The One Big Beautiful Bill (H.R. 1) recently became law, and while much of the news has focused on how it affects businesses, there are several important changes for individuals and families too.
From tax credits to estate planning, this bill may impact your household finances — and for many of our customers, especially ITIN holders, some changes are more significant than others.
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Standard Tax Deduction Increase
Who this affects:
Taxpayers who claim the standard deduction (rather than itemizing)
What’s Changing:
The standard tax deduction will jump to $15,750 for single filers and $31,500 for joint filers. The amounts will also increase with each year with inflation after 2025.
Why it matters:
A higher standard deduction means more of your income is shielded from taxes. In many cases, this will reduce what you owe — and depending on how much is withheld from your paycheck, it could also mean a bigger refund at tax time.
What to do next:
Check your withholdings. If you usually get a large refund, you may want to adjust your W-4 so less is withheld from your paycheck each month — giving you more take-home pay throughout the year. And even though the standard deduction is higher, if you have paid state and local taxes or mortgage interest, or have made charitable contributions, itemizing could still save you more. We recommend that you speak with a tax professional for a quick check in before making any changes. They will ensure you’re set up to get the best outcome when you file.
SALT Deduction Limit Raised
Who this affects:
Taxpayers who itemize deductions.
What’s changing:
The cap on state and local tax (SALT) deductions increases from $10,000 to $40,000 through 2029, then reverts to $10,000 in 2030.
Why it matters:
If you itemize, you may be able to deduct more of your state and local taxes for the next few years.
Bigger Child Tax Credit (which grows with Inflation)
Who this affects:
Parents and guardians claiming qualifying children under age 17.
What’s changing:
The child tax credit amount is increasing to $2,200 per child for qualifying taxpayers. Even better, this credit will now be tied to inflation, so it will continue to rise in future years to help offset the cost of living.
Why it matters:
This is a meaningful boost for many families, putting more money back in your pocket each year. For those with multiple children, the increase can add up quickly, and you can count on it keeping pace with inflation over time.
When it takes effect:
The increased tax credit will go into effect when filing your 2025 taxes. Inflationary increases begin the following year.
Special Note for ITIN Holders Regarding the Child Tax Credit
Who this affects:
Anyone who files taxes using an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN).
What’s changing:
Under the new law, ITIN holders will no longer qualify for certain family-related tax credits, including the child tax credit, even if your children have SSNs.
Why it matters:
This may significantly change your tax refund amount or increase what you owe, which could affect your household budget.
What to do next:
- Plan early — meet with a tax preparer who understands ITIN rules.
- Ask about other credits or deductions you may still qualify for.
- If you need help finding a trusted tax professional, our team can connect you with local resources.
New Tax-Deferred “Trump Accounts” for Children + $1,000 Treasury Contribution for Certain Birth Years
Who this affects:
Parents, grandparents, or guardians who want to help children save for the future.
What’s changing:
The bill creates new tax-deferred savings accounts, dubbed Trump Accounts, for children. You can contribute annually, the funds grow tax-deferred, and at age 18 the account converts into the child’s retirement account.
Additionally, U.S. citizens born between January 1, 2025, and December 31, 2028, will receive a $1,000 contribution from the U.S. Treasury to jump-start their account.
Why it matters:
This provides a unique opportunity to start long-term savings for your child — with free seed money for qualifying birth years.
What are the details?
Final rules have not been written, and the details are still subject to change, but this is our current understanding of the plan. A Trump Account will allow parents (and others) to contribute up to a combined $5,000 annually for children under age 18. Contributions are non-deductible and cannot be made prior July 2026. In addition, the federal government will make a onetime $1,000 contribution to the Trump Account of each child born between Jan. 1, 2025, and Dec. 31, 2028. At age 18, the account effectively becomes an IRA, and account distributions may receive favorable tax treatment.
Extra $6,000 Deduction for Ages 65+
Who this affects:
Taxpayers age 65 or older.
What’s changing:
An additional $6,000 deduction will be available starting in 2025 for those aged 65+, on top of the regular standard deduction.
Why it matters:
This can help reduce taxable income and potentially lower the amount of tax owed.
No Tax on Overtime Pay
Who this affects:
Employees earning overtime pay.
What’s changing:
Overtime pay will no longer be subject to federal income tax for tax years 2025–2028, up to certain income limits.
Why it matters:
This could mean more take-home pay for workers who regularly earn overtime.
Car Loan Interest Deduction
Who this affects: Anyone financing the purchase of a brand new U.S.-assembled vehicle.
What’s changing:
Interest paid on qualifying new car loans will be tax-deductible, up to a set limit.
Why it matters:
This can help lower the overall cost of financing a new vehicle.
PMI Deduction Returns
Who this affects:
Homeowners who pay private mortgage insurance (PMI).
What’s changing:
The ability to deduct PMI premiums will return in 2026.
Why it matters:
This deduction can reduce taxable income for homeowners who made a smaller down payment.
Higher FSA & Dependent Care FSA Limits
Who this affects: Anyone with a medical or dependent care Flexible Spending Account through work.
What’s changing:
The annual cap for dependent care FSAs will rise to $7,500 starting in 2026. Healthcare FSA caps are also expected to increase annually with inflation.
Why it matters:
A higher cap means you can save more pre-tax money for qualifying medical, dental, vision, or dependent care expenses, reducing your taxable income.
What to do next:
If you have access to an FSA, consider increasing your contributions during your employer’s open enrollment period.
Bigger Estate & Gift Tax Exemptions
Who this affects:
Anyone planning to leave assets to heirs.
What’s changing:
The lifetime exemption for federal estate and gift taxes will increase to $15 million per person starting in 2026 (or $30 million for married couples).
Why it matters:
This allows more wealth to be passed on without triggering federal estate tax.
Higher 1099-MISC & 1099-NEC Threshold for Side Jobs
Who this affects:
Anyone earning money from contract, freelance, or gig work.
What’s changing:
The threshold for receiving a 1099 form will increase from $600 to $2,000 starting in 2026.
Why it matters:
You may receive fewer 1099s, but all income is still reportable and taxable.
No Immediate Payroll Changes
The IRS has confirmed there will be no changes to payroll forms or withholding tables for 2025, meaning paychecks and year-end tax forms will look the same as last year for now.