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One Big Beautiful Bill Act (2025 tax law)
Signed July 4, 2025· Legal document or tool
Law or rule (2026)Set by statute, regulation or the agency; numbers change yearly.
The 2025 budget law that made the 2017 tax cuts permanent and changed Medicaid, health savings accounts and dozens of other rules.
See it on the Personal Finance & Estate map →How it works
Signed July 4, 2025, after a 51–50 Senate vote and a 218–214 House vote. For individuals it locks in the 10%–37% brackets and higher standard deduction, sets the estate exemption at $15 million per person, keeps the 20% QBI deduction, restores 100% bonus depreciation, and raises the SALT cap to $40,000 through 2029. Temporary 2025–2028 items include a $6,000 senior deduction and deductions for tips, overtime and car-loan interest. It also cuts Medicaid spending and adds work requirements.
Why it matters for you
It replaced the scheduled 2026 'tax cliff' with mostly permanent rules, so long-range plans rest on known brackets and exemptions, with several sunsets in 2028–2029.
Rules, limits and sources (2026)
Public Law 119-21 (H.R. 1). The Congressional Budget Office estimated it adds about $3.4 trillion to deficits over 2025–2034; the Joint Committee on Taxation and IRS publish provision summaries.
Watch out for
Whether temporary items get extended, and the law's deficit and distributional effects, remain politically contested; 'permanent' only means no end date is written in.
Connections (6)
▸One Big Beautiful Bill Act (2025 tax law) adds a 2025–28 senior deduction against Taxation of Social Security benefits (up to 85%)Law or rule (2026)
How they connect
The law did not end taxation of Social Security benefits, which can still be up to 85% taxable. Instead it added a $6,000 deduction per person aged 65 or older for 2025–2028, phasing out above $75,000 of income ($150,000 joint), which offsets tax on benefits and other income.
When it applies
Signed July 4, 2025; claimed on 2025–2028 federal returns whether or not the taxpayer itemizes or collects benefits.
The rule
The law's text and IRS guidance on the 'enhanced deduction for seniors', claimed on the new Schedule 1-A.
Watch out for
Whether it is extended past 2028 is open; it is often described as 'no tax on Social Security', which it technically is not.
▸One Big Beautiful Bill Act (2025 tax law) expanded eligibility for Health savings account (HSA) vs. use-it-or-lose-it FSALaw or rule (2026)
How they connect
Starting in 2026, the law treats bronze and catastrophic marketplace plans as HSA-eligible, lets direct primary care memberships (up to $150 a month) coexist with an HSA, and permanently allows pre-deductible telehealth. Contribution limits were not raised. California still taxes HSA contributions and earnings.
When it applies
Signed July 4, 2025; most changes effective January 1, 2026, including for people buying coverage through Covered California.
The rule
IRC Sec. 223 as amended by the 2025 law and IRS guidance; 2026 limits are $4,400 self-only and $8,750 family.
Watch out for
How many newly eligible people will actually open and fund HSAs is unknown.
▸One Big Beautiful Bill Act (2025 tax law) adds work requirements, starting 2027, to Medi-Cal (California's Medicaid)Law or rule (2026)
How they connect
The law requires many adults 19–64 covered under Medicaid expansion to show 80 hours a month of work, school, job training or volunteering, with exemptions for parents of children 13 or younger, disabled people and others. It also requires eligibility checks every six months. People 65 and older are not subject to the work rule.
When it applies
States must start by January 1, 2027, with possible extensions to 2028; California's Department of Health Care Services is implementing it for Medi-Cal.
The rule
The statute amends Social Security Act sec. 1902; the Congressional Budget Office projected about 10 million more uninsured nationally by 2034 from the law.
Watch out for
How many Californians lose coverage over paperwork rather than ineligibility is the central dispute between supporters and critics.
▸One Big Beautiful Bill Act (2025 tax law) restored 100% bonus depreciation for Cost segregation & 100% bonus depreciationLaw or rule (2026)
How they connect
Bonus depreciation had been phasing down, to 40% in 2025 and 20% in 2026. The 2025 law restored 100% permanently for property acquired after January 19, 2025, so short-lived components found by a cost segregation study, such as fixtures and parking lots, can be fully deducted in year one.
When it applies
Signed July 4, 2025; applies to qualifying property acquired and placed in service after January 19, 2025. California does not allow bonus depreciation.
The rule
IRC Sec. 168(k) as amended; Form 4562; the IRS cost segregation audit techniques guide.
Watch out for
Front-loaded deductions raise recapture on sale and may be limited by passive-loss rules; whether a study pays depends on holding period and tax status.
▸One Big Beautiful Bill Act (2025 tax law) raised and made permanent Estate & lifetime gift exemption ($15M in 2026)Law or rule (2026)
How they connect
The 2017 law had doubled the exemption only through 2025, and it was set to fall to roughly $7 million in 2026. The 2025 law instead set it at $15 million per person for 2026, indexed for inflation afterward, with no sunset date.
When it applies
Signed July 4, 2025; effective for deaths and gifts after December 31, 2025, and for the generation-skipping transfer tax exemption.
The rule
IRC Sec. 2010(c)(3) as amended; the IRS confirmed the $15 million figure in its 2026 inflation adjustments.
Watch out for
'Permanent' means no expiration date; a future Congress can still change it, as has happened repeatedly since 2001.
▸One Big Beautiful Bill Act (2025 tax law) temporarily raised SALT deduction cap (raised to $40,000 in 2025)Law or rule (2026)
How they connect
The 2025 law raised the SALT cap from $10,000 to $40,000 for 2025, increasing 1% yearly to about $41,600 in 2029, before reverting to $10,000 in 2030. Higher earners lose the increase gradually above about $500,000 of income, a threshold that also rises 1% a year.
When it applies
Signed July 4, 2025, after pressure from House Republicans representing high-tax states such as New York and California.
The rule
IRC Sec. 164(b)(7) as amended; IRS Schedule A instructions for 2025 and 2026.
Watch out for
Whether Congress extends the higher cap past 2029 or lets it snap back is an open political question.