2025 Tax Changes You Can Use Now
Part 1 of our OBBB Tax Strategy Series
You might not notice it at first glance, but a few quiet tax updates tucked into the One Big Beautiful Bill (OBBB) could save you thousands—or cost you, if you’re not paying attention. Whether you’re a W-2 earner, freelancer, or small business owner, these changes are worth understanding now—while there’s still time to act.
✅ The 10% and 12% Tax Brackets Live On — For Now
The lowest federal income tax brackets (10% and 12%) are safe through at least 2026. That’s good news for most middle-income households. Congress extended the TCJA’s inflation indexing, so if your income grows with inflation, you won’t be bumped into a higher bracket prematurely.
Tax Planning Tip:
Consider accelerating income (like Roth conversions or year-end bonuses) while these lower brackets are still in effect. It may cost less tax-wise now than in 2026.
Bigger Standard Deduction in 2025
The standard deduction gets a bump in 2025:
- Single: $15,750
- Married Filing Jointly (MFJ): $31,500
That’s up from $14,600 (Single) and $29,200 (MFJ) in 2024.
Why it matters:
If you don’t itemize deductions, this increase could reduce your taxable income — and help more people skip the hassle of Schedule A.
Tax Planning Tip:
If you expect to itemize some years but not others, consider “bunching” charitable donations or medical expenses into one year to maximize deductions.
New QBI Deduction Rules for 2026
If you’re self-employed or own an S-Corp, you’ve likely benefited from the Qualified Business Income (QBI) deduction. OBBB brings changes in 2026:
- Phase-in thresholds drop to $75K (Single) / $150K (MFJ)
- Minimum deduction: Even small businesses with just $1,000 in active QBI get a $400 deduction
Tax Planning Tip:
If your income will exceed the new QBI limits in 2026, talk to your CPA now about shifting income between 2025 and 2026—or using wages or depreciation strategies to stay eligible.
TCJA Extensions Made Permanent
Several key provisions from the 2017 TCJA are now permanent:
- Individual rate structure (10%–37%)
- Repeal of the personal exemption
- AMT relief (expanded exemptions and phaseouts)
- Mortgage interest deduction limits
- Estate & gift tax exclusions
- Casualty loss deduction only for federally declared disasters
Tax Planning Tip:
With the estate exemption staying high (for now), this is still a good time to make large gifts if you have a taxable estate.
Summary Table: What’s Changing and What’s Staying
| Provision | 2024 Rule | OBBB Change |
|---|---|---|
| Standard Deduction (MFJ) | $29,200 | $31,500 (2025) |
| QBI Deduction Phase-in | $364,200 | $150,000 (MFJ, 2026) |
| Minimum QBI Deduction | None | $400 (if $1K active income) |
| Estate/Gift Tax Exclusion | ~$13.6M (2024) | Permanent (not sunset yet) |
| 10% & 12% Brackets | Extended via TCJA | Still extended to 2026 |
FAQ: Common Questions About These Changes
Q: Do I still qualify for the QBI deduction if I have W-2 income only?
A: No. QBI only applies to income from self-employment, S-Corps, partnerships, and sole proprietorships.
Q: What happens after 2026?
A: Many TCJA provisions expire in 2026 unless Congress extends them again. That could mean higher taxes for many people unless they plan ahead.
Q: Will the $400 minimum QBI deduction apply automatically?
A: As long as you have at least $1,000 in active QBI, yes—it should apply even if you don’t meet the old income thresholds.
Disclaimer: This article is for educational purposes only and does not constitute tax advice. Please consult your CPA before acting on any tax planning strategies.