(Getty/AFP/Alex Wroblewski)
The following are some of the major tax credit and deduction changes impacted by the passing of the One Big Beautiful Bill (OB3 for short). We have highlighted phaseout thresholds and credit amounts by filing statuses to help you see how these changes affect your tax outlook:
Child Tax Credit (CTC)
The CTC is now worth up to $2,200 per child under 17. It begins to phase out at $200,000 AGI for single/HoH filers and $400,000 for married filing jointly. A portion of the credit is refundable up to $1,700.
Itemized Deductions (for high-income earners)
Before the Tax Cuts and Jobs Act of 2017, high earners faced what’s known as the Pease limitation, which reduced the value of their itemized deductions once income surpassed a certain threshold. That rule was suspended under the Tax Cuts and Jobs Act and now, starting in 2025, a new rule replaces it: the 2/37 Limitation on Itemized Deductions, introduced as part of the Big Beautiful Bill. This updated rule reduces total itemized deductions by 2 cents for every $1 of income above $370,000 (single) or $740,000 (married filing jointly).
Charitable Deduction for Non-Itemizers
Taxpayers that don’t itemize can now take advantage of a new above-the-line charitable deduction of up to $1,000 for single filers and $2,000 for married filing jointly. This not only provides a way for individuals to lower their tax liability, but also incentivizes non-itemizers to make more charitable contributions.
State and Local Tax (SALT) Deduction
Under new tax legislation in 2025, the SALT deduction limit has increased to $40,000. However, this deduction begins to phase out as MAGI increases.
| Filing Status | Base Cap | Phase‑Out Starts at MAGI | Fully Reverts to $10K at MAGI |
| Single/HoH | $ 40,000 | $ 250,000 | $ 590,000 |
| MFJ | $ 40,000 | $ 500,000 | $ 840,000 |
| MFS | $ 20,000 | $ 250,000 | $ 590,000 |
Additional Senior Deduction
For 2025 through 2028, a temporary deduction of $6,000 (or $12,000 for joint filers where both are age 65 or older) is available to seniors aged 65 or older. This deduction phases out at 6% of the household’s MAGI over $75,000 (single) or $150,000 (joint). The deduction fully phases out once MAGI reaches $175,000 (single) or $250,000 (joint).
Car Loan Interest Deduction
A new deduction for “qualified passenger vehicle loan interest” capped at $10,000 per year for 2025 through 2028 is introduced. This deduction phases out when the taxpayer’s MAGI exceeds $100,000 (single) or $200,000 (Married Filing Jointly) and is completely eliminated at MAGI of $150,000 (single) or $250,000 (MFJ). The vehicle must be a U.S.-assembled vehicle to qualify.
Tips and Overtime Deductions
Temporary deductions for certain tips received, up to $25,000 (single) or $50,000 (joint) and overtime pay (up to $12,500 for single filers, $25,000 for joint filers) are available from 2025 through 2028. These deductions phase out for single filers with MAGI over $150,000 and $300,000 for joint filers.
Additional Miscellaneous Changes
- Gambling losses are limited to 90% of gambling winnings now.
- Unreimbursed educator expenses can be deducted as a miscellaneous itemized deduction. All other miscellaneous itemized deductions are permanently repealed.
- Energy-efficient Home Improvement Credit – The credit is terminated and does not apply to property placed in service after December 31, 2025.
- Residential Clean Energy Credit – The credit is terminated and does not apply to property placed in service after December 31, 2025.
- All Clean Vehicle Credits (Commercial, New, Used) – All credits are terminated for vehicles acquired after Sept. 30, 2025.
For an in-depth listing of all 2025 Federal tax credits and deductions, please click here.