One Big Beautiful Bill Act

Why it happened

The 2017 law’s individual provisions were due to expire on December 31, 2025. Without action, the 2026 return would have reverted to 2017 rates, half the standard deduction, personal exemptions, no SALT cap and a $1,000 child credit — a tax increase for most households and a tax cut for some. With one party again controlling the White House and both chambers, the bill moved under budget reconciliation and passed on the narrowest margins in both chambers on the eve of the July 4 holiday. Unlike 2017, most of the core provisions were made permanent, with a handful of new deductions written to expire after 2028.

Made permanent from 2017

• The rates and brackets — 10% to 37% — with an extra year of inflation adjustment for the lower brackets. The 37% rate begins at $640,600 single and $768,700 joint for 2026.
• The standard deduction, raised to $15,750 single and $31,500 joint for 2025 and $16,100 / $32,200 for 2026. The personal exemption stays at zero.
• The child tax credit, raised to $2,200 and indexed, with the $500 credit for other dependents; both the parent and the child now need a Social Security number.
• The mortgage interest cap at $750,000, with mortgage insurance premiums again deductible as interest.
• No miscellaneous itemized deductions (educator expenses carved out), no moving expense deduction except military, and casualty losses only in declared disasters — now including state-declared ones.
• The alternative minimum tax exemption kept high, though the phase-out thresholds were reset to $500,000 / $1,000,000 and the phase-out rate doubled, which pulls some high earners back in from 2026.
• The estate and gift exemption set at $15 million per person for 2026, indexed, permanent.
• The 20% qualified business income deduction, permanent, with a wider phase-in range ($75,000 single, $150,000 joint) from 2026 and a $400 minimum for small active businesses. See the QBI deduction and specified service businesses.
• The 60% limit on cash charitable gifts; the excess business loss limit; the gambling loss limitation; the student loan exclusions.

Changed

• The SALT cap raised from $10,000 to $40,000 for 2025, rising 1% a year through 2029, but phased down for income over $500,000 and never below $10,000; it reverts to $10,000 in 2030. See the SALT cap.
• A new limit on itemized deductions for taxpayers in the 37% bracket, from 2026: deductions are worth 35 cents on the dollar instead of 37.
• Charitable giving: a permanent deduction for non-itemizers of $1,000 ($2,000 joint) from 2026 — the third time this idea has been enacted — and, for itemizers, a floor of 0.5% of income below which gifts do not count. Corporations get a 1% floor. See charitable giving.
• The dependent care credit raised to a maximum of 50% from 2026, and the dependent care FSA limit from $5,000 to $7,500.
• 529 plans usable for more K–12 expenses, up to $20,000 a year, and for professional credentials.
• Qualified small business stock: the exclusion phases in at three years and is complete at five for stock issued after July 4, 2025, with the cap raised to $15 million. See C corporations.
• Information returns: the 1099-NEC and 1099-MISC threshold raised from $600 to $2,000 starting with 2026 payments, and the 1099-K threshold restored to $20,000 and 200 transactions, retroactively.

New, and temporary (2025 through 2028)

• No tax on tips: a deduction of up to $25,000 of qualified tips, phasing out above $150,000 of income ($300,000 joint). Not available for tips earned in a specified service business.
• No tax on overtime: a deduction of up to $12,500 ($25,000 joint) for the premium portion of overtime pay, with the same phase-out.
• Car loan interest: up to $10,000 of interest on a loan for a new, U.S.-assembled personal vehicle.
• A $6,000 deduction for each taxpayer 65 and older, phasing out above $75,000 ($150,000 joint). This is the provision described as “no tax on Social Security”; it does not change how benefits are taxed, but it does reduce taxable income for many retirees. See how Social Security is taxed.
• Trump accounts: a new savings account for children under 18, with a $1,000 federal deposit for children born 2025 through 2028 and contributions of up to $5,000 a year, from 2026. See the child tax credit and Trump accounts.

All of these are written to expire after 2028. Whether they are extended is a question for a future Congress — and, on this timeline, the pattern is that temporary provisions usually are.

Business

• 100% bonus depreciation, permanent, for property acquired after January 19, 2025. Section 179 to $2.5 million, phasing out at $4 million.
• Research costs deductible again for domestic research from 2025, reversing the 2017 amortization rule, with catch-up for the 2022–2024 amounts.
• The business interest limit back to an EBITDA base, which allows more interest to be deducted.
• A permanent paid family leave credit; a larger employer child care credit; a cap on claims for the employee retention credit; 100% expensing for new U.S. factory buildings.
• For corporations, the 1% charitable floor and controlled-group aggregation under the executive pay cap.

Ended

• The clean vehicle credits — $7,500 new, $4,000 used, and the commercial credit — for vehicles acquired after September 30, 2025.
• The home energy credits — solar, batteries, heat pumps, windows and doors — for property placed in service after December 31, 2025. See the energy credits that ended.
• The commercial building deduction and the energy-efficient home credit for construction beginning or homes acquired after June 30, 2026.
• Not extended: the enhanced Marketplace premium credit from 2021, which expired on schedule at the end of 2025. The law did not address it, and 2026 premiums rose for many enrollees. See Marketplace insurance.

What it meant

For the great majority of households the first effect was that nothing changed: the rates, the standard deduction and the child credit that would have reverted in 2026 stayed where they were. A retired couple over 65 with $80,000 of income picked up a $12,000 deduction for four years. A server or a nurse working overtime got a deduction on part of her pay. A family in a high-tax suburb got its state taxes back on the return, up to $40,000. A business owner finally got a 20% deduction with no expiration date, and a manufacturer got equipment expensing with no phase-down. And anyone who had been planning solar panels, a heat pump or an electric car in 2026 lost the credit that would have paid for part of it.

Colorado does not automatically follow all of this. The state starts from federal taxable income but has its own additions and subtractions, and the legislature responded to the federal law with changes of its own. See changes coming for Colorado in 2026.