The Tax Code Just Changed. Here's How.

Understanding how these changes might impact you.

Jul 30, 2025

The One Big Beautiful Act (OBBA) is a far-reaching bill that reshapes nearly every sector and institution in American society. Its changes to the tax code alone represent one of the most consequential rewrites of federal policy in a generation. MurMur has been tracking its full implications and will continue to report on the bill’s broader impact. Today, we focus on the tax provisions that could directly affect your personal finances.

Provisions Made Permanent

Individual Tax Rate Reductions: The lower income tax rates introduced in 2018 are now permanent, with additional inflation indexing for the three lowest tax brackets. These changes offer modest savings for low- and middle-income earners, while the bulk of benefits continue to flow to top earners.
Standard Deduction Increased: The larger standard deduction, doubled in 2018, remains in place, reducing taxable income for many filers but also limiting the number of people who itemize deductions.
Child Tax Credit Raised: The credit increases to $2,200 per child, with automatic annual inflation adjustments. However, OBBA does not expand refundability, meaning lower-income families who don’t owe taxes may still not receive the full credit.
SALT Deduction Cap Maintained at $10,000: The cap on the State and Local Tax (SALT) deduction remains, disproportionately affecting residents in high-tax states like New York, California, and Illinois.

Temporary New Provisions (Through 2028)

No Tax on Tips: Income earned from tips is exempt from federal income tax through 2028, capped at $25,000 annually. This provision phases out for individuals earning over $150,000.
No Tax on Overtime Pay: Overtime wages are exempt from tax up to $12,500 annually, benefiting hourly workers.
Senior Tax Deduction: An additional $4,000 deduction is now available for seniors aged 65 and over. This begins to phase out for seniors earning less than $75,000.
Auto Loan Interest Deduction: Up to $10,000 in interest on new car loans can now be deducted through 2028. Eligible purchases must be for new vehicles under 14,000 pounds and manufactured in the U.S. The benefit phases out for individuals with incomes above $100,000.
Charitable Deduction for Non-Itemizers: OBBA restores a limited charitable deduction for those who take the standard deduction, $1,000 for single filers and $2,000 for joint filers.
Newborn Savings Accounts: Beginning in 2026, every child born in the U.S. will receive a $1,500 federally seeded “Now Savings Account.” These funds are restricted to use for education, home ownership, or retirement and grow tax-free.

So What Does It All Mean For You?

It depends on how much you earn, where you live, and whether you own a home, work hourly, or have children. But the overall shape is clear:

If you’re wealthy, OBBA locks in years of windfall tax savings.
If you’re working- or middle-class, it offers a few temporary perks, but does little to address long-term inequality.
If you live in a blue state, the continued SALT cap likely means higher effective taxes.
If you're hoping for fairer tax reform, one that invests in public goods rather than codifies corporate giveaways, OBBA is not that bill.

The Tax Foundation has an excellent resource on the tax implications for taxpayers. Click here and scroll down to the section for “Individuals”. The IRS will be releasing regulations that will guide the implementation of these provisions, and we will keep you posted as this information becomes available. OBBA will also directly impact individuals and families who participate in Medicaid, purchase their insurance in the Marketplace, and receive SNAP. While each state will establish its own rules, MurMur will share important information as these programs are implemented.

Final Thoughts

When you step back from considering how these new tax laws impact you directly, we all need to keep in mind the broader implications. At MurMur, we will continue to explore the impact of the new tax laws and other provisions of the OBBA on our economy, health care, education, the environment, and the next generation. Let us know if there is a particular aspect of the OBBA that you would like us to address.