Insights

What the One Big Beautiful Bill Act Means for Your Taxes

When a major new tax law goes into effect, it’s natural to have questions. And the changes are broad and complex in the One Big Beautiful Bill Act (OBBBA). The key word here is “big.” Passed just before the July 4, 2025 deadline, the bill spans hundreds of pages and includes wide-ranging provisions across tax policy, spending, and federal programs.

At LCNB National Bank, we know how important it is for you to understand what this means for your finances—particularly your tax outlook. This summary focuses exclusively on the provisions of the OBBBA that apply to individual taxpayers. We’ve left out the broader political context and institutional changes to concentrate on what matters most for individuals and families. Here’s what you need to know.

Big Changes to Personal Income and Estate Taxes

Several major tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA), which were previously set to expire at the end of 2025, have now been made permanent. This provides long-term certainty around personal tax rates and deductions that were originally implemented on a temporary basis.

Tax Brackets and Rates: The current seven individual income tax brackets will remain in place permanently. These brackets were originally reduced under the TCJA and were scheduled to revert to higher levels in 2026. With this change, taxpayers across nearly all income levels will avoid the 1% to 4% rate increases that were expected.
Standard Deduction: The increased standard deduction (another central feature of the 2017 law) is also now permanent. This deduction reduces the amount of income subject to tax for those who do not itemize, simplifying the filing process for millions of Americans.
Estate and Gift Tax Exemption: The lifetime estate and gift tax exemption has been permanently increased to $15 million starting in 2026, adjusted annually for inflation. This change allows individuals and families to transfer more wealth without triggering federal estate or gift taxes. The increase may affect long-term wealth transfer strategies, including wills, trusts, and annual gifting plans.

Temporary Expansion of SALT Deduction Limits

For taxpayers who itemize deductions, the state and local tax (SALT) deduction cap has been temporarily expanded:

New Cap Levels: The limit increases from $10,000 to $40,000 ($20,000 for married individuals filing separately), beginning in 2025 and continuing through 2029. In 2030, the cap reverts to $10,000. The new limit is adjusted upward by 1% each year through 2029.
Income Thresholds: This higher deduction is available only to married taxpayers with incomes below $500,000 ($250,000 for single filers). For those above these thresholds, the expanded deduction is gradually phased out during the same period.

This temporary change may have a more modest impact in Ohio compared to higher-tax states, but it could still benefit certain households. While Ohio’s state income and property tax rates are generally lower than those in places like California or New York, some taxpayers may still exceed the original $10,000 SALT cap. This is especially true for those with higher property values or who pay both state and local income taxes. For itemizing taxpayers under the income phase-out thresholds, the expanded limit may increase their total deduction and reduce federal taxable income between 2025 and 2029.

Additional Deduction for Seniors

For tax years 2025 through 2028, a new deduction is available to older adults:

Eligibility and Amount: Taxpayers aged 65 and older may deduct up to $6,000 from their income if they earn up to $75,000 individually or $150,000 as a couple filing jointly. The deduction phases out above those income levels and is unavailable once income exceeds the upper threshold.

This change creates an opportunity for qualifying retirees to reduce their taxable income without changing how they file. It can also potentially offset other taxable income sources, such as distributions from retirement accounts or Social Security benefits, depending on filing status and total income.

Other New Deductions

The OBBBA also introduces temporary deductions for certain types of income and expenses, applicable between 2025 and 2028:

Auto Loan Interest Deduction: Taxpayers who finance the purchase of a new vehicle assembled in the United States can deduct up to $10,000 annually in interest on their auto loans. This deduction does not require itemization and is available only for qualifying vehicles purchased within the 2025–2028 window.
Tip Income Deduction: Workers who earn income through tips may deduct up to $25,000 of reported tip income per year. The deduction begins phasing out at an income level of $150,000 and is also scheduled to sunset after 2028.
Overtime Pay Deduction: Up to $12,500 of earned overtime pay may be deducted annually. Like the tip deduction, this provision is time-limited and will expire after the 2028 tax year.

These deductions represent a targeted effort to recognize specific types of labor income and could reduce taxable income for individuals in service industries or others who rely on overtime wages. It is important to note that these provisions have income thresholds and sunset clauses, meaning they apply only for a fixed period and to taxpayers within certain income ranges.

Permanent Enhancement of the Child Tax Credit

The One Big Beautiful Bill Act makes several significant changes to the Child Tax Credit (CTC), beginning with the 2025 tax year. These updates clarify credit amounts, eligibility rules, and income thresholds—removing the uncertainty that had surrounded previous temporary extensions.

Higher Maximum Credit Amount
The maximum credit increases to $2,200 per qualifying child starting in 2025. This amount will be adjusted for inflation beginning in 2026, helping the credit keep pace with rising costs over time.
Permanent Income Phase-Outs
The income thresholds for phasing out the credit are now permanent.
- For single filers: phase-out begins at $200,000 of modified adjusted gross income (MAGI).
- For joint filers: phase-out begins at $400,000 of MAGI.
Refundable Credit Portion Made Permanent
The refundable portion of the CTC—available to taxpayers who meet certain requirements—has also been made permanent. This ensures that eligible households may continue to receive a portion of the credit even if their total tax liability is less than the credit amount.
Nonrefundable Credit for Other Dependents
A $500 nonrefundable credit is now permanently available for each dependent who does not qualify under the child tax credit rules, such as older children or adult dependents.
New Identification Requirements
Starting in 2025, taxpayers must provide a work-eligible Social Security number for each qualifying child, as well as for the taxpayer and their spouse (if filing jointly), in order to claim the credit.

These changes make the CTC a more defined and reliable part of long-term family tax planning. With fixed income thresholds and permanent benefit levels in place, families can more confidently evaluate how the credit fits into their broader tax picture.

What This Means for Your Financial Planning

The tax-related changes in the OBBBA offer increased clarity and planning stability. With key provisions now set in place—some permanently, others for the next several years—this may be an ideal time to revisit core elements of your financial and estate plans:

Estate Planning:
The permanent $15 million exemption level may influence your approach to long- term wealth transfer. Reviewing gifting strategies, trust structures, and charitable contributions may be appropriate.
Retirement and Fixed-Income Strategies:
If you’re over 65 and within the eligible income range, the new $6,000 deduction may affect your tax planning. Retirees may benefit by adjusting income draw strategies to remain within qualifying thresholds.
Tax-Efficient Giving and Investments:
The continuation of higher standard deductions and permanent child tax credits can influence how you time deductions, charitable gifts, and investment decisions over time.
Implications of SALT Deduction Changes:
While Ohio isn’t typically categorized as a high-tax state, many residents pay local income taxes or have higher property values that could push them above the old $10,000 SALT deduction cap. For those who itemize and meet the income requirements, the temporary expansion to $40,000 may create new opportunities for tax savings between now and 2029.

Let’s Go Further Together

When the tax code changes, even experienced taxpayers can feel unsure about what comes next. What deductions still apply? What strategies no longer make sense? And most importantly: how do you move forward with clarity and confidence?

That’s where we come in.

At LCNB, we believe your financial plan should reflect not just where you’ve been, but where you’re going. The changes in the One Big Beautiful Bill Act touch everything from everyday expenses to long-term legacy plans. Whether you’re navigating retirement, raising a family, building wealth, or simply trying to make smart decisions for the future, it’s worth taking a closer look.

Our team is here to walk through these updates with you—calmly, clearly, and at your pace. We can help you evaluate what’s changed, what matters most for your situation, and what steps can strengthen your plan going forward.

If you’d like to learn more or talk through your next chapter, visit lcnb.com/wealth- journey to start the conversation.

Financial life can get complicated. But you don’t have to figure it out alone. We’re here when you need us.