What You Need to Know About the Upcoming Tax Changes (Summer 2025 Update)

The Senate just released its version of the One Big Beautiful Bill Act—a sweeping proposal packed with tax provisions that could shape how we approach everything from child credits to business deductions in the coming years. While this isn’t law yet, the final version will likely mirror what the Senate just rolled out.

Here’s what I want you to know now—especially if you’re a small business owner, an S corp shareholder, or just trying to stay ahead of the curve financially.

For Individuals: What’s on the Table

  1. Child Tax Credit Changes
     The credit may increase:
  • House: $2,500 (temporarily), adjusted for inflation after 2029
  • Senate: $2,200 (permanent and adjusted)
  1. HSA Expansions (House Only)
     If your income is under $75K ($150K for families), you may soon be able to double your HSA contributions—and even write off some fitness costs like gym memberships.
  2. Bigger Standard Deduction
  • Senate: $16,000 (single), $24,000 (HOH), $32,000 (joint) starting in 2026
  • Indexed to inflation = bigger break over time.
  1. SALT Deduction Updates
  • House: Raises the deduction cap to $40K for 2025, phasing down for higher earners
  • Senate: Keeps the current $10K cap permanently
  1. New Deductions for Overtime & Tips
     Both versions propose below-the-line deductions for workers earning tips or OT, with income phaseouts around $150K–$300K.
  2. Senior Taxpayers May Get an Extra Break
     Those 65+ could see an additional deduction—$4K under the House, $6K under the Senate.
  3. Mortgage & Home Equity Loan Interest
     Both versions lock in the $750K mortgage interest deduction. The Senate also brings back deductibility for mortgage insurance premiums (a win for many first-time buyers).

 

For Business Owners: What Might Change

  1. §199A QBI Deduction
  • House: Makes it permanent and bumps it from 20% to 23%
  • Senate: Keeps it at 20% but raises income thresholds for phasing out
  1. 100% Bonus Depreciation
  • House: Restored through 2029
  • Senate: Wants it permanent
     This matters if you’re planning to invest in equipment or property.
  1. Expanded §179 Expensing
     Expensing limits could rise to $2.5M, with phase-outs beginning at $4M—good news for growth-stage businesses with heavier capital investment.
  2. 1099 Reporting Relief
  • 1099-K threshold may reset to $20,000 and 200 transactions
  • Standard 1099 threshold could increase from $600 to $2,000 starting in 2025

This could reduce filing burdens for freelancers and digital entrepreneurs.

  1. Pass-Through Entity Taxes (PTET)
     Complex but important: PTET deductions may be tied to the SALT cap, with differing treatments between House and Senate. This could impact how much your S corp taxes save you personally.
  2. Opportunity Zones Return
     Both bills aim to revitalize OZ investments starting in 2027—with some permanent changes proposed by the Senate.
  3. R&D Deduction Improvements
  • Senate: Full domestic R&D write-offs could return and even apply retroactively back to 2022
  • This is a huge shift for businesses in tech, wellness products, and IP development

 

What's Next?

Congress has set a goal to pass this bill by July 4, 2025, but the real pressure may come from the debt ceiling, which must be raised by August 2025. This is likely to speed up negotiations and finalize the bill.

My Take: What You Should Do Now

✅ Stay aware, but don’t pivot yet. These changes aren’t law until they’re signed.
 ✅ Think ahead: If you’re planning to buy property, invest in new equipment, or expand hiring, timing could make a big difference.
 ✅ Prepare to advise or ask questions: If you’re a business owner or consultant, now is the time to gather your questions and bring them to your tax pro.
 ✅ Watch your income thresholds: Many of these new deductions and credits phase out at specific levels—good planning here can keep you eligible.