Designed to address the expiration of key provisions in the 2017 Tax Cuts and Jobs Act, this landmark tax and spending bill has just rewritten major parts of the U.S. tax code—permanently. With over three dozen changes packed into 900 pages, the new law touches everything from your paycheck to your 529 plan. Whether you’re a retiree, a parent, a tip earner, or simply buying a car, chances are you’ll feel the impact. Below are some of the most notable updates taxpayers need to know—before next April sneaks up.
- Tax Brackets Made Permanent: Current tax brackets and inflation-adjusted income thresholds are now permanent.
- State and Local Tax (SALT) Deduction Expanded—Temporarily: The SALT deduction increases to a maximum of $40,000, phasing out for households with income over $500,000. It reverts to the prior $10,000 cap in 2030.
- Estate and Gift Tax Exemption Increased: Starting in 2026, the estate and gift tax exemption will be $15 million per person, adjusted annually for inflation.
- Expanded Bonus Deduction for Seniors: For taxpayers aged 65 and older, the bonus deduction rises from $1,600 to $7,600 through 2028, phasing out for those with income over $75,000.
- Overtime and Tip Income Exemption: Through 2028, there is no federal tax on up to $12,500 in overtime pay and $25,000 in tip income, phasing out at $150,000 for single filers and $300,000 for joint filers.
- Enhanced Child Tax Credit: The maximum child tax credit increases by $200 to $2,200 per child. An additional $1,000 credit is available for each child born between 2025 and 2028
- Expanded Use of 529 Plans: Withdrawals from 529 savings plans can now be used beyond college expenses. The K–12 withdrawal limit doubles to $20,000, and eligible expenses now include books, tutoring, standardized test fees and the like. Homeschooling expenses are now allowed as are withdrawals for professional credentialing costs such as licensing exams.
- Auto Loan Interest Deduction: Taxpayers can now deduct up to $10,000 in interest on new auto loans for vehicles assembled in the United States. This deduction phases out for incomes over $100,000 (single) or $200,000 (joint).
Our tax forecasting software has already been updated with these new provisions. If you’d like help projecting your tax liability—or potentially reducing it—please contact us. We’d be happy to assist with a customized tax forecast.
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