The BBB Act of 2025: Your Interactive Guide
Understand the landmark tax changes and what they mean for you.
Key Changes at a Glance
The BBB Act makes several major provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent, preventing a scheduled tax increase, while introducing new, targeted relief. This section provides a high-level comparison of the most significant changes.
Detailed Tax Provisions
Explore the details of the new tax deductions, credits, and rules. Use the filters above to see the provisions most relevant to your financial situation. Each card highlights the core details, who is affected, and key planning takeaways.
SALT Deduction Increase
The cap on State and Local Tax (SALT) deductions is temporarily increased from $10,000 to $40,000 per household.
Who Benefits: Homeowners and W-2 employees in high-tax states.
Income Limit: Benefit phases out for incomes over $500,000.
Key Pitfall: The PTET workaround for service businesses (SSTBs) is eliminated. See Business Owner profile for details.
Tip & Overtime Deductions
New temporary, above-the-line deductions for up to $25,000 in tip income and for the "premium" portion of overtime pay.
Who Benefits: Service industry workers and hourly employees.
Income Limit: Phases out for incomes between $150,000 and $160,000.
Key Pitfall: Meticulous, daily record-keeping is required. The IRS will scrutinize these deductions heavily.
Senior "Bonus" Deduction
A new temporary $6,000 deduction for individuals age 65 and older, in addition to the standard deduction.
Who Benefits: Retirees with moderate income.
Income Cliff: The deduction is lost completely if income exceeds $75,000 (single) or $150,000 (joint).
Key Pitfall: A small increase in income (e.g., from an IRA withdrawal) can cause a large tax hike by pushing you over the cliff.
QBI Deduction Enhanced
The Qualified Business Income (QBI) deduction is made permanent and increased from 20% to 23% for pass-through businesses.
Who Benefits: Owners of S-corps, partnerships, LLCs, and sole proprietorships.
Key Change: Provides long-term certainty for business structure and investment planning.
Child Tax Credit (CTC)
The $2,000 per child credit is made permanent and temporarily boosted to $2,200.
Who Benefits: Families with children.
Income Limit: Phase-out starts at $200k (single) / $400k (joint).
Key Change: A valid SSN is now required for the filing parents, not just the child, disqualifying some mixed-status families.
Estate Tax Exemption
The federal estate and gift tax exemption is permanently set at $15 million per person, indexed for inflation.
Who Benefits: High-net-worth individuals and families.
Key Change: Eliminates the 2026 "sunset," ending the urgency for massive gifting and shifting focus to long-term wealth planning.
Investment Incentives Restored
100% bonus depreciation is reinstated, and immediate expensing for R&D costs is restored.
Who Benefits: Capital-intensive and innovative businesses (manufacturing, tech, etc.).
Key Change: Provides a massive cash flow benefit and incentive to invest in equipment, machinery, and research.
Auto Loan Interest Deduction
A new temporary deduction for up to $10,000 in interest on a loan for a new car assembled in the U.S.
Who Benefits: Middle-income car buyers.
Income Limit: Phases out above $100k (single) / $200k (joint).
Key Pitfall: Requires proof of final U.S. assembly, likely via a new tax form (1098-AUTO).
Warning: The PTET Minefield for Service Businesses
The Act closes the Pass-Through Entity Tax (PTET) workaround for Specified Service Trades or Businesses (SSTBs)—like law, health, accounting, and consulting firms.
SSTB (e.g., Law Firm, Doctor)
Cannot use the PTET strategy. State tax deductions for owners are now limited by the individual $40,000 SALT cap. This is a significant tax increase for many.
Non-SSTB (e.g., Manufacturer)
Can continue to use the PTET strategy. The business pays state tax and gets a full, uncapped federal deduction. This strategy remains highly valuable.
Correctly classifying your business is now one of the most critical tax planning issues.
Interactive Calculators
These tools help visualize the financial impact of key provisions. Adjust the inputs to see how the new rules could affect your tax situation. This section is designed to turn abstract policy into a personal financial calculation.
SALT Deduction Calculator
The Senior Income Cliff Visualizer
Your Income: $70,000 | Your Bonus Deduction: $6,000
Your Action Checklist
Navigating new tax law requires proactive planning. Based on the profile you selected, this checklist highlights the most critical steps to take now to prepare for the next tax season and maximize your benefits under the BBB Act.
