What Is the OBBBA?

OBBBA stands for the One Big Beautiful Bill Act, a major federal tax and policy package passed in 2025.
It includes significant tax changes, and many of the personal-tax provisions took effect starting in tax year 2025.

The act focuses heavily on individual tax relief, adjusting or extending several provisions that were previously set to expire.

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How Does the OBBBA Affect You?

Here are the most important ways individuals may feel the impact:

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1. SALT Deduction Cap Increased to $40,000

SALT = State and Local Taxes
This is the biggest headline change.

• The deduction cap rose from $10,000 → $40,000.
• Applies to itemizers (people who do not take the standard deduction).
• Benefits people in high-tax states the most (CA, NY, NJ, CT, IL, MA, etc.).
• Not everyone gets the full benefit — the increase phases out at higher incomes.

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2. High-Income Filers Face Phaseouts

If your Modified Adjusted Gross Income (MAGI) is above certain thresholds, your increased SALT benefit begins to shrink.

• For 2025, the phaseout starts around $500,000 MAGI (less for married filing separately).

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3. Some Itemized Deductions Are Limited for Top Earners

If you are in the top federal tax bracket, certain deductions—including SALT and charitable contributions—are worth less because of new limitation formulas.

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4. Charitable Contribution Rules Change in 2026

Beginning 2026, even people who take the standard deduction may be allowed to deduct a small amount of charitable donations:

• ~$1,000 for singles
• ~$2,000 for joint filers

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5. The Pass-Through Business (LLC/S-corp) Workaround Still Works

The popular PTET (Pass-Through Entity Tax) workaround—where business entities pay state taxes that are then deducted on the federal return—remains in place, continuing to offer major planning opportunities for business owners.

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6. These Changes Are Temporary

Most OBBBA tax provisions (like the raised SALT cap) apply for tax years:

2025 → 2029

In 2030, the SALT cap is scheduled to revert back to $10,000 unless Congress changes the law again.

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How This Affects You In Practical Terms

✔ You may save money if:

• You pay high property taxes
• You pay state income tax
• You already itemize deductions
• You’re under the high-income phaseout threshold

✔ You may NOT see much benefit if:

• You take the standard deduction
• You live in a low-tax state
• Your MAGI is high enough to trigger phaseouts

✔ You’re affected differently if:

• You are self-employed or own an LLC/S-corp
• You are in the top tax bracket
• You make significant charitable donations