How the Big Beautiful Bill Impacts Your Personal Taxes

Jason Wong
Sep 30
2 min read

1. Permanent Extension of 2017 Tax Cuts

Many provisions from the Tax Cuts and Jobs Act (TCJA) that were set to expire in 2025 are now made permanent under the OBBB. This includes the lower individual income tax rates that currently top out at 37%.

2. Standard Deduction & Itemized Deductions

The higher standard deduction levels from the TCJA remain in place so more filers will continue to benefit by not itemizing.
For those who itemize, the bill removes the previous overall limitation known as the Pease limitation, but introduces a
cap on how much an itemized deduction is worth: effectively limiting the benefit to 35% of the deduction for many taxpayers.

3. State & Local Tax (SALT) Deduction

Under prior law, the SALT deduction was capped at $10,000 for most taxpayers. Under the OBBB, that cap is temporarily raised to $40,000 for taxpayers with incomes under certain thresholds, though the cap starts to phase down for high earners. The spike is only valid through 2029 (after which it reverts).

4. New Deductions & Exemptions

No tax on certain tips & overtime: For tip income up to $25,000 (for individuals) and overtime pay up to $12,500, the new law gives an above-the-line deduction (meaning you don’t need to itemize to claim it).
Enhanced senior deduction: Taxpayers aged 65 or older can claim an additional $6,000 deduction (on top of their standard deduction) if their income is below certain thresholds.
Auto loan interest deduction: Interest on car loans (for vehicles assembled in the U.S.) up to $10,000 can be deducted in certain income ranges.

5. Alternative Minimum Tax (AMT)

The increased AMT exemptions under TCJA are preserved. Those thresholds are phased out for very high incomes.

6. Social Security / Senior Tax Relief

The bill does not completely eliminate taxes on Social Security benefits, but introduces a temporary deduction for seniors 65 or older (up to $6,000).

Who Gains, Who Loses — What to Watch

Beneficiaries:

Lower- and middle-income workers benefit from expanded standard deductions, the new tip and overtime deductions, and the elevated SALT cap.
Seniors (if incomes are in range) get additional deduction relief.
High-income taxpayers may not get much benefit from the new SALT rules (because of phaseouts) and the cap on itemized deduction benefits.
The increased deductions and tax cuts cost the government revenue, which could pressure cuts in public services or increase borrowing.
Some provisions are temporary (e.g. the elevated SALT cap expires after 2029).

The Big Beautiful Bill reshapes individual tax rules by locking in many of the Trump-era tax cuts, adding new deductions (tips, overtime, auto loan interest), and expanding relief for seniors and SALT payers. For average taxpayers, this means more predictability and potential tax relief in the short term — but with uncertainty ahead as some benefits expire or phase out. If you’re considering how it affects you, reviewing your deductions, income level, and retirement plans with a tax advisor will be critical in coming years.