Tax Planning · The Lithos Blog
Signed July 4, 2025, the OBBBA is the biggest federal tax overhaul since 2017 — hundreds of provisions deep. You do not need all of them. You need the four or five that touch your life. Pick your profile below and start there.
What Happened
On July 4, 2025, the One Big Beautiful Bill Act was signed into law — the most significant federal tax overhaul since the 2017 Tax Cuts and Jobs Act. It made the TCJA's individual rates permanent, created brand-new deductions for tips and overtime, launched a savings account for newborns, restored full bonus depreciation for businesses, and quadrupled the SALT cap.
Here is the thing about laws this size: reading them provision-by-provision is how people get overwhelmed and do nothing. Reading them profile-by-profile is how families and business owners actually capture the benefit. So that is how this guide is built. Find yourself below; skip the rest with a clear conscience.
And a housekeeping note for filers: the new individual deductions land on a brand-new Schedule 1-A, starting with 2025 returns.
Trump Account contributions opened on July 4, 2026 — this month. If your family had a baby in 2025 or 2026, the $1,000 federal seed and the contribution window are live right now. Details in the Growing Families profile below.
The Headline Numbers
Choose One
Two new above-the-line deductions, both running 2025 through 2028. Workers in occupations that customarily receive tips — restaurants, bars, salons, delivery, hospitality — can deduct up to $25,000 of qualified tip income per year. Hourly workers can deduct the premium portion of FLSA overtime — the "half" in time-and-a-half — up to $12,500 ($25,000 filing jointly).
Two honesty checks before anyone celebrates. First, these are income tax deductions, not exclusions — Social Security and Medicare taxes still apply to every dollar, and your paycheck withholding does not automatically change. Second, both benefits phase out starting at $150,000 of modified AGI ($300,000 joint). For a typical Indianapolis server or warehouse worker, though, this is real money left in the household.
The OBBBA created Trump Accounts: tax-advantaged investment accounts for children. Kids born January 1, 2025 through December 31, 2028 with a Social Security number are eligible for a one-time $1,000 federal deposit when the account is established. Families can contribute up to $5,000 per year (indexed), employers can add up to $2,500 toward that same limit tax-free, and until the child turns 18 the money must sit in broad, low-cost U.S. stock index funds. No withdrawals before the year the child turns 18.
Contributions opened July 4, 2026. For illustration only: the $1,000 seed plus $200 a month, compounding at a hypothetical 7% for 18 years, grows to roughly $85,000 — not a guarantee, just the math of starting early. The law also lifted the Child Tax Credit to $2,200 per child, now permanent and indexed.
The single biggest business change: 100% bonus depreciation is back — permanently — for qualified property acquired after January 19, 2025. Equipment, vehicles, many building components: fully deductible in year one instead of over decades. Section 179 expensing limits were raised substantially as well, and the 20% Qualified Business Income deduction, which was scheduled to sunset, is now permanent.
For real estate investors, this revives the cost segregation playbook. A typical $1 million residential rental often contains $200,000–$300,000 of components that can be reclassified from 27.5-year depreciation to 5–15-year property — and with 100% bonus depreciation, deducted in year one. Illustration only: $250,000 of reclassified components at a 35% effective rate is roughly $87,500 of year-one tax savings. Your actual mileage depends on income type, passive-loss rules, and entity structure — which is exactly why this is a CPA conversation, not a DIY project.
The SALT deduction cap jumped from $10,000 to $40,000 for 2025, rising about 1% per year through 2029 — with a phase-down for modified AGI above $500,000 (never below $10,000) and a scheduled reversion to $10,000 in 2030. For Indianapolis-area homeowners with meaningful property tax and state income tax, that can unlock thousands in additional deductions during the window. Business owners keep the PTET workaround as well.
Three more quiet wins: the federal estate tax exemption is set at $15 million per person (permanent and indexed, from 2026), protecting family wealth transfers; taxpayers 65 and older get a new bonus deduction of up to $6,000 per person (2025–2028, income-limited); and the TCJA's individual rates and larger standard deduction are now permanent, which makes multi-year planning — Roth conversions, gain harvesting, charitable bunching — far more predictable.
Keep This Handy
| Provision | What Changed | Window |
|---|---|---|
| Tip deduction | Up to $25,000/yr above the line; phases out over $150K MAGI ($300K joint); payroll taxes still apply | 2025–2028 |
| Overtime deduction | Premium portion of FLSA overtime, up to $12,500 ($25,000 joint); same phase-out | 2025–2028 |
| Trump Accounts | $1,000 federal seed for births 2025–2028; $5,000/yr contributions (opened July 4, 2026); index funds until 18 | Ongoing |
| Bonus depreciation | Restored to 100% for qualified property acquired after Jan 19, 2025 | Permanent |
| QBI deduction | 20% pass-through deduction made permanent | Permanent |
| SALT cap | $40,000 (2025), rising ~1%/yr; phase-down above $500K MAGI; reverts to $10,000 in 2030 | 2025–2029 |
| Child Tax Credit | Increased to $2,200 per child, permanent and indexed | Permanent |
| Estate exemption | Set at $15 million per person, indexed | From 2026 |
| Senior bonus deduction | Up to $6,000 per person age 65+, income-limited | 2025–2028 |
Summary for education only — figures per PayrollOrg, University of Illinois Tax School, and CPA-firm analyses linked below. Confirm current-year amounts with your tax professional; several are indexed annually.
The Bottom Line
You do not need to master the OBBBA. You need to execute your profile's three action steps and coordinate them with the rest of your plan — withholding with income, accounts with goals, depreciation with entity structure, deductions with protection. That coordination is precisely what our CPA-led tax advisory division does with families and business owners across Indianapolis, and the first conversation is always educational. Simply speaking: the law changed in your favor in several places. Make sure you actually collect.
These resources support the facts and research referenced throughout this article.
Payroll-industry tracking of the tips and overtime deductions, W-2 reporting rules, and Trump Account contribution mechanics.
See the trackerHow the $25,000 tip deduction and the $12,500/$25,000 overtime deduction actually work at filing time, including the MAGI phase-outs.
Read the updateDeep detail on Trump Accounts: the 2025–2028 birth window, the $5,000 annual limit, employer contributions, and the index-fund investment rules.
See the detailA consumer-level overview of the major provisions, effective dates, and eligibility rules.
Read the overview
Dr. Saha works with families, business owners, and aspiring entrepreneurs on financial education, wealth strategy, real estate, and entrepreneurship — helping people build stronger foundations and make confident decisions. Meet the author →
Next step
The OBBBA's provisions interact — tips with withholding, Trump Accounts with 529s, depreciation with entity structure, SALT with PTET elections. Lithos coordinates the tax, protection, and planning layers in one conversation.
