In addition, the larger
standard deduction was made permanent. For the majority of filers, the larger standard deduction created by TCJA eliminated the need to itemize deductions on taxes. In 2025, the standard deduction is $31,500 for joint filers. Additionally, a temporary senior deduction of $6,000 for each qualifying individual (for both itemizers and non-itemizers) that phases out when Modified Adjusted Gross Income (MAGI) exceeds $75,000 is available from 2025 through 2028.
Good news for
parents with dependent children, an increase to the child tax credit was made permanent with an increased maximum of $2,200 in 2026. As an added bonus for home owners carrying a mortgage, OBBA delivered a mixed bag of relief. The mortgage interest deduction of borrowing for a home remains capped at $750,000 in principal. Bummer for those in high cost of living areas. On the positive side, the cap on itemized deductions for State and Local Taxes (known as SALT) was increased from $10,000 to $40,000. This means higher property taxes may be deducted up to $40,000 for incomes below $500,000. Above the $500k threshold, the deduction drops back down to $10,000.
For
charitable giving, a $1,000 ($2,000 for joint filers) above-the-line deduction for charitable contributions to qualified organizations is available. This means you no longer have to itemize your taxes to deduct the first $1,000 of charitable contributions. However, a 0.5 percent floor was created on charitable contributions if you itemize. For example, if your Adjusted Gross Income (AGI) was $100,000 you could only deduct charitable contributions exceeding $500 (0.5% of $100,000).
For
clean energy proponents, incentive tax credits for purchasing green energy items such as electric vehicles or residential energy efficiency credits have been repealed.
In support of bringing manufacturing back to America, a temporary
auto loan interest deduction is available for itemizers and non-itemizers for new autos with final assembly in the U.S. for tax years 2025 through 2028. The deduction is limited to $10,000 and begins to phase out when income exceeds $100k for single filers, $200k for joint filers.
On the estate planning front, a permanent increase in the
estate and lifetime gift tax exemption to an inflation-indexed $15 million for single filers and $30 million for joint filers beginning in 2026.
Other provisions related to tip and overtime income, business taxes, international tax and other nuanced areas of tax code were also included in the bill; however are beyond the scope of this summary.
Bills such as TCJA and OBBA create the need to revisit financial plans - with a particular focus on the areas of estate and tax planning. We encourage you to review the changes above and if you would like to discuss or dive deeper into how this could effect you please reach out to us
