in the U.S. This is an “above the line” deduction, meaning, you can take the deduction whether or not you itemize deductions. The deduction is reduced by $100 for every $1,000 over MAGI of $100K single and $200K joint returns.

EV TAX CREDITS

The tax credits for both new (up to $7,500) and used (up to $4,000) EVs expire this October, which means only three months remain to purchase an EV and potentially receive those credits (subject to current MAGI limits). These credits were previously set to expire after 2032.

RESIDENTIAL CLEAN ENERGY (e.g. SOLAR) CREDITS

Solar tax credits go away in 2026, which means taxpayers have limited time remaining this year to purchase, install, and place in service a home solar system by 12/31/25 to receive a 30% tax credit on the system. This also applies to batteries – if you have an existing solar system, you can install batteries by year-end and receive a tax credit on that purchase. If you have unused solar tax credits, they carry forward to future tax years.

ENERGY EFFICIENT HOME IMPROVEMENT CREDITS

These credits also go away in 2026. This applies to certain energy-efficient windows, doors, insulation, heat pumps, central A/C, etc. These credits can be as much as $1,200 to $3,200 per year. They do not carry forward to future years.

CHILD TAX CREDIT

The child tax credit increases from $2,000 to $2,200 for children under the age of 17 at the end of 2025. It phases out when MAGI reaches $200K single and $400K joint.

CHARITABLE DEDUCTIONS

The new law adds a permanent provision for non-itemizers to deduct up to $1,000 (single) and $2,000 (joint returns) in cash donations to 501(c)3 charities, beginning in 2026. In other words, you can deduct cash donations starting next year, even if you don’t itemize deductions.

The new law introduces a floor of .5% (half of a percent) of AGI for those itemizing charitable donations, beginning in 2026. What this means is that you can deduct charitable donations to the extent they exceed .5% of your AGI. So if your AGI is $200K and your charitable donations are $5,000, you can deduct $4,000 ($5,000 less .5% of $200K).

MISCELLANEOUS ITEMIZED DEDUCTIONS

The bill permanently eliminates various deductions that were previously subject to 2% of AGI prior to 2018, such as unreimbursed employee expenses, tax preparation fees, investment advisory fees, safe deposit box rental, etc.

OTHER ITEMS

Moving expenses associated with work are now permanently not deductible (unless you are active-duty military moving under orders).

After 2025, gambling losses will only be deductible up to 90% of your gambling losses. It is still 100% in 2025. And remember, you must itemize deductions to claim gambling losses. I know a couple of you that this will impact.

“Trump Accounts” are a new type of tax-deferred investment account for every child born between January 1, 2025 and December 31, 2028. The government funds the first $1,000. It is invested in a diversified U.S. stock index fund. Up to $5,000 of additional funds can be invested per year, plus an extra $2,500 from employers.  The funds can be withdrawn starting at age 18 for education and other specified uses. For those with newborns this year, the IRS should be coming out with information about these accounts by the end of the year.

There’s a provision in the new law that allows for a tax credit of up to $1,700 per taxpayer for contributions made to “Scholarship Granting Organizations” that support K-12 private or religious school scholarships. The tax credit must be taken in the year of donation. It cannot be carried forward. And you can’t take both the credit and an itemized deduction for the payment.

The new law made the $750,000 cap on mortgage loan interest deduction permanent. The cap is not tied to inflation.

The estate tax exemption increases from $13.99 million in 2025 to $15 million per individual in 2026 and will be indexed for inflation going forward. If the law hadn’t passed, the exemption would have dropped to about $7 million in 2026.

View the 870 page bill at www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf.

Take Advantage of AAA Membership Benefits and Discounts

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The Automobile Club is a non-profit service organization with over 51 million members, including 6 million in Southern California.  If you are not already a member, you should consider becoming one.

Basic “classic” membership is $57 per year (as of June 2025). Membership provides for up to 4 service calls per year, with tows up to 7 miles, discounted rental cars, emergency fuel delivery, locksmith service, access to AAA offices and services, free maps and travel planning, etc. Upgraded plans (AAA Plus and AAA Premier) are available, with enhanced benefits, such as much longer towing benefits.

But where membership can really pay off are savings on products and services.  Here are a few that really stand out (updated June 2025...subject to change).

  • Getting a AAA rate on hotels like Hilton, Hyatt, and Best Western can save you 5% or more on your rooms.

  • AMC Theatre Black Tickets good for seats across the country for $12.75, which is a 20% savings over average retail prices. Also save on tickets at Regal and Cinemark theatres.

  • $2 off admission to the Kidspace Children’s Museum in Pasadena.

  • Save over 40% on admission at Knott's Berry Farm.

  • Up to 20% off when you purchase advance tickets to Aquarium of the Pacific in Long Beach at an AAA branch and 10% off at the gate or online.

  • Save 30% on a 1-day general admission to Universal Studios Hollywood

  • Save up to 56% off passes to Six Flags Magic Mountain.

  • Save 5% at the gate at LEGOLAND California Resort and up to 20% off of tickets purchased in advance

  • Save up to 60% on tickets to Sea World San Diego

  • Planning on a multi-day visit to Disneyland? Save by buying passes at a AAA office

  • 10% off food and non-alcoholic drinks at Dave & Buster’s

Hundreds more discounts listed on the AAA website. There's also a free AAA iPhone and Android app to find AAA discounts in your area.

So even if you don't think you'll need roadside assistance or towing, it could really pay off having a AAA membership.  Visit the Auto Club of Southern California website at www.calif.aaa.com/home.html for more information.

Volunteer Income Tax Assistance Locations in Ventura County

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The Volunteer Income Tax Assistance (VITA) program recruits volunteer tax preparers to provide free preparation of federal and state income tax returns to taxpayers with incomes of $67,000 or less in 2024. VITA benefits these taxpayers by eliminating the cost of commercial tax return preparation and by securing valuable tax credits such as the Child Tax Credit and EITC.

Local VITA location sites are as follows (see this IRS link for details, including dates and times and contact information for making appointments, when required):

  • Newbury Park Library, 2331 Borchard Road - Wednesdays 10am to 4pm, 2/5/25 to 4/9/25. Appointments not required.

  • Conejo Creek South Park Community Building, 1350 E. Janss Road, Thousand Oaks - Mon-Fri 8:30am to 4pm, 2/3/25 to 4/15/25. Appointments not required.

  • Moorpark College - 2/1/25 to 4/30/25. Appointments are required. www.moorparkcollege.edu/departments/academic/business-administration/program/accounting/VITA

  • East County Job and Career Center, 2900 N. Madera Road, Simi Valley - 2/5/25 to 4/30/25. Appointments are required.

  • Oxnard College, 4000 South Rose Avenue - 2/6/25 to 4/30/25. Appointments are required.

  • United Way of Ventura County, 702 County Square Drive #100, Ventura. 2/4/25 to 4/30/25. Appointments are required.

  • Ventura Community Service Center, 4651 Telephone Road, 2nd Floor. Appointments are required. 2/1/25-4/30/25

Also see www.ventura.org/human-services-agency/tax-preparation

What to bring:

  • Proof of identification (photo ID)

  • Social Security cards for you, your spouse and dependents

  • An Individual Taxpayer Identification Number (ITIN) assignment letter may be substituted for you, your spouse and your dependents if you do not have a Social Security number

  • Proof of foreign status, if applying for an ITIN

  • Birth dates for you, your spouse and dependents on the tax return

  • Wage and earning statements (Form W-2, W-2G) from all employers

  • Pension, Retirement and Social Security Income statements (Forms 1099)

  • Interest and dividend statements from banks (Forms 1099)

  • A copy of last year’s federal and state returns, if available

  • Proof of bank account routing and account numbers for direct deposit such as a blank check

  • Total paid for daycare provider and the daycare provider's tax identifying number such as their Social Security number or business Employer Identification Number

  • Forms 1095-A, Health Insurance Marketplace Statement

  • Copies of income transcripts from IRS and state, if applicable

To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms

www.irs.gov/individuals/checklist-for-free-tax-return-preparation

The IRS partners with software companies to provide “IRS Free File” guided tax software for taxpayers with adjusted gross income (AGI) or $84,000 or less for the 2024 tax year. Learn more at apps.irs.gov/app/freeFile. Providers for 2024 filings include FreeTaxUSA, 1040.com, FileYourTaxes.com, 1040NOW, TaxAct, OLT.com, TaxSlayer, and ezTaxReturn.com.

Deducting Losses From Federally Declared Disasters on Your Federal Income Tax Return

According to the IRS:

Personal casualty losses are losses from casualty, disaster, and theft that are not connected to a trade or business, or a transaction entered into for profit. Generally, if the loss is caused by a federally declared disaster, you may deduct personal casualty losses relating to your home, household items, and vehicles on your federal income tax return. For tax years 2018 through 2025, personal casualty losses are otherwise not deductible. A theft loss deduction is generally available, however, if the loss is due to theft related to a transaction entered into for profit. You may not deduct casualty and theft losses covered by insurance, unless you file a timely claim for reimbursement, and you reduce the loss by the amount of any reimbursement or expected reimbursement. 

A federally-declared disaster is any disaster determined by the President of the United States to warrant assistance by the federal government. Visit fema.gov/disasters for a list of federally-declared disasters. Current and recent federally-declared disasters as of January 2025 include:

If your property is personal-use property or isn't completely destroyed, the amount of your casualty loss is the lesser of the adjusted basis of your property, or the decrease in fair market value of your property as a result of the casualty. You must reduce the loss by any insurance or other reimbursement you receive or expect to receive.

Casualty losses can be claimed as an itemized deduction on Schedule A of Form 1040, less $100 for each casualty, then subtract 10% of your adjusted gross income to calculate allowable losses for the year. However, you may elect to deduct the loss without itemizing your deductions. Your net casualty loss doesn't need to exceed 10% of your adjusted gross income to qualify for the deduction, but you would reduce each casualty loss by $500 after any salvage value and any other reimbursement. Report casualty losses on Form 4684, Casualties and Thefts.

Casualty losses are deductible in the year you sustain the loss. You have not sustained a loss if you have a reasonable prospect of recovery through a claim for reimbursement. If you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to treat the casualty loss as having occurred in the year immediately preceding the tax year in which you sustained the disaster loss, and you can deduct the loss on your return or amended return for that preceding tax year.

www.irs.gov/taxtopics/tc515

Get or Give Free Stuff With Freecycle

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The Freecycle Network has over 5,300 groups and 11.3 million members around the world.  It is a grassroots, nonprofit movement of people who are giving (and getting) stuff for free in their own towns and thus keeping it out of landfills.  Membership is free, and everything posted must be free, legal and appropriate for all ages.

More information is available at www.freecycle.org.  There are groups organized and moderated by volunteers in many different locations via use of Yahoo Groups.

Here are the Ventura County area groups as of July 2024:

Thousand Oaks Group (2,600 members)

Simi Valley Group (1,700 members)

Ventura Group (2,100 members)

So check it out!  Somebody may need something that you don't want!

Another source for giving and getting local free stuff is www.craigslist.com.  Here is a link to free stuff in the Ventura County Craiglist and Los Angeles County Craigslist.

California's Low Cost Auto Insurance Program Provides Affordable Insurance for Those Eligible

Auto insurance is a requirement if you have a valid driver's license and drive a vehicle in the state of California. The California Low Cost Auto (CLCA) Insurance program is a state-sponsored program that makes auto insurance more affordable to those meeting eligibility requirements.

To qualify, you must 1) have a valid California driver's license; 2) own a vehicle valued at $25,000 or less; 3) meet income eligibility guidelines; and 4) be at least 16 (under 18 must be legally emancipated) or older.

Maximum income requirements are based on the size of your household. As of 2024, that maximum is $37,650 for a household size of 1, increasing by $13,450 for each additional household member (e.g. household of 4 maximum income is $78,000.

Annual premiums vary by county. If you live in Ventura County, have been licensed continuously for 3 years and are not a 19-24 years of age and unmarried, your annual premium is $275 ($358 if you are an unmarried 19-24 year old).

While the premiums are great, the coverage is very limited. A basic policy includes only up to $10,000 per person and up to $20,000 per accident for bodily injury or death and up to $3,000 for property damage. Comprehensive and collision is not included in these policies (they would have to be purchased separately).

Learn more and sign up at www.mylowcostauto.com.

California Has Billions of Dollars of Unclaimed Property - Claim Yours Now!

The State of California maintains billions of dollars in unclaimed property belonging to individuals and organizations.

California's Unclaimed Property Law requires "holders" such as corporations, business associations, financial institutions, and insurance companies to report and deliver property to the Controller's Office after there has been no customer contact for three (3) years. Often the owner forgets that the account exists, or moves and does not leave a forwarding address or the forwarding order expires. In some cases, the owner dies and the heirs have no knowledge of the property.

The most common types of unclaimed property are bank accounts and safe deposit box contents, stocks, mutual funds, bonds, and dividends, uncashed cashier's checks or money orders, certificates of deposit, matured or terminated insurance policies, estates, and mineral interests and royalty payments, trust funds and escrow accounts. You may also find things like unused balances in prepaid cards and refunds due.

Find out more at www.ClaimIt.ca.gov.

Search the California Unclaimed Property database at ucpi.sco.ca.gov/en/Property/SearchIndex.

Search by name, address, city, property number or any combination.