Got questions about the new deductions for seniors, tips, overtime and car loans? Here’s what you’ve been asking—and my answers—about those, as well as other updated tax provisions.
The One Big Beautiful Bill Act (OBBBA) was signed into law by President Donald Trump on Thursday, July 4, 2025. The bill makes permanent several of the expiring tax cuts contained in Trump’s signature 2017 tax legislation—the Tax Cuts and Jobs Act (TCJA). It also introduces a few new provisions, including some temporary tax breaks for individuals.
Following the House vote, I wrote a summary article (you can find it here). Since that time, I’ve been fielding some of your questions via email and social media.
I thought it would be helpful to address some of the most frequently asked questions in a separate article. Here’s what you’ve been asking—along with my answers—about those tax provisions. Please note that these answers are based on the information currently available. Treasury and IRS are expected to issue regulations and other guidance in the coming months.Child Tax Credit
Under OBBBA, the child tax credit allows families a tax break of up to $2,200 per qualifying child beginning in 2025, adjusted for inflation. The credit remains subject to phase-outs.
How old does my child have to be to qualify for the child tax credit? Your child must be under the age of 17 at the end of the tax year.
I’ve read mixed things about Social Security numbers. Who has to have one for the child tax credit? The taxpayer (that’s you) and the child must both have a Social Security number. The provision that both parents must have an SSN didn’t make it into the final version of OBBBA.State and Local Tax (SALT) Deduction
Under OBBBA, if you itemize your deductions, you can deduct state and local income taxes or sales taxes, and you can deduct state and local property taxes up to a $40,000 cap, often referred to as the SALT cap. The cap—which is an increase from last year’s $10,000 cap—goes into effect for the 2025 tax year. There’s a 1% increase in the cap each year, but only until 2029 (it goes back to $10,000 in 2030). A phase-down applies for taxpayers with modified adjusted gross income (MAGI) over $500,000—unlike a phaseout, which eliminates the deduction, a phase-down simply reduces it.
How do I know if this applies to me? Despite the earlier drama in Congress, this provision does not impact most taxpayers. It impacts taxpayers who itemize and carry a high overall state and local tax burden. Here’s a quick cheat: if you itemize, take a peek at Schedule A. If the amount on line 5d is more than $10,000, that means that you benefit from the tax break. If you haven’t been itemizing, but pay high real estate or state income taxes, then you’ll want to run the numbers when you prepare your 2025 income tax return, to see if you’ll now benefit from itemizing.Charitable Deductions
Under OBBBA, the charitable donation deduction has been expanded to include a permanent “above-the-line” deduction for taxpayers who do not itemize their deductions. Beginning in 2026, taxpayers who do not itemize can claim a deduction of up to $1,000 ($2,000 for those taxpayers who are married filing jointly) for certain charitable contributions. Taxpayers who itemize are subject to a new limit on deductions—new carryover rules would also apply. OBBBA also makes the 60% contribution limit for cash gifts to qualified charities permanent.
What is a floor, and why does it matter for charitable giving? OBBBA creates a 0.5% floor on charitable contributions for taxpayers who itemize. A floor is a baseline that you have to exceed in order to benefit from the deduction (the medical expense deduction also has a floor). In this case, taxpayers who itemize can only deduct the amounts over 0.5% of their adjusted gross income (AGI). Here’s a quick example: Let’s say your AGI is $100,000 and you donated $1,500. You can deduct $1,000—that’s your $1,500 donation less the floor of $500 ($100,000 x .5%).
What does the 60% of AGI limit for cash gifts mean? When it comes to cash donations, you can generally deduct an amount up to 60% of your AGI. If you give more, the excess is not deductible that year, but you may be able to carry it forward for up to 5 years. Here’s a quick example: Let’s say your AGI is $100,000 and you donated $75,000 in cash. You can deduct $60,000 this year (60% of $100,000) and you can carry the extra forward to use in a future year.
Are there any limitations on the deduction for taxpayers who do not itemize? Mostly, the normal rules for charitable giving apply, but there is one addition: you cannot claim the deduction for contributions to donor-advised funds.No Tax On Social Security (Sort Of)
Under OBBBA, seniors who are age 65 and older are eligible to claim a new, temporary deduction of $6,000 beginning in 2025—the deduction would expire after 2028. The deduction would be available to taxpayers who itemize and those who claim the standard deduction. This is a stand-in for Trump’s “no tax on Social Security” promise—there is no separate provision.
