The One Big Beautiful Bill Act (OBBBA) ushers in a wave of reforms that could dramatically affect how you plan your finances for 2025 and beyond. From accelerated write‑offs on vehicles to expanded deductions for your family and charitable giving, this legislation creates fresh opportunities—but only if you understand how to leverage them. Below you’ll find a concise breakdown of the most significant provisions, along with practical tips to help you make the most of them.
1. Convert Your Personal Vehicle to a Business Asset
If you own a car, truck or SUV that you use for personal purposes, the OBBBA offers a compelling reason to shift it into business use. By converting your personal vehicle to a business asset, the law treats it as placed in service on the date of conversion. Because the legislation reinstates 100 percent bonus depreciation, you may deduct up to 100 percent of the vehicle’s fair market value on your 2025 return—provided you don’t opt out of bonus depreciation.
For example, if a vehicle with a fair market value of $31,000 is converted to business use and 70 percent of its mileage is for work, you could deduct $21,700 on your 2025 tax return.
A few rules to keep in mind
- Use the lower of the vehicle’s fair market value or its adjusted basis on the conversion date.
- The Section 179 deduction is not available on converted vehicles; however, bonus depreciation applies automatically unless you actively opt out.
- All assets within the same depreciation class must be treated consistently—you’re either in or out of bonus depreciation for the entire group.
If you later sell the vehicle, the basis used to compute your gain or loss will vary depending on whether you realize a gain or a loss.
Heavy SUVs, pickups and vans with a gross vehicle weight rating (GVWR) over 6,000 pounds qualify for the full 100 percent bonus depreciation. Smaller vehicles are subject to “luxury auto” limitations, but even those allow up to $20,200 in first‑year write‑offs.
2. Increase the Tax Benefits of Employing Your Child
Hiring your children has long been an effective way to shift income and teach them the value of work. The OBBBA enhances this strategy starting in 2025 by raising the standard deduction for single taxpayers to $15,750 (subject to annual inflation adjustments). Consequently, your child can earn up to that amount in wages from your business and pay zero federal income tax, regardless of whether you take the standard deduction or itemize.
If you operate as a sole proprietor or within a spouse‑only partnership, the benefits are even greater. Wages paid to your children under age 18 are exempt from Social Security and Medicare taxes, and those under age 21 avoid federal unemployment tax. This lets you deduct their wages without paying any employment tax costs. Even S or C corporations can benefit: although payroll taxes apply, you still deduct both the wages and the payroll taxes, and your children owe no federal income tax on their pay.
Imagine hiring three of your children, each earning $15,750 for genuine work in your business. They owe no federal tax, and you could save thousands through deductions that lower your income and self‑employment taxes. In one case study, a family netted $9,663 in government‑paid tax savings after accounting for all taxes and deductions.
3. A New Senior Tax Deduction for 2025 and Beyond
Beginning in 2025, taxpayers who will be age 65 or older on December 31 may claim a brand‑new “bonus” deduction—on top of the regular standard deduction and existing age‑based additional deduction. Qualifying seniors may deduct up to $6,000 per person, while married couples filing jointly could claim up to $12,000 if both spouses are at least 65. One important caveat: if you’re married, you must file jointly to benefit even if only one spouse qualifies; filing separately will forfeit the deduction.
Income limits apply
The deduction phases out as your modified adjusted gross income (MAGI) increases:
- Singles: phases in at $75,000 MAGI and disappears by $175,000.
- Joint filers: phases in at $150,000 MAGI and ends at $250,000.
MAGI includes your adjusted gross income plus certain types of tax‑free foreign income. To maximize the deduction, consider strategies that keep your MAGI below or close to these thresholds, such as breaking up Roth IRA conversions, spreading capital gains over multiple years, or creating additional business deductions through retirement contributions.
4. Expanded SALT Deductions (2025–2029)
For taxpayers living in high‑tax states, the OBBBA temporarily increases the cap on the state and local tax (SALT) deduction. From 2025 through 2029 you may deduct up to $40,000 if married filing jointly or $20,000 if married filing separately (the amounts will adjust for inflation beginning in 2026). Without further legislation, the cap will return to $10,000/$5,000 in 2030.
There is a catch: the increased deduction phases out if your MAGI exceeds $500,000 (joint filers) or $250,000 (separate filers). For every dollar above the threshold, your SALT deduction is reduced by 30 percent, down to a minimum deduction of $10,000 or $5,000. For instance, if your MAGI is $550,000 as a joint filer, you can deduct only $25,000 rather than the full $40,000.
You can still choose to deduct sales taxes instead of income taxes—useful if your income taxes are low but your sales or property taxes are high. Pass‑through entities such as S corporations, partnerships and LLCs can continue to use state‑level SALT workaround programs that allow the business to pay the tax and pass the deduction through to owners. Consider strategies like spreading capital gains, staging Roth conversions, or leveraging your state’s workaround to maximize your benefit.
5. Charitable Giving Shake‑Up: Winners and Losers
The OBBBA makes significant changes to the tax treatment of charitable donations starting in 2026. The news is mixed, with non‑itemizers gaining new opportunities while itemizers and high‑income donors face new limitations.
Good news for non‑itemizers
If you usually take the standard deduction, you currently receive no tax benefit for making charitable donations. Beginning in 2026 you’ll be allowed to deduct cash contributions up to $1,000 per year if you file single, or $2,000 if you’re married filing jointly. Note that contributions to donor‑advised funds are excluded.
New limits for itemizers and high‑income donors
Itemizers who make substantial charitable gifts will face a new “floor” starting in 2026. You may deduct only the portion of your donations that exceeds 0.5 percent of your adjusted gross income (AGI). For example, if your AGI is $200,000 and you donate $10,000 to charity, only $9,000 (the amount over $1,000) will count. This disallowed portion cannot be carried forward unless your total donations exceed other percentage‑of‑AGI limits (such as the 60 percent limit for cash contributions).
What about C corporations?
C corporations also see new restrictions. Beginning in 2026, charitable contributions are deductible only to the extent they exceed 1 percent of the corporation’s taxable income, and any disallowed amount can be carried forward for up to five years, but only if total donations for the year exceed 10 percent of taxable income.
Planning opportunities
The new limits don’t kick in until January 1, 2026, creating a window of opportunity in 2025. If you plan to itemize and make sizeable donations, consider accelerating your giving before year‑end to avoid the new 0.5 percent AGI floor. Another strategy after the rules change is “bunching” your donations: combine multiple years of giving into one tax year to exceed the deduction threshold, then take the standard deduction the following year while making little or no charitable contributions.
6. New 1099 Filing Rules for 2026
Administrative burdens matter too. If your business pays independent contractors, you’re required to issue IRS Form 1099‑NEC once payments cross a certain threshold. For decades that threshold was $600, but the OBBBA raises it to $2,000 for payments made in 2026 and beyond. Beginning in 2027, the amount will be indexed to inflation in $100 increments. Fewer filings mean less paperwork for many small businesses.
The bill also leaves in place the higher filing threshold for Form 1099‑K, which is used by third‑party settlement organizations like PayPal, Uber and eBay. Contrary to earlier proposals that would have dropped the threshold to $600, the OBBBA retains the pre‑existing standard: a 1099‑K is required only when a recipient receives more than $20,000 and has more than 200 transactions in a year. This rollback dramatically reduces the number of 1099‑K forms that will be issued.
Remember, even if a 1099 isn’t filed, you are still obligated to report all taxable income on your return. Make sure your record‑keeping systems can track payments and help you comply with the revised rules.
Conclusion: Plan Ahead to Maximize Your Benefits
The OBBBA presents a broad array of tax planning opportunities, but navigating them requires foresight. Whether you’re converting a vehicle to business use, hiring your children, planning for retirement age or adjusting your charitable giving, early preparation will help you capture the greatest benefit. Consult with your tax advisor to tailor these strategies to your unique situation and stay ahead of upcoming changes. With thoughtful planning, the OBBBA’s reforms can translate into meaningful tax savings for you and your family.