OBBA is Law. How Will it Affect You?
Big Changes That Might Affect You:
SALT Cap Boost! The limit on deducting State and Local Taxes (SALT) jumped from $10,000 to $40,000 for 2025-2028. This means more people might itemize deductions and those who already do will get a bigger tax break.
Child Tax Credit Bump (Later): Good news for parents! The child tax credit goes up to $2,200 per kid, but not until 2026. You might see a tiny bit more in your paycheck then if you claim your kids on your W-4, or get an extra $200 per child back at tax time if you don't.
Things That Aren't Really Changing (Even Though You Hear About Them):
Most of the huge budget impacts you hear about in the news are just extensions of tax rules that have been around for the last 8 years. So, you won't feel a difference with these:
Lower tax rates
Bigger standard deduction
Qualified business income deduction
Rules that keep most people out of the Alternative Minimum Tax
New Stuff That Probably Won't Impact Many (and has some catches):
No Tax on Overtime? (Probably not for you): This is super limited! You have to be an hourly employee, make less than $150k ($300k for married couples), and it only applies to the extra 50% you get for overtime, capped at $12,500 ($25k for married couples).
No Tax on Tips? (Again, probably not for you): Similar to overtime, this is for folks in traditional tip-based jobs, with the same income and deduction limits. It'll mostly depend on your employer reporting tips.
No Tax on Social Security? (Not quite): Seniors 65+ get an extra $6,000 added to their standard deduction ($12,000 for married couples both 65+). But if you itemize, it doesn't help. If you have a lot of taxable Social Security, you'll still pay some tax. Plus, seniors already got a $2,000 bonus deduction, so it's only a $4,000 increase, and it starts phasing out if you make over $75,000.
Car Loan Interest Deduction? (Small impact): Only for new cars bought in 2025 or later that were assembled in America. It also phases out for higher earners ($100k/$200k married). And it's only for the interest, not the whole payment. On average, that's only about $1,100 a year, way less than the $10,000 cap you might have heard about.
Act Fast on Energy Credits!
Almost all home energy efficiency credits are disappearing after 2025, and some even sooner!
EV/PHEV credit (up to $7,500) ends September 30, 2025.
Residential energy-efficiency credits (like for rooftop solar) are good through December 31, 2025. For solar, the project needs to be complete and turned on by then!