The One Big Beautiful Bill Act, which produced several acronyms, but we are going to go with (“BBB”), was passed on July 4, 2025, and made several changes to the Internal Revenue Code (“IRC”). BBB made changes to several areas of the law that may or may not affect you personally, but we are going to focus on some provisions related to an individual’s personal income tax. Many of the changes that were made by BBB modify changes to the IRC that were implemented by the Tax Cuts and Jobs Act (“TCJA”) signed into law in 2017.
The list below is a non-exhaustive summary of the modifications BBB made that could affect your federal (state laws are different in most cases) income tax for 2025 and future tax years. This list also does not include all the requirements of eligibility for each item discussed.
- Marginal Individual Tax Brackets – TCJA set forth seven marginal individual tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) that were set to expire after 2025. The BBB made these seven brackets permanent.
- Standard Deduction – The Federal standard deduction allows an individual or married couple to claim a fixed amount of income of which they do not have to pay taxes on. If your itemized deductions do not exceed the stated Standard Deduction, you would typically claim the higher Standard Deduction. For 2025, the basic Standard Deduction is $15,750 for a single tax filer and $31,500 for joint tax filers. For 2026, the Standard Deduction is $16,550 for a single tax filer and $33,100 for joint tax filers. The Standard Deduction will also be adjusted annually for inflation beginning in 2026.
- Charitable Deductions – For those that do not itemize, BBB will allow a tax filer a charitable deduction of $1,000 per person starting with 2026 tax returns. This deduction only applies to cash donations to qualified 501(c)(3) public charities and does not apply to gifts to donor advised funds, private foundations or gifts of non-cash assets. Additionally, BBB made permanent the 60% Adjusted Gross Income (“AGI”) limit on cash donations. Generally, this means that those who are making a cash donation can only deduct up to 60% of their AGI in a given tax year. The AGI limit for non-cash gifts remains unchanged. Additionally, gifts from an Individual Retirement Account (“IRA”) remain unchanged and an individual at least age 70 ½ can still make a Qualified Charitable Distribution (“QCD”) of up to $108,000 for 2025. The QCD limit is also adjusted for inflation.
- Child Tax Credit – Under the TCJA there was a Child Tax Credit of $2,000 per child. Beginning with 2025 tax returns, the credit rises to $2,200 per qualifying child. For 2026 and beyond, the Child Tax Credit will be adjusted annually for inflation.
The information contained in this article does not constitute legal or tax advice and you should consult with your own legal counsel or tax counsel about your situation. If you have questions about this article or the Foundation’s services, please contact us at 501-376-4791, Ext. 5907 or [email protected].