“The passage of the so called “One Big Beautiful Bill Act” (OBBBA) has caused controversy and disagreement whether it will increase the federal deficit or ultimately reduce it by expanding the economy. Among other tax provisions, OBBBA extends and modifies the state and local tax (SALT) deduction, eliminates tax on qualified tip income and overtime pay for many workers and addresses estate and gift taxes.
Key tax highlights include:
SALT Deduction:
OBBBA temporarily increases the state and local tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers with incomes below $500,000 through December 31, 2029, with the cap reverting to $10,000 thereafter. The deduction is subject to a phase-out for higher-income taxpayers.
Tax Cuts and Extensions:
OBBBA makes permanent certain individual income tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA), including the higher standard deduction and lower tax brackets. It extends and expands the estate and gift tax exemption, increasing it to $15 million per individual ($30 million for married couples) beginning in 2026, adjusted annually for inflation and includes a temporary tax break for older adults with incomes below $75,000, allowing a $6,000 deduction.
Other Tax Breaks:
OBBBA includes a deduction for qualified tip income and eliminates taxes on tips and overtime pay for many workers.”
