OBBBA: New Standard Deductions

"By LouAnn Schulfer, AWMA®, AIF® “The Wealth InFormation Lady”, Accredited Wealth Management AdvisorSM, Accredited Investment Fiduciary® , Published Author" |
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Taxes

The One Big Beautiful Bill Act, signed into law by President Trump on July 4, 2025, brings sweeping changes that present significant opportunities for taxpayers and investors. As with any legislation of this magnitude, the potential benefits will vary based on each individual’s unique financial and tax planning circumstances.

The Tax Cuts and Jobs Act of 2017 significantly increased standard deductions by roughly doubling them. These standard deductions were scheduled to sunset at the end of 2025, meaning, they’d go back to pre-TCJA levels, indexed for inflation.  The standard deduction likely benefits the greatest number of tax payers, impacting all tax filers who have income in excess of their standard deduction levels. Essentially, a standard deduction is an amount of income that you do not have to pay any tax on.  That’s right:  Zero.  Nada. Nothing.  For example, prior to the OBBBA, the standard deduction for a couple, Married Filing Joint under age 65 for the 2025 tax year was $30,000. The OBBBA increased that amount of $31,500.  That means that any couple under age 65 married filing joint, pays $0 taxes on their first $31,500 of income.  For single filers under 65, the standard deduction for 2025 prior to the OBBBA was $15,000.  The new bill increased single filers’ standard deduction to $15,750.  Standard deductions are generally indexed for inflation, meaning, they go up a little each year.

The greatest part of the standard deduction is that it does not require any strategizing, planning or cost. Impacting the greatest number of tax filers and the easiest to do, is the standard deduction.

 

LouAnn Schulfer of Schulfer & Associates, LLC Wealth Management can be reached at (715) 343-9600 or louann.schulfer@lpl.com TheWealthInformationLady.com  SchulferAndAssociates.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.