The recent legislation, known as the “One Big Beautiful Bill” (the Bill) makes sweeping changes to individual tax provisions, aiming to make many temporary benefits permanent while introducing new deductions and thresholds that will reshape planning strategies for millions of Americans.
The Bill made permanent many of the individual tax provisions from the 2017 Tax Cuts and Jobs Act including, lower marginal tax rates, a higher standard deduction for those not itemizing their deductions, higher exemption amounts for the alternative minimum tax (AMT), elimination of miscellaneous itemized deductions, and higher estate and gift tax exemptions, among others.
Additionally, the Bill made significant changes to certain provisions, including:
SALT Deduction Cap - The $10,000 cap raised and extended. For 2025, the SALT deduction limit becomes $40,000 ($20k MFS). The cap increases 1% a year but reverts back to $10k in 2030.
The cap is reduced (but not below $10k) for people with modified AGI above $500k.
State workarounds known as “pass-through entity tax” (PTET) were not eliminated.
Pease limitation on Itemized Deductions - A version of the pre-2018 “Pease” limitation on itemized deductions is reinstated from 2026 onward. For high-income individuals, itemized deductions will be reduced by roughly 3% of the amount that AGI exceeds the top bracket of 37% with a formula ensuring no more than 80% of deductions are lost. In effect, this limits the value of all itemized deductions to a 35% effective rate for taxpayers in the top marginal tax bracket.
QBI Deduction – The 20% QBI deduction for pass-through business income (Section 199A) is extended indefinitely. Additionally, the Act increases phase-in income limits to $75,000 ($150,000 MFJ) and adds a minimum deduction of $400 for taxpayers with at least $1,000 of QBI from an active trade or business.
Charitable Deductions - The COVID era above-the-line charitable deduction was made permanent allowing single taxpayers to deduct up to $1,000 ($2,000 for MFJ) in charitable contributions even if they don’t itemize. For taxpayers who itemize their deductions introduced a floor for charitable contributions. Beginning in 2026, only contributions exceeding 0.5% of adjusted gross income will be deductible.
The Bill also contains highly publicized new tax incentives that are scheduled to sunset in a few years if not extended. These temporary incentives include:
No Tax on Tips - Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.“Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.
Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.
Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
No Tax on Overtime - Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation -- that is required by the Fair Labor Standards Act (FLSA) and that is reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.
The maximum annual deduction is $12,500 ($25,000 MFJ).
The deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
Car Loan Interest Deduction - Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)
Maximum annual deduction is $10,000.
Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).
Senior Deduction - Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.
The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify).
Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
Rialto Wealth Management is a fee-only, fiduciary, advisory firm based in Syracuse, NY. From financial planning to investment management, we help families across New York and beyond. We can be reached by phone at (315) 992-9129 or via email through our website’s secure and confidential contact page.
New Tax Legislation
September 18, 2025 by Mike Antonacci
The recent legislation, known as the “One Big Beautiful Bill” (the Bill) makes sweeping changes to individual tax provisions, aiming to make many temporary benefits permanent while introducing new deductions and thresholds that will reshape planning strategies for millions of Americans.
The Bill made permanent many of the individual tax provisions from the 2017 Tax Cuts and Jobs Act including, lower marginal tax rates, a higher standard deduction for those not itemizing their deductions, higher exemption amounts for the alternative minimum tax (AMT), elimination of miscellaneous itemized deductions, and higher estate and gift tax exemptions, among others.
Additionally, the Bill made significant changes to certain provisions, including:
The Bill also contains highly publicized new tax incentives that are scheduled to sunset in a few years if not extended. These temporary incentives include:
Rialto Wealth Management is a fee-only, fiduciary, advisory firm based in Syracuse, NY. From financial planning to investment management, we help families across New York and beyond. We can be reached by phone at (315) 992-9129 or via email through our website’s secure and confidential contact page.