On July 4th, 2025, a major new sweeping tax law—the ‘One Big Beautiful Bill’—was signed into law, bringing impactful changes for both individuals and businesses. This legislation aims to boost the economy by offering a variety of tax-saving opportunities.
The One Big Beautiful Tax Bill takes a two-pronged approach. At its core, it extends—and in many cases, permanently adopts—key provisions from the Tax Cuts and Jobs Act (TCJA) that were set to expire in 2025. On top of that, it introduces new legislation aimed at expanding tax-saving opportunities even further.
Key changes in the legislation include the following:
For the Individual:
- Reduced tax brackets introduced under TCJA, ranging from 10% to 37%, remain unchanged.
- Increases in the Standard Deduction under TCJA have been made permanent.
- SALT deduction (state and local tax) is increased from $10,000 to $40,000.
- Child Care credit is increased from $2,000 to $2,200 per child.
- Auto Loan interest deduction up to $10,000 is a new above-the-line deduction for vehicles assembled in the United States.
- Charitable contributions are deductible for non-itemizers in the amounts of $1,000 for single filers or $2,000 for married-filing-jointly filers.
- Tax favored accounts for children, including a one-time tax credit of $1,000 upon opening an account (for children born between 12/31/24 and 01/01/29).
- Tips income up to $25,000 is exempt from taxation.
- Overtime up to $12,500 per individual is not taxable. Note that this overtime must be reported separately on the annual form W-2.
- Senior taxpayers aged 65 and older may claim an extra $6,000 deduction ($12,000 for taxpayers filing jointly) through 2028.
For Business:
- Form 1099-NEC and 1099-MISC thresholds have increased from $600 to $2,000 starting on January 1, 2026. Going forward, the $2,000 will be adjusted for inflation. This significantly simplifies vendor tracking and reduces the risk of penalties for unfiled 1099s.
- Overtime up to $12,500 per individual is not taxable. Note that this overtime must be tracked properly in the payroll system and reported separately on the annual form W-2.
- Research and Development Expenses are once again eligible for immediate deductions. For R&D expenses that were previously capitalized, retroactive deductions are allowed to be reported on an amended tax return.
(This list is not comprehensive, but it captures most of our clients’ concerns.)
At Ludwig Business Consultants, we’re partnering with each client individually to evaluate how the new tax law affects them and to guide strategic decision-making. We remain committed to our belief that there’s no one-size-fits-all solution—every plan requires thoughtful interpretation and personalized guidance.
If you have questions about how this bill affects your tax strategy, please do not hesitate to contact us at info@ludwigconsultants.com or by phone: (215) 839-0985.
