Tax laws change frequently, and keeping up with potential adjustments is crucial. Recently, the Big Beautiful Bill was signed into law, introducing a comprehensive tax bill aimed at reshaping and making permanent key parts of the existing tax landscape. There are many things to cover in this bill, so we’ll break down just a few key components.
Key Points of the 2025 Tax Bill
- Making Tax Brackets Permanent
The bill locks in the lower tax brackets originally established under the Tax Cuts and Jobs Act (TCJA) of 2017. By keeping these brackets in place, tax planning strategies, like Roth conversions, still remain favorable for many taxpayers. The bill also provides an extra inflation adjustment to the bottom 2 tax brackets (10%–12% brackets). - Preserving the Higher Standard Deduction
In 2017, the TCJA also increased the standard deduction for all filing statuses, making deductions to your adjusted gross income simpler than the option to itemize. And taxpayers adjusted to that change—according to TurboTax, roughly 90% of taxpayers now take the standard deduction, compared to only 68.6% in 2016. The new law makes those higher deductions permanent and increases them more—for 2025—by $750 for single filers and $1,125 for married couples filing jointly (MFJ). - Larger Standard Deduction for Seniors
Taxpayers age 65+ can now each claim an extra $6,000 on top of the regular deduction. The add on phases out at 6% of MAGI over $75,000 (single) or $150,000 (MFJ) disappearing entirely at $175,000 and $250,000, respectively. This additional deduction applies whether a taxpayer taxes the standard deduction or itemizes.
Example, Single: A single senior with $85,000 MAGI exceeds the threshold by $10,000. 6% of $10,000 is $600, so the additional deduction is reduced to $5,400.
Example, MFJ: A married senior couple with $200,000 MAGI exceeds the threshold by $50,000. 6% of $50,000 is $3,000, which is applied to both taxpayers, so the additional combined deduction is reduced to $6,000. - Expanding the Child Tax Credit
The current $2,000 credit has been made permanent, and the law temporarily increases it to $2,200 per child under age 17 for 2025-2028. Phaseouts still begin at $200,000 (single) and $400,000 (MFJ). - Increasing the Estate Tax Exemption
Following the framework laid out by the TCJA, the law makes permanent and increases the lifetime and estate tax exemption to $15 million per individual, indexed for inflation beginning in 2026. - Modifying the SALT Deduction
The law temporarily raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000. It is set to revert back to $10,000 permanently after 2029. It also introduces a phaseout for taxpayers with a modified adjusted gross income (MAGI) above $500,000, gradually reducing the benefit as income rises until an AGI of $600,000. - Pass-Through Deductions
Section 199A’s 20% Qualified Business Income deduction is now permanent. The law also increases the phaseout thresholds for “specified service trade or business (SSTB)” so some high income professionals classified as an SSTB may now be able to claim a QBI deduction benefit. - Mortgage Interest Deduction
In 2017, the TCJA set the $750,000 limit (or $375,000 for single filers) on mortgage debt eligible for interest deduction, as well as not allowing the interest deduction on home equity loans unless the funds are used for the taxpayer’s residence. The new law makes this permanent.
At WJ Interests, we’re committed to helping our clients make the most of these opportunities. Our team is here to provide expert guidance on how these potential changes could affect your financial plan and ensure you remain well‑positioned for a fulfilling retirement.
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PAST PERFORMANCE IS NOT A GUARANTEE OF CURRENT OR FUTURE RESULTS. Examples of historical information included in this presentation do not, nor are they intended to, constitute a promise of similar future results. Specific client portfolio allocations, risks and returns can and may deviate from these examples depending on accounts and types of investments available through each account. Future market views by WJ Interests, LLC may vary significantly from the historical examples presented herein and no one receiving this summary should assume that WJ Interests, LLC will be able to replicate successful views in the future.
