Signed into law in mid-2025, the “One Big Beautiful Bill” brings a wide range of changes to the U.S. tax code, impacting individuals, families, and business owners alike. While many provisions simply extend or build on past legislation, there are several key changes and expiration dates to be aware of—especially for taxpayers who want to act before the end of 2025.
Here’s a breakdown of the most notable updates.
Energy Tax Credits Expiring Soon
Several clean energy tax credits are set to expire at the end of 2025. These include:
- Energy Efficient Home Improvements such as doors, windows, skylights, heat pumps, and water heaters.
- Residential Clean Energy Systems such as solar electric panels, solar water heaters, and battery storage units.
To qualify for these credits, eligible improvements must be installed and paid for before December 31, 2025. If you’re planning to make energy-efficient upgrades to your home, now is the time to act.
1099 Reporting Threshold Increased
Beginning in 2025, the threshold for issuing a Form 1099 to independent contractors will increase from $600 to $2,000 per payee. This update may reduce administrative burden for some small businesses but could also change how contractors track and report their income.
New Deduction for Vehicle Interest
A new deduction allows individual taxpayers to deduct up to $10,000 in interest paid on vehicles purchased after 2024. To qualify, the vehicle must:
- Be new
- Weigh less than 14,000 pounds
- Be assembled in the United States
This deduction is available to all taxpayers, regardless of whether they itemize deductions. However, it begins phasing out for individuals earning over $100,000 and for married couples earning over $200,000.
Itemized Deduction Limitations
Starting in 2025, there will be a new cap on the benefit of itemized deductions. Itemized deductions will now be reduced by 2/37ths of the lesser of:
- Total itemized deductions or;
- The portion of taxable income that exceeds the beginning of the 37% tax bracket
This change could significantly impact high-income earners who previously benefited from full deductions.
Changes to Charitable Giving Rules
Two major changes will affect how charitable contributions are deducted:
- New Floor for Charitable Giving Deductions:
Individuals may only deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI). Corporations will face a 1% AGI floor.
- Above-the-Line Deduction for Non-Itemizers:
Taxpayers who do not itemize deductions can now claim an above-the-line deduction of up to $1,000 (or $2,000 for joint filers) for qualified charitable contributions.
These changes may influence how individuals structure their giving and whether they choose to bunch contributions into certain years.
Other Key Provisions
- The State and Local Tax (SALT) Deduction increases from $10,000 to $40,000, with a phaseout beginning at $500,000 of income.
- Bonus Depreciation returns to 100% for qualifying property placed in service after January 19, 2025.
- The Qualified Business Income (QBI) Deduction (Section 199A) is made permanent.
- The Estate Tax Exemption increases to $15 million per person in 2026, adjusted for inflation.
Final Thoughts
The One Big Beautiful Bill introduces meaningful shifts across the tax landscape—some immediate, others unfolding over time. From clean energy credits to new deduction rules, there are opportunities for proactive planning now that could save money down the line.
If you have questions about how these provisions impact your tax strategy or need help navigating changes before the 2025 deadlines, our team is here to help.