The recently enacted One Big Beautiful Bill (OBBB) is designed to benefit a broad spectrum of Americans – not just tax cuts for the rich. By maintaining the tax rates and provisions set forth under the 2017 Tax Cuts and Jobs Act (TCJA), OBBB helps ensure most taxpayers will see continuity in their tax responsibilities, while also introducing enhancements designed to boost working and middle-class families.
Key Provisions
Some of the most impactful provisions in OBBB include:
- Higher Standard Deductions: For 2025, the standard deduction is set at $31,500 for married couples filing jointly, $15,750 for singles, and $23,625 for heads of household – amounts that are indexed for inflation.
- Child Tax Credit Extension: The child tax credit is set at $2,200 per child through 2028 (phasing out at age 17), preserving a vital benefit for families.
- Small Business Deduction Expansion: Small business owners can still claim a 20% deduction, with higher income thresholds of $150,000 for joint filers and $75,000 for others. Phase-out rules for certain business types remain in place.
Enhancements and Temporary Measures
Beyond the headline provisions, OBBB introduces additional tax reliefs targeted to everyday Americans. For example, the cap on State and Local Tax (SALT) deductions increases from $10,000 to $40,000 until 2030, reverting to the lower limit after that.
Seniors 65 and older will also see a permanent increase in their additional standard deduction from $1,950 to $2,000 for singles and from $1,550 to $1,600 per spouse for married couples filing jointly. Additionally, there is a temporary deduction of $6,000 per eligible taxpayer for tax years 2025 through 2028 and married couples where both spouses are age 65 or older can claim up to $12,000. The temporary deduction begins to phase out at higher income levels. This new measure in OBBB effectively offsets the inability to change Social Security tax formulas in the current legislative process.
Taxpayers can now deduct interest on car loans on a temporary basis, and new exclusions for tip and overtime income – both subject to income phase-outs – offer targeted relief to service and hourly workers. Additionally, a universal charitable deduction up to $1,000 (or $2,000 for joint tax filers) is now available to all filers, whether or not they itemize.
Expanded Savings and Education Benefits
Recognizing the importance of saving for education and disability-related expenses, OBBB also expands:
- 529 Plans: These now allow for greater annual education expenses (increased from $10,000 to $20,000), cover a broader range of learning materials and costs, and include certain accreditation-related fees.
- ABLE Accounts: For individuals with disabilities, the law increases the inflation-adjusted contribution cap (set at $19,000 for 2025), permanently allows working beneficiaries to contribute more, and ensures those who do so remain eligible for the Saver’s Credit.
Who Benefits?
According to a 2025 analysis by the Joint Committee on Taxation, the largest share of tax cuts under the OBBB will go to households earning under $50,000 – especially those earning between $15,000 and $30,000, who are projected to see an average federal tax cut of 27.1% in 2027. This distribution of tax cuts means the bill is structured to provide proportionally greater tax relief to low- and middle-income families, while still delivering tax cuts across all brackets, though with diminishing benefits for higher-income groups.
Note. Illustration derived from data in “TITLE VII – FINANCE, SUBTITLE A – TAX” from Joint Committee on Taxation, June 30, 2025.
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