Financial Focus®
What the New Federal Tax Provisions Mean for You
Now that the “One Big Beautiful Bill Act” has become federal law, there is a lot to unpack for American taxpayers and investors. Here, we'll focus on the tax impacts.
For starters, the law permanently extends certain major tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire at the end of this year, such as permanently extending lower income tax rates for individuals, the higher standard deduction, the expanded child tax credit, the higher alternative minimum tax (AMT) exemption and phase-in thresholds, and the higher federal estate, gift and generation-skipping transfer tax exemption ($15 million per individual and $30 million for married couples in 2026).
But as the name of the law says, the act is “big,” and there are a number of other changes that could impact American taxpayers. Here’s a closer look:
Individuals: The new law delivers several changes that can help individuals further reduce their taxes, including the temporary ability for taxpayers below certain income thresholds to deduct portions of income for individuals age 65 or older, overtime pay, qualified tips and interest on qualified passenger-vehicle loans; a slightly higher charitable contribution deduction for non-itemizers beginning in 2026 ($1,000 for single filers and $2,000 for joint returns); and greater flexibility to use 529 accounts for K-12 and homeschooling expenses.
The act also extends certain TCJA provisions that limit or eliminate some tax benefits, like the elimination of personal exemptions, limits on the state and local tax deduction (albeit with a higher cap, which is subject to phaseout, through 2029), limits on the amount and type of loans eligible for the mortgage interest deduction and the termination of miscellaneous itemized deductions. Additionally, there are new changes that could increase taxes for some individuals, such as a new 35% rate cap on itemized deductions and a new floor for itemized deductions of charitable contributions, both beginning in 2026, as well as the elimination of several clean-energy credits.
Businesses: The new law extends or enhances several tax benefits that could help firms up and down Main Street, as well as America’s farmers. For example, it permanently extends TCJA's "qualified business income" deduction (often referred to as the "199A deduction") for individuals who own "pass-through" businesses (businesses other than sole proprietorships for which owners report business income on their individual tax returns) and increases phase-in thresholds for the deduction, which may allow more individuals to qualify.
It also permanently reinstates the 100% bonus depreciation deduction for qualifying assets placed into service after Jan. 19, 2025; permanently reinstates the ability for small businesses to immediately deduct the full amount of qualified domestic research and development (R&D) expenses in the year they're incurred (which may be retroactively applied for qualifying small businesses); and for purposes of calculating business interest limitations, permanently reinstates the exclusion of depreciation and amortization expenses in the limitation base.
Additionally, small business owners and farmers may benefit from an increase to the allowable expense for qualifying property from $1 million to $2.5 million, potentially enabling them to expense more business equipment purchases. And, finally, the act extends or enhances tax credits for employer-provided childcare and paid family and medical leave benefits.
Individuals and businesses can use additional tax savings to meet current expenses or toward a financial goal, like saving for retirement or moving forward with a business expansion. Consider consulting financial, tax, and legal professionals to help assess specific situations.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor, Tristan Bezzant.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.
Edward Jones, Member SIPC
For starters, the law permanently extends certain major tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire at the end of this year, such as permanently extending lower income tax rates for individuals, the higher standard deduction, the expanded child tax credit, the higher alternative minimum tax (AMT) exemption and phase-in thresholds, and the higher federal estate, gift and generation-skipping transfer tax exemption ($15 million per individual and $30 million for married couples in 2026).
But as the name of the law says, the act is “big,” and there are a number of other changes that could impact American taxpayers. Here’s a closer look:
Individuals: The new law delivers several changes that can help individuals further reduce their taxes, including the temporary ability for taxpayers below certain income thresholds to deduct portions of income for individuals age 65 or older, overtime pay, qualified tips and interest on qualified passenger-vehicle loans; a slightly higher charitable contribution deduction for non-itemizers beginning in 2026 ($1,000 for single filers and $2,000 for joint returns); and greater flexibility to use 529 accounts for K-12 and homeschooling expenses.
The act also extends certain TCJA provisions that limit or eliminate some tax benefits, like the elimination of personal exemptions, limits on the state and local tax deduction (albeit with a higher cap, which is subject to phaseout, through 2029), limits on the amount and type of loans eligible for the mortgage interest deduction and the termination of miscellaneous itemized deductions. Additionally, there are new changes that could increase taxes for some individuals, such as a new 35% rate cap on itemized deductions and a new floor for itemized deductions of charitable contributions, both beginning in 2026, as well as the elimination of several clean-energy credits.
Businesses: The new law extends or enhances several tax benefits that could help firms up and down Main Street, as well as America’s farmers. For example, it permanently extends TCJA's "qualified business income" deduction (often referred to as the "199A deduction") for individuals who own "pass-through" businesses (businesses other than sole proprietorships for which owners report business income on their individual tax returns) and increases phase-in thresholds for the deduction, which may allow more individuals to qualify.
It also permanently reinstates the 100% bonus depreciation deduction for qualifying assets placed into service after Jan. 19, 2025; permanently reinstates the ability for small businesses to immediately deduct the full amount of qualified domestic research and development (R&D) expenses in the year they're incurred (which may be retroactively applied for qualifying small businesses); and for purposes of calculating business interest limitations, permanently reinstates the exclusion of depreciation and amortization expenses in the limitation base.
Additionally, small business owners and farmers may benefit from an increase to the allowable expense for qualifying property from $1 million to $2.5 million, potentially enabling them to expense more business equipment purchases. And, finally, the act extends or enhances tax credits for employer-provided childcare and paid family and medical leave benefits.
Individuals and businesses can use additional tax savings to meet current expenses or toward a financial goal, like saving for retirement or moving forward with a business expansion. Consider consulting financial, tax, and legal professionals to help assess specific situations.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor, Tristan Bezzant.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.
Edward Jones, Member SIPC
