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The One Big Beautiful Bill Act (“OBBBA”) represents a sweeping update to the U.S. tax code. Here is a breakdown of some of the key highlights.
Individual Tax Changes:
· Individual Income Tax Rates
Permanently retains the existing seven brackets: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. Income thresholds will be indexed for inflation.
· Increased Standard Deduction
Makes the higher standard deduction permanent, set at $15,750 for individuals and $31,500 for married filing jointly in 2025, with inflation adjustments in subsequent years.
· Temporary Senior Deduction
Added new $6,000 above-the-line deduction for individuals at least 65. It phases out for married taxpayers with incomes of $150,000 (joint return) or $75,000 (others). Through years 2025-2029.
· Expanded SALT Deduction
Temporarily raises SALT (State and Local Tax) deduction cap from $10,000 to $40,000 per taxable year through 2029, with phased out deduction amount for individuals earning more than $500,000.
· Mortgage Interest Deduction
Permanently retained principal limit of $750,000 and added mortgage premium insurance (PMI) as a deduction.
Additional individual tax changes will be outlined next week.
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