If you’re working hard to keep up with bills, kids, and the cost of living, there’s some good news that could put real money back in your pocket. The recently passed One Big Beautiful Bill Act—signed into law on July 4, 2025—makes several tax provisions permanent and increases the standard deduction for millions of Americans.
What’s Changed?
The biggest updates for taxpayers come in two forms:
- Permanent Tax Rate Cuts
The individual income tax brackets that were originally reduced under the 2017 Tax Cuts and Jobs Act are now permanent. This means the current marginal tax rates—from 10% up to 37%—are no longer set to expire at the end of 2025. - Larger Standard Deduction
Beginning with the 2025 tax year, the standard deduction has increased once again:- $15,750 for single filers or married filing separately
- $23,625 for heads of household
- $31,500 for married couples filing jointly
Why This Matters for You
With the additional boost in the standard deduction, even more people will benefit by skipping itemized deductions entirely and simply taking the standard deduction. For most earners, this simplifies the tax filing process and results in meaningful tax savings.
Not only does this save time and paperwork, it also reduces taxable income by a larger amount—leaving more money in your paycheck throughout the year. For example, a married couple filing jointly in the 22% marginal tax bracket could save around $506 in federal income taxes just from the $2,300 increase in the standard deduction over 2024 levels ($2,300 × 0.22 = $506).
Charitable Contribution Deductions
Generally, to claim a charitable contribution deduction, taxpayers must itemize their deductions and not claim the standard deduction. Because of the increase in the standard deduction and limitations on many of the deductions that could otherwise be itemized, most taxpayers do not itemize. But if you take the standard deduction, how can you get a tax benefit for making contributions?
The One Big Beautiful Bill provides a charitable contribution deduction of up to $1,000 for single taxpayers, or up to $2,000 for married taxpayers filing jointly, even if they don’t itemize. For taxpayers who do itemize, the BBB reduces the deductible charitable contributions by 0.5% of the taxpayer’s contribution base. The contribution base is generally adjusted gross income (AGI).
Car Loan Interest Deduction
Another welcome change: the BBB allows a deduction for interest paid on qualified car loans from 2025 through 2028. To qualify, the vehicle must be a passenger car used for personal use and must have had its final assembly in the United States. The loan must be secured by a first lien on the vehicle.
The deduction is capped at $10,000 per year and phases out for higher-income earners: it begins to phase out for single taxpayers with modified adjusted gross income (MAGI) over $100,000, and for married couples filing jointly with MAGI over $200,000.
Indexed for Inflation
The new standard deduction is also indexed for inflation, which means it will automatically adjust over time to help keep pace with the rising cost of living. This helps prevent tax brackets and deductions from becoming outdated or less useful as prices go up.
Simpler, More Predictable Tax Planning
These changes make the tax code easier to understand and more predictable. You don’t have to guess what’s going to change in a couple of years—these rules are now written into law for the long term.
Want to explore how these changes impact your specific tax situation? Let’s run the numbers and make sure you’re making the most of what the new law offers.
Did You Know?
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