Navigating OBBBA for Individualsand the Road to Filing Season
The One Big Beautiful Bill Act—better known as OB3—introduces sweeping tax changes that will touch nearly every client you serve. Below is a streamlined, practitioner-friendly rundown of the provisions worth tracking now so you’re not playing catch-up later.
What OB3 Does
OB3 is a budget reconciliation package that reshapes key elements of individual and business taxation, sets new spending priorities, and addresses the debt limit. Notably, several TCJA-era rules are now permanent, including reduced individual tax rates and the continued suspension of personal exemptions.
Key Individual Provisions
OB3 blends permanent changes with time-limited provisions that will affect brackets, deductions, and credits. Highlights include:
Temporary $6,000 deduction for each eligible individual age 65 and older
Expanded Child Tax Credit (CTC) with a maximum of $2,200 per qualifying child
Phaseouts begin at $200,000 (or $400,000 for MFJ)
Permanent $500 credit for dependents who aren’t qualifying children (e.g., older dependents or dependent parents)
Expanded mortgage interest deduction rules, permanently extended
Starting after Dec. 31, 2025, MIP/PMI can be treated as deductible mortgage interest under existing acquisition debt limits
Miscellaneous itemized deductions subject to the 2% floor end beginning in 2026
The $300 above-the-line educator expense deduction continues
Credits and Deductions to Watch
Some of OB3’s most impactful items will be the ones clients ask about first—often because they’re tied to everyday life: housing, kids, work pay, and big purchases.
Wagering Losses
OB3 wagering loss rules limit deductions to 90% of wagering losses
SALT Cap
The SALT deduction cap increases in 2025 to:
$40,000 for most filers
$20,000 for MFS
Indexed through 2029
Qualified Tips Deduction (2025–2028)
Up to $25,000 per return for qualifying tips if they are:
voluntary,
properly reported, and
earned in a trade or business where tipping is customary
Not available to those filing separately
Qualified Overtime Deduction (2025–2028)
Applies to FLSA overtime pay
Limits:
$12,500 for individuals
$25,000 for joint filers
Phaseouts begin at:
$150,000 MAGI (individual)
$300,000 MAGI (joint)
Interest on Qualifying Car Loans
A below-the-line deduction for up to $10,000 of interest on qualifying car loans for vehicles purchased after 2024
Requirements:
Vehicles must meet Clean Air Act standards
Must be assembled in the U.S.
Only new vehicles qualify
Looking Ahead
Despite the uncertainty, e-filing should remain stable. The bigger question mark is the IRS’s day-to-day capacity—particularly phone support, processing timelines, and correspondence. Setting expectations early and communicating clearly will be essential this season.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Level Books assumes no liability for actions taken in reliance upon the information contained herein.
