The recently passed “One Big Beautiful Bill Act” (H.R.1) includes sweeping tax changes that will affect how millions of Americans file and plan in 2025 and beyond.
Whether you’re a high-income earner, homeowner in a high-tax state, small business owner, or simply trying to make the most of your deductions, here’s what to watch out for.
Standard vs. Itemized Deduction, A Big Shift for Many
One of the most impactful changes is the temporary increase in the SALT (state and local tax) deduction cap:
- Now: $10,000
- Starting in 2025: $40,000 (effective through 2029)
This change could allow more people, especially in high-cost-of-living areas, to benefit from itemizing again instead of taking the standard deduction. Property owners and high-income households should pay close attention to this shift when planning next year’s taxes.
If your recent tax returns showed you just below the itemizing threshold, this could move the needle.
Additionally, the standard deduction will also increase in 2025, making it even more important to evaluate which route, standard or itemized, offers greater tax savings for your situation.
Charitable Giving Still Matters (Even If You Don’t Itemize)
If itemizing still doesn’t make sense in your situation, there are still ways to make your charitable giving tax-efficient:
- Bunch donations into one tax year to exceed the standard deduction
- Consider setting up or contributing to a donor-advised fund (DAF)
- For retirees, Qualified Charitable Distributions (QCDs) remain a powerful tool to reduce taxable income
Note: Because of the provision in the bill, you don’t need to itemize to benefit from certain charitable giving strategies, some deductions and credits may apply even if you take the standard deduction.
New Deduction for Auto Loan Interest, With Income Limits
For the first time in years, there’s now a deduction for auto loan interest on new vehicle purchases. But there’s a catch:
- Deduction applies only to new vehicles assembled in the U.S.
- Income phase out begins at:
- $100,000 for single filers
- $200,000 for married filing jointly
- Deduction is fully phased out at $150,000/$250,000
This deduction could benefit middle-income households financing a new car, but high earners may not qualify.
Business Owners: QBI Deduction Extended
The Qualified Business Income (QBI) deduction, a major benefit for self-employed individuals, freelancers, and small business owners, has been extended and enhanced. This means continued opportunities to reduce taxable income if your business is structured as a sole proprietorship, S corp, or LLC.
Additionally, estate tax exemptions were expanded, reinforcing the importance of long-term planning for those focused on wealth transfer and legacy-building.
What to Do Next
Now’s a smart time to:
- Re-evaluate whether you’ll benefit from itemizing in 2025
- Plan out charitable giving in a way that aligns with your tax strategy
- Understand if the auto loan deduction is worth factoring into your next vehicle purchase
- If you’re self-employed or own a business, double down on tax-efficient structures and deductions
These changes may not all take effect immediately, but smart planning now can set you up for greater savings and smoother tax seasons ahead.
If you want help navigating how this policy shift impacts your financial plan or organizational strategy, bring your questions to our upcoming Market Insights webinar!
Register here: https://us02web.zoom.us/meeting/register/4Altl6EyQTGh2jtDbfFrWg
– Zenith Wealth Partners
All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.