In 2025 small businesses and individuals across the country face one of the most significant tax policy shifts since the Tax Cuts and Jobs Act (TCJA). On July 4th, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law—a sweeping tax reform package that extends, modifies, or sunsets numerous provisions from the TCJA. For business owners and families alike, understanding how OBBBA may affect tax deductions, credits, and overall financial planning is essential.
Whether you’re managing payroll in Fort Collins, bookkeeping for a small business in Hawaii, or relying on CPA services from afar, the ripple effects of this legislation are far-reaching. This post explores what the OBBBA means for individuals, families, and small business owners—and how Key2 Accounting can help you prepare.
TL;DR — Key OBBBA Provisions That Could Affect You:
- Lower individual tax rates extended
- Increased standard and senior deductions
- Expanded child tax credits
- More flexible Qualified Business Income (QBI) deductions
- Deduction for car loan interest and overtime
- Introduction of Trump Accounts
- New rules on SALT, gambling, and mortgage deductions
A Changing Landscape for Individuals and Small Businesses
Here at Key2 Accounting, we know that navigating new legislation can be overwhelming—especially when you’re also managing the day-to-day operations of your life or small business. That’s why we’ve broken down the OBBBA’s most impactful changes into digestible, actionable points.
Individual Tax Rate Changes
The OBBBA extends the lowered individual tax rates established by the TCJA beyond 2025. This move aims to reduce the tax burden for most households, although the elimination of the 39.6% bracket benefits high-income earners disproportionately. Indexed inflation adjustments will continue, ensuring that thresholds keep pace with the economy.
Standard and Senior Deductions
Standard deductions are not only extended but significantly increased. Final figures for 2025 are pending IRS release, but changes will favor most taxpayers. In addition, seniors 65 and older can now claim a $6,000 deduction (if under MAGI thresholds), replacing Trump’s earlier promise to eliminate Social Security taxes.
Family-Oriented and Personal Tax Changes
Child Tax Credit
The Child Tax Credit increases from $2,000 to $2,200 per qualifying child starting in 2025 and will be adjusted for inflation thereafter. However, higher income thresholds and Social Security number requirements may limit eligibility.
New Trump Accounts
One of the more unique additions, “Trump Accounts”, are tax-advantaged savings vehicles for children born between 2025 and 2028. These accounts allow up to $5,000 in parental contributions and $2,500 from employers annually, with favorable tax treatment. While not as robust as 529 plans, they may be worth considering in your overall financial plan.
Other Notable Provisions:
- Overtime Pay Deduction: Deduct the difference between regular and overtime pay, up to $12,500 per person.
- Tips Deduction: Workers in tipped professions may now deduct up to $25,000 annually.
- Mortgage Interest and Insurance: The $750,000 debt limit stays, but deductions for insurance premiums return.
- Car Loan Interest: From 2025–2028, deduct up to $10,000 on qualified vehicles if your MAGI falls under $150,000–$250,000 thresholds.
Qualified Business Income (QBI) and Small Business Relief
If you own a small business or operate as a sole proprietor, this is where OBBBA could really work in your favor. The QBI deduction phase-ins increase from $50,000 to $75,000 (individuals) and $100,000 to $150,000 (married). There’s also a new $400 minimum deduction for those with at least $1,000 in QBI—perfect for small-scale businesses that previously missed the mark.
These updates provide more accessible tax benefits for entrepreneurs, freelancers, and service professionals, especially in areas like Fort Collins and Hawaii where local businesses form the economic backbone.
Charitable and Educational Provisions
OBBBA offers a dollar-for-dollar tax credit (up to $1,700) for contributions to Scholarship Granting Organizations, available to carry forward for five years. Additionally, non-itemizers can now deduct up to $1,000 in charitable contributions, or $2,000 for joint filers.
Energy and Estate Planning Considerations
Several energy-related tax credits are sunset early, such as solar and clean vehicle credits, with most expiring by late 2025. If energy efficiency upgrades were part of your long-term plan, the window is closing fast.
Meanwhile, estate planning receives a boost: Estate and gift tax exemptions rise to $15 million (or $30 million for married filers) in 2026, with inflation adjustments going forward. If you’re planning your legacy or exploring wealth transfer strategies, this change may present an opportunity.
What This Means for You
The One Big Beautiful Bill Act brings sweeping changes that offer potential tax savings—but only if you act with intention and planning. Whether you’re a small business owner in Hawaii or a Fort Collins resident nearing retirement, your financial picture could shift substantially under this new law.
At Key2 Accounting, we help clients across the U.S. interpret new tax laws, implement strategies, and minimize risk. Our team of CPAs, tax experts, and bookkeeping professionals is ready to tailor a strategy to your unique situation.
