For seven years, most taxpayers could hit autopilot. Take the standard deduction, ignore the shoebox full of receipts, call it a day. It was simple. Too simple.
But the One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, broke that routine. It didn’t nudge a few numbers. It blew up the math that made the standard deduction the default for most Americans.
If you’re still cruising toward the standard deduction this season, you might walk right past thousands of dollars in savings.
The Standard Deduction Got Bigger. Itemizing Got Better.
OBBBA raised the standard deduction far above the usual inflation bump.
- Single: $15,750
- Married Filing Jointly: $31,500
- Head of Household: $23,625
For many people, that’s still a solid deal. But not for everyone.
Seniors Get a Massive Boost
OBBBA added a temporary $6,000 bonus deduction for anyone 65 or older. It phases out at $75,000 MAGI (single) or $150,000 (joint).
A married couple, both over 65, earning $140,000 can take about $47,000 without lifting a finger. For many retirees, itemizing won’t come close. The standard deduction becomes a brick wall you can’t climb.
SALT Is Back, And It Changes Everything
For taxpayers under 65, the real story is the SALT deduction. The old $10,000 cap made itemizing pointless for most homeowners in high-tax states. OBBBA blows the cap open to $40,000 for 2025.
If you live in New York, New Jersey, California, Illinois, Connecticut, or any high-property-tax suburb, this is a game changer.
Example: You pay $18,000 in property taxes and $12,000 in state income taxes.
Before: You deducted $10,000.
Now: You deduct $30,000. Before adding mortgage interest. Before charity. Hitting $50,000 in itemized deductions is suddenly easy.
The $500K Phase-Out
The expanded SALT cap shrinks once your MAGI hits $500,000 and disappears at $600,000. This is an “upper-middle” tax break, not a top-earner benefit.
Don’t Mix Up “Above-the-Line” Deductions
OBBBA added several juicy deductions that don’t belong in your itemized tally:
- Up to $25,000 in qualified tips
- Up to $12,500 or $25,000 in overtime pay
- Up to $10,000 in car loan interest on new U.S.-assembled personal vehicles
These apply whether you itemize or not. Don’t let them push you into the wrong choice.
Don’t Double Count New Deductions
If you’re under 65 and live in a high-tax state, dust off the shoebox. Itemizing might save you more in 2025 than any year since 2017.
If you’re over 65, the standard deduction is almost unbeatable. Don’t force itemizing when the bonus deduction already puts you way ahead.
Check your MAGI. If you’re under $500,000 and the SALT numbers look big, run both calculations. The difference could pay for your next vacation.
