General Description
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OBBBA Summary
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Effective Date
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Individual Income Tax Rates
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- Retained existing seven brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%
- Income thresholds indexed for inflation
- Brackets under 24% receive additional year inflation adjustment
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Taxable Years Beginning After Dec. 31, 2025
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Alternative Minimum Tax
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- Permanently allowed 2018 individual AMT exemption amounts indexed for inflation
- Increased phaseout percentage from 25% to 50%
- Modified phaseout thresholds to $500,000 (single) or $1,000,000 (joint) with an index for inflation
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Taxable Years Beginning After Dec. 31, 2025
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Standard Deduction
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- Permanently allowed $31,500 (married filing jointly), $23,625 (head of household), and $15,750 (single) plus future inflation adjustments
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Taxable Years Beginning After Dec. 31, 2024
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Temporary Senior Deduction
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- Added new $6,000 above-the-line deduction for individuals at least 65
- Phases out for married taxpayers with incomes of $150,000 (joint return) or $75,000 (others)
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Taxable Years Beginning After Dec. 31, 2024 through tax years beginning before Jan. 1, 2029
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Itemized Deduction Limitation
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- Caps benefit of each dollar at $0.35 for taxpayers in the top tax bracket (37%)
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Taxable Years Beginning After Dec. 31, 2025
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Miscellaneous Itemized Expense Deductions
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- No longer allowed (other than certain educator expenses which has been removed from the list of miscellaneous itemized deductions)
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Taxable Years Beginning After Dec. 31, 2025
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Mortgage Interest Deduction
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- Permanently retained principal limit of $750,000 and disallowance of deduction for home equity interest
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Taxable Years Beginning After Dec. 31, 2025
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Car Loan Interest
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- Temporarily allowed a deduction of up to $10,000 per taxable year for certain car loan interest for Taxable Years Beginning After Dec. 31, 2024 and before Dec. 31, 2029
- Phase-out of deduction for incomes over $100,000 (non-joint return) and $200,000 (joint return)
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Indebtedness incurred after Dec. 31, 2024
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SALT Cap
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- Temporarily raised SALT deduction cap from $10,000 to $40,000 per taxable year through 2029, with phased out deduction amount for individuals earning more than $500,000 per year ($250,000 per year for married filing separately)
- The change did not eliminate the availability of state-level pass-through entity (PTE) tax regimes
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Taxable Years Beginning After Dec. 31, 2024
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Wagering Losses
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- Permanent modification to limit wagering loss deductions to 90% of the amount of wagering losses for the taxable year with an overall limitation equal to the amount of wagering gains during the same taxable year
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Taxable Years Beginning After Dec. 31, 2025
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Casualty Losses
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- Permanently allowed personal casualty losses from both federal and state declared disaster areas and offset with personal casualty gains
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Taxable Years Beginning After Dec. 31, 2025
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Individual Charitable Deductions
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- Created permanent deduction for individuals that do not itemize to claim up to $1,000 (single) or $2,000 (married filing jointly)
- For itemized deductions, a charitable contribution deduction is allowed only in excess of 0.5% of the taxpayer’s contribution base for the taxable year, with some possibility of a carry forward of unutilized deductions
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Taxable Years Beginning After Dec. 31, 2025
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Qualified Business Income Deduction
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- Permanently allowed deduction for qualified business income from a pass-through entity at 20%
- Expanded deduction limit phase-in by increasing the $50,000 (non-joint returns) and $100,000 (joint returns) amounts to $75,000 and $150,000, respectively
- Added minimum $400 deduction for taxpayers having at least $1,000 of qualified business income from one or more active qualifying trades or businesses
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Taxable Years Beginning After Dec. 31, 2025
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Moving Expense Deduction
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- Permanently eliminated moving expense deduction for all taxpayers except for active duty members of the armed forces and intelligence community
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Taxable Years Beginning After Dec. 31, 2025
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Tip Taxation
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- Temporarily provided a deduction of up to $25,000 per taxable year for qualified tips
- Phases out for incomes over $150,000 (non-joint return) and $300,000 (joint return)
- Deduction disallowed for any taxable years beginning after Dec. 31, 2028
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Taxable Years Beginning After Dec. 31, 2024
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Overtime Taxation
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- Temporarily provided a deduction of up to $12,500 (non-joint return) and $25,000 (joint return) per taxable year for qualified overtime compensation
- Phases out for incomes over $150,000 (non-joint return) and $300,000 (joint return)
- Deduction disallowed for any taxable years beginning after Dec. 31, 2028
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Taxable Years Beginning After Dec. 31, 2024
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529 Accounts
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- Expanded types of qualifying expenses to include certain elementary or secondary public, private or religious school expenses
- Permanently allowed money in 529 accounts to be rolled over to an ABLE account without penalty
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Taxable Years Beginning After Dec. 31, 2025
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Trump Accounts
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- Created tax-exempt savings accounts for certain minors allowing up to $5,000, subject to an annual cost of living adjustment increase, may be contributed each calendar year
- Employers may contribute without an employee income inclusion up to $2,500 per employee into a Trump Account for the employee or any dependent of the employee
- A one-time $1,000 credit will be available for each qualifying child born after Dec. 31, 2024 and before Jan 1, 2029
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Contributions not accepted before July 4, 2026
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Qualified Small Business Stock
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- Permanently increased corporation maximum aggregate gross asset limitation from $50,000,000 to $75,000,000, and increased the applicable dollar limit amount for gain exclusion from $10,000,000 to $15,000,000, and added an inflation adjustment to each
- Added phase-in of the applicable percentage of gain exclusion depending upon holding period of stock: (1) at least 3 years – 50%, (2) at least 4 years – 75%, and (3) at least 5 years – 100%
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Changes generally apply to qualified small business stock acquired after July 4, 2025
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Remittance Transfers
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- Added a 1% excise tax on certain remittance transfers from the United States to an international jurisdiction
- If the excise tax is not paid by the sender, the provider may have secondary liability for the tax amount
- There are some exceptions to the transactions subject to this excise tax
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Transfers made after Dec. 31, 2025
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