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What the New Trump Tax Law Means for You

President Trump signed a major new tax law on July 4th — known as the One Big Beautiful Bill (OBBB) — and it brings a wide range of tax changes that start in 2025 and 2026.

Here are the key highlights that could impact your household:

1. Bigger Standard Deductions
Starting next year (on 2025 tax returns):

  • Married couples: $31,500
  • Single filers: $15,750
  • Extra for age 65+: $1,600 per spouse

2. Expanded Child-Related Tax Benefits

  • Child Tax Credit rises to $2,200 per child
  • Childcare Credit increases to $1,500 (or $3,000 for two or more kids) in 2026
  • Childcare FSAs allow up to $7,500 in pre-tax contributions in 2026

3. Four New Tax Deductions (Temporary: 2025–2028)
You may qualify for:

  • $6,000 for seniors age 65+
  • Deduction for tip income
  • Deduction for overtime pay
  • Auto loan interest on new U.S.-assembled vehicles

(Each has income limits and specific rules — we’ll help you determine eligibility.)

4. State & Local Tax (SALT) Deduction Expanded

  • Deduction cap increases to $40,000 through 2029
  • Applies to both married couples and single filers
  • Begins to phase out for incomes over $500,000 (joint) or $250,000 (single)

5. Changes to Education Savings

  • 529 Plans can now cover more K–12 expenses — and the annual withdrawal limit doubles to $20,000
  • A new “Trump Account” for children born 2025–2028 allows family contributions and includes a $1,000 federal deposit per child

6. Clean Energy Credits Expiring
Thinking about solar panels or an electric vehicle? Act soon:

  • Most home energy and EV tax credits expire after 2025

7. Estate Tax Update

  • The estate/gift tax exemption rises to $15 million per person starting in 2026
  • The 40% estate tax rate stays the same

8. Other Notables

  • Charitable donations by itemizers face new limits starting in 2026
  • A new 1% tax applies to most money transfers sent abroad (starting 2026)
  • Starting in 2026, even if you don’t itemize, you can deduct up to $1,000 in charitable donations ($2,000 for joint filers)

We’re here to help you understand how these changes may affect you — and how to plan ahead.

If you’d like a personal review or want to explore tax-saving strategies under the new rules, please reach out.

Emerald Advisors, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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