Tax Compliance, Planning and Strategy

On July 4th, the tax landscape of the United States was reshaped with the signing of the One Big Beautiful Bill (OBBB) Act. At Hill Financial Solutions (HFS), our mission is to Simplify Money, Protect Profits and Fuel Financial Clarity.

This isn't just a minor update; it's a total overhaul. Whether you are a side hustler, a parent, or a retiree, the way you file in January 2026 will look very different. Here is the definitive, short list of some of the OBBBA changes you need to know before the year ends.

1. The New "Working Family" Standard Deductions

The OBBBA didn't just keep the TCJA standard deduction; it gave it a massive "Working Families" boost for 2025.

• Single / Married Filing Separately: $15,750 (up from $15,000)

• Head of Household: $23,625 (up from $22,500)

• Married Filing Jointly: $31,500 (up from $30,000)

• HFS Insight: These amounts are now permanent and indexed for inflation, meaning your "tax-free" baseline income is higher than ever.

2. The $6,000 "Senior Bonus" Deduction

In a major win for retirees, Section 70105 creates a brand-new Senior Bonus Deduction.

• The Benefit: If you are age 65 or older by Dec 31, you get an additional $6,000 deduction ($12,000 for couples if both qualify).

• The Catch: This is a separate personal exemption that phases out for individuals with a MAGI over $75,000 ($150,000 for joint filers).

3. Permanent & Increased Child Tax Credit (CTC)

The $2,000 credit is no longer "temporary."

• The New Total: For 2025, the credit is $2,200 per child.

• Inflation Protection: Starting in 2026, this amount will increase every year based on inflation.

• SSN Requirement: Both the child and at least one parent (on a joint return) must have a valid Social Security Number to claim the credit.

4. The "Trump Account": $1,000 for Every New Baby

The OBBBA established a new tax-advantaged savings vehicle for children.

• Seed Money: Children born between 2025 and 2028 receive a $1,000 federal contribution into a "Trump Account."

• Growth: Parents can add up to $5,000/year. All growth is tax-deferred and can be rolled into a retirement account when the child turns 18.

5. "No Tax on Tips" and "No Tax on Overtime"

This is the headline provision for 1099 and W-2 workers alike.

• Tipped Income: If you are in a "customary tipped occupation" (waiters, drivers, stylists), you can deduct up to $25,000 of your tips from federal income tax.

• Overtime Pay: You can deduct the "premium" portion (the half in time-and-a-half) up to $12,500 ($25,000 for couples).

• Action: These are "above-the-line" deductions, meaning you get them even if you don't itemize!

6. SALT Relief: The $40,000 Cap

For those in high-tax states, the $10,000 SALT cap was the biggest pain point of the last decade.

• The New Limit: You can now deduct up to $40,000 in state and local taxes (property, income, or sales tax) if you itemize.

• Phase-Out: If you earn over $500,000, this cap begins to slide back down toward $10,000.

7. Education: 529 Plans Go Universal

Your 529 plan is no longer just for university.

• K-12 Expansion: You can now withdraw up to $20,000/year for private/religious K-12 tuition.

• Homeschooling & Tutoring: For the first time, 529 funds can be used for homeschooling curriculum, academic tutoring, and even educational therapies for students with learning differences.

8. Homeowners: Mortgage Interest & Car Loans

• Mortgage Interest: The $750,000 debt limit for interest deductions is now permanent.

• PMI: Private Mortgage Insurance is now treated as deductible mortgage interest again.

• Car Loan Interest: You can deduct up to $10,000 of interest on a loan for a U.S.-assembled vehicle (VIN required).

9. Small Business: 100% Bonus Depreciation & 23% QBI

• 100% Expensing: Bonus depreciation is back at 100% for 2025. Buy that equipment before Dec 31!

• QBI Boost: The Section 199A "Pass-Through" deduction has been increased from 20% to 23% and made permanent.

The OBBB Act introduces new changes aimed at both families & workers. But with new deductions come new reporting requirements (VINs for cars, occupation codes for tips). At Hill Financial Solutions, we don't just file forms; we build strategies.

Don't leave your OBBBA benefits to chance. Let's ensure your 2026 filing season is a victory for your bank account.

👉 Book your OBBBA Strategy Session now

Financial Advice Disclaimer

Disclaimer: The information provided on this blog and by Hill Financial Solutions, LLC is for general educational and informational purposes only and should not be construed as professional tax, legal, or financial advice. While we strive to provide accurate and up-to-date information, tax laws are subject to change and vary by jurisdiction.

Each individual’s and business's financial situation is unique. Reading this content does not create an accountant-client relationship. You should consult with a qualified tax professional or financial advisor before making any decisions based on the information found on this site. Hill Financial Solutions, LLC is not responsible for any losses or damages arising from the use of or reliance on this information.