Now that the Act — commonly called the One Big Beautiful Bill Act (OBBBA) — has been signed into law, it introduces a number of changes for individual taxpayers. Even as we await implementation action from the Treasury Department, people who want to plan ahead can start doing so today.
While our team here at ShayCPA primarily focuses on corporate tax provisions, we want to help individuals, too. And some of the Act’s individual tax ramifications will directly impact the people we work most closely with, like founders, investors, and executives. To help them navigate what’s ahead, we wanted to outline some of the biggest individual tax provisions to note.
Extension and permanent implementation of TJCA tax provisions
To some extent, President Trump’s driving of the Big Beautiful Bill was to take temporary provisions from the Tax Cuts and Jobs Act (TCJA) and make them permanent.
Notably, the Act retains the seven tax brackets we saw in the TCJA, currently at:
- 10%
- 12%
- 22%
- 24%
- 32%
- 35%
- 37%
Additionally, it made some provisions permanent, like the increased alternative minimum tax (AMT) exemption amount and the elimination of miscellaneous itemized deductions (save for one education-related category).
Perhaps most notably for our clients, the Act builds on the TCJA’s initial increase of the standard deduction amount. The TCJA nearly doubled the amount taxpayers can claim without itemizing.
Under the TCJA, the 2025 inflation-adjusted amounts for standard deductions were scheduled to be $15,000 for single taxpayers and those married but filing separately, $30,000 for joint filers, and $22,500 for heads of households. The higher standard deduction was slated to expire after this year.
Under the Act, the standard deduction is both increased and extended. For 2025, it goes up even more, to:
- $15,750 for single/married filing separately taxpayers
- $31,500 for joint filers
- $23,625 for heads of households
The standard deduction increase is now permanent (and will continue to be indexed for inflation).
Adjustments to the cap on SALT deductions
The state and local tax (SALT) provision was one of the stickiest parts of the Act, thanks in large part to issues that started brewing under the TCJA. The Tax Cuts and Jobs Act put a $10,000 cap on the SALT deduction. For taxpayers in high-tax states, this cap meant a much bigger tax bill. As a result, their representatives banded together to form the SALT Caucus with the intention to get tax relief for their constituents.
While the cap is still in place, that Caucus was successful in increasing it to $40,000 for 2025. Through tax year 2029, that cap will see a 1% increase.
Founders, investors, executives, and employees should all be aware that there’s a modified adjusted gross income (MAGI) threshold here. In most cases, if your income exceeds $500,000 in 2025, that cap gets reduced by 30% of the amount over the threshold. So if you have a MAGI in 2025 of $600,000, for example, you have $100,000 over that limit. You would then see a $30,000 reduction in your cap (30% of $100,000), leaving you with a cap of $10,000.
Like the cap, the SALT MAGI threshold will see a one percent increase through 2029.
Changes to taxation of qualified business income (199A)
For any individual taxpayers who get business income from a pass-through entity (e.g., S-corporation, sole proprietorship), the Act introduces some changes.
First, taxpayers now get a permanent 20% deduction for qualified business income (QBI) from the pass-through entity. This deduction, which was established by the TCJA, was set to expire after 2025.
Second, there are new phase-ins for the deduction limit. The Act moves the thresholds here to $75,000 for people filing individually and $150,000 for joint filers.
Finally, if you have at least $1,000 of QBI, you qualify for a minimum deduction of $400 here.
1099-K rules for Venmo, PayPal, etc.
For companies that pay employees or contractors through third-party platforms, an upcoming IRS requirement was likely to make life more difficult. Historically, there was a $20,000/200 transaction threshold before 1099-K reporting was required. That meant that many founders and executives using apps like Venmo or PayPal had little to do for tax reporting purposes.
As these third-party platforms get more popular, though, the IRS has taken note. It was on track to implement a $600 reporting threshold (technically, a de minimis rule for third-party network transactions). That meant the payment platform needed to issue a 1099-K as soon as the company used its services to pay anyone $600 or more.
The Act buys everyone a little time, setting the reporting threshold at $2,500 for 2025. There is no transaction threshold for this year.
The $600 1099-K reporting threshold will likely be in full force next year, though, so companies can help themselves avoid a big headache by prepping now. Start capturing what you pay via third-party apps and planning for the IRS to be looped in. \
Other provisions
The Act’s tax provisions are wide-ranging, and we’ve only scratched the surface. The 400+ pages also include provisions about:
- A $25,000 deduction for income earned as tips, with a phase-out starting at a MAGI of $150,000 for single filers and $300,000 for joint filers (set to expire after 2028)
- A deduction for overtime pay of up to $12,500 for single filers and $25,000 for joint filers, with a phase-out starting at a MAGI of $150,000 for single filers and $300,000 for joint filers (set to expire after 2028)
- Penalty-free retirement distributions for taxpayers in areas affected by federally declared disasters
- A deduction for mortgage insurance premiums
- An auto loan interest deduction of up to $10,000 for interest paid between 2025–2028 on vehicles bought after 2024
- A charitable giving deduction for non-itemizers that allows individual taxpayers who don’t itemize to deduct up to $1,000 of cash donations, and couples filing jointly to take a deduction of up to $2,000
Clearly, a lot is changing with the way individuals pay their taxes in America. For help understanding how all of this might affect you as a founder or owner of your company, you can turn to our team. Here at ShayCPA, we’re staying on top of all of the adjustments required by the Act. Our goal is to help your clients navigate these adjustments smoothly while maximizing their tax savings.
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