Trump's Notable Tax Legislation Timeline: Detailing When Crucial Tax Provisions Take Effect
The "One Big Beautiful Bill Act" (OBBBA), signed into law by President Donald Trump, brings significant changes to the US tax system, particularly in the area of individual taxes. Here's a breakdown of the key provisions, both permanent and temporary.
Permanent Tax Provisions
- Lower Individual Tax Rates and Brackets: The seven tax brackets established by the 2017 Tax Cuts and Jobs Act (TCJA) - 10%, 12%, 22%, 24%, 32%, 35%, and 37% - are now permanent.
- Standard Deduction Increase: The larger standard deduction introduced by TCJA is now permanent and slightly expanded for 2025 - $15,750 for singles and $31,500 for married filing jointly, adjusted annually for inflation.
- Child Tax Credit: The child tax credit has been permanently raised to $2,200 per qualifying child, but without inflation adjustment.
- Estate Tax Exemption: The lifetime estate tax exclusion is permanently increased to $15 million per individual starting in 2026, adjusted for inflation thereafter.
- Mortgage Interest Deduction: The $750,000 cap on mortgage interest deduction is permanently set.
- Alternative Minimum Tax (AMT) Changes: Higher AMT exemption amounts and thresholds are permanent.
- Elimination of Personal Exemptions: Personal exemptions for taxpayers and dependents are permanently removed (with some exceptions for seniors).
- Moving Expenses Deduction Removal: The exclusion and deduction for moving expenses are permanently removed except for active-duty military and U.S. Intelligence Community members.
Temporary Tax Provisions
- State and Local Tax (SALT) Deduction: The SALT cap is temporarily increased from $10,000 to $40,000 starting in 2025, adjusted for inflation, but this higher cap is set to revert back to $10,000 in 2030 unless Congress acts to extend it.
- New Income Tax Deductions: Temporary deductions are introduced for certain types of income, such as tips, overtime income, auto loans, and additional deductions for seniors. These generally apply from 2025 through 2028 or 2029.
- Charitable Contribution Deduction for Non-Itemizers: Starting in 2026, a new permanent deduction for charitable contributions is available for taxpayers who do not itemize.
- No Tax on Tips and Overtime Pay: These benefits are temporary, effective from 2025 through 2028.
These changes provide a stable, permanent base for many tax provisions from TCJA while granting temporary relief on certain deductions like SALT and additional income types, mostly expiring by 2029 or 2030 without further legislative action.
Taxpayers are advised to review both expiring tax provisions and new ones that may apply to their situation. For instance, the popular electric vehicle (EV) tax credit is set to expire on Sept. 30, 2025. Being strategic with tax planning can lead to big savings when filing the 2026 return.
In light of the changes brought by the "One Big Beautiful Bill Act" (OBBBA), businesses may want to consider utilizing financial strategies that cater to the permanent increase in the standard deduction for individual taxpayers, which could lead to potential savings in their business's tax accounts. Additionally, the introduction of temporary income tax deductions for certain types of income, such as tips and overtime pay, presents a unique opportunity for employees to put aside more money in their savings accounts, especially from 2025 through 2028.
