When the Tax Cuts and Jobs Act (TCJA) passed back in 2017, it brought lower federal tax brackets, larger standard deductions, and higher estate and gift tax exemptions. But there was always a catch—many of these provisions were set to expire at the end of 2025. For years, we’ve all been wondering what would happen when that date arrived.
Here in East Tennessee, we’ve had countless conversations with individuals, families, and small business owners, many of you right in our community, about how potential tax changes could impact your plans. That uncertainty has weighed on decision-making for everything from retirement timing to passing on family businesses.
This summer, on July 4, 2025, new legislation was signed into law that made many of the TCJA tax cuts permanent and added a host of new provisions. At 887 pages, it’s not exactly light reading, so we’ve done the legwork of combing through it and summarizing the key changes that might matter to you, your family, or your business.
(As always, what follows is for informational purposes only. Everyone’s tax situation is unique. Before making changes, please coordinate with your tax, legal, and accounting professionals).
Changes for Individuals
- Tax Rates and Brackets2
The tax brackets you’ve been used to since 2017 are here to stay. The bill also adds an extra year of inflation adjustments to the income thresholds for higher brackets, which may help keep more income in lower tax tiers. - Estate & Gift Tax Exemption3
A big one for those with larger estates—starting in 2026, the exemption will be $15 million for individuals ($30 million for married couples) and will adjust for inflation. - Standard Deduction3
Good news for many taxpayers: the standard deduction jumps to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly, retroactive to 2025. - Bonus Deduction for Older Adults4
The new law includes a temporary $6,000 “bonus” for Americans ages 65 and over. The full deduction is available to individuals with up to $75,000 in modified adjusted gross income ($150,000 for married couples filing jointly)—the bonus phases out for taxpayers who are above those thresholds. A temporary senior deduction is in place for tax years 2025–2028. Some speculated that this provision is in place of eliminating taxes on Social Security, since changes to Social Security are generally not permitted in reconciliation legislation. - State and Local Tax Deduction (SALT)4
If you itemize, the cap on the state and local tax deduction rises to $40,000 starting in 2025, with gradual adjustments until 2029. This is most impactful for higher-tax states, but it’s worth noting for those with significant property taxes or state income tax elsewhere. - Alternative Minimum Tax Exemption3
The law permanently extends the TCJA’s increased individual alternative minimum tax (AMT) exemption amounts and reverts the exemption phaseout thresholds to their 2018 levels of $500,000 ($1 million for married couples filing jointly). These amounts will be indexed for inflation. However, the law increases the phaseout of the exemption amount from 25% to 50% of the amount by which the taxpayer’s AMT income exceeds the threshold amount. - Child Tax Credit4
The child tax credit is intended to benefit families with qualifying children under age 17 with a valid Social Security number. The TCJA temporarily doubled the maximum child tax credit to $2,000 from $1,000. As with several other provisions of the 2017 law, the increase would have sunsetted after 2025. The new legislation permanently raises the top credit limit to $2,200 starting in 2025 and indexes it for inflation starting next year. The higher refundable portion of the child tax credit was also made permanent and would adjust for inflation. This part is known as the additional child tax credit. - Tax Break on Tips4
For service workers, there is a temporary federal income tax deduction of up to $25,000 per year on qualified tip income. The tip deduction has an income limit of $150,000, or $300,000 for joint filers, and is in effect for tax years 2025–2028. - Tax Break on Overtime4
The legislation also provides a temporary tax break for overtime pay. It allows for a maximum $12,500 above-the-line deduction for overtime pay ($25,000 for married couples filing jointly) from 2025 to 2028. The tax break begins to phase out once earnings exceed $150,000 ($300,000 for joint filers). - Auto Loan Interest Deduction4
The new law creates a tax deduction for car loan interest. Qualified households could deduct up to $10,000 of annual interest on new auto loans from their taxable income. Once again, this deduction would be temporary, lasting from 2025 to 2028. The deduction’s value would start to decline for individuals whose annual income exceeds $100,000 ($200,000 for married couples filing jointly). To qualify, cars must also be assembled in the United States. - 529 Modifications5
The law expands allowable tax-free 529 withdrawals for expenses beyond K–12 tuition and applies to private, public, religious, and homeschool students. 529 withdrawals can now be used to cover the cost of curriculum materials, tutoring, or classes outside the home, educational therapies for students with disabilities, and testing fees. For credentials and licenses, the law also makes a range of non-college programs eligible for 529 withdrawals. - Child Savings Account4
The legislation includes a new savings account for children with a one-time deposit of $1,000 from the federal government for U.S. citizens born in 2025–2028. Parents can contribute up to $5,000 a year, with the account balance being invested in a fund that tracks a U.S. stock index. Employers can also contribute up to $2,500 to an employee’s account, which wouldn’t be counted as income to the recipient. Potential earnings would grow tax-deferred, and qualified withdrawals would be taxed as long-term capital gains. - Charitable Deductions6
Starting in 2026, the law allows for a new charitable gift deduction for taxpayers who do not itemize up to $1,000 for single filers or $2,000 for married couples filing jointly. Those who itemize can only claim a tax deduction if their qualified charitable contributions exceed 0.5% of their adjusted gross income.
Changes for Qualified Small Businesses
In addition to individual tax changes, the new legislation includes several provisions that may affect businesses. These include:
- Qualified Business Income (QBI) Deduction7
The law makes the 20% deduction for qualified business income, which was set to expire at the end of the year, permanent. This is targeted at pass-through entities, such as sole proprietorships, partnerships, and S corporations. - Increased Expensing Limits7
The legislation raises the maximum amount a small business can expense for qualifying property from $1 million to $2.5 million. There is also a higher phaseout threshold and inflation adjustments. This provision is intended to allow small businesses to deduct more capital investments immediately, which might help cash flow and encourage growth. - Estate Tax8
The law increases the estate tax exemption for small business owners, which could influence decisions about passing businesses to the next generation. - Restored Bonus Depreciation8
The 100% bonus depreciation, which allows businesses to deduct the full cost of new equipment and facilities immediately, has been reinstated.
Looking Ahead
While many provisions are permanent, several, including deductions for tips, overtime, and auto loans, expire in 2028. This means that even with greater certainty now, future tax changes are still possible.
At BCS Wealth Management, we know that tax policy isn’t just a headline, it’s something that can directly affect your savings, investments, and even the way your family business transitions to the next generation. That’s why we work closely with your tax advisors, estate attorneys, and other professionals to make sure your financial plan adapts as the rules change.
If you’d like to talk about how this new law may affect your situation, let’s schedule some time and discuss your specific situation.
Sources
1. CNBC, June 18, 2024
https://www.cnbc.com/2024/06/18/plan-for-expiring-trump-tax-breaks.html
2. CNBC, July 3, 2025
https://www.cnbc.com/2025/07/03/trump-big-beautiful-bill-tax-changes.html?msockid=37a2e58496ac672b39a4f4af9742667d
3. Journal of Accountancy, July 7, 2025
https://www.journalofaccountancy.com/news/2025/jun/tax-changes-in-senate-budget-reconciliation-bill/
4. CNBC, July 4, 2025
https://www.cnbc.com/guide/what-trumps-one-big-beautiful-bill-means-for-your-money/#trumps-2017-tax-cut-extensions
5. The Wall Street Journal, June 13, 2025
https://www.wsj.com/personal-finance/taxes/republican-tax-bill-529-college-savings-a035f7e7?mod=Searchresults_pos1&page=1
6. Fidelity, July 2025
https://www.fidelitycharitable.org/articles/obbb-tax-reform.html
7. Fortune, July 2025
https://www.msn.com/en-us/money/smallbusiness/how-the-big-beautiful-bill-is-rewriting-the-rules-for-small-business-success/ar-AA1IcHJM?ocid=BingNewsVerp
8. USA Today, July 1, 2025
https://www.usatoday.com/story/graphics/2025/07/01/winners-losers-trump-big-tax-bill-senate/84391469007/