Does OBBBA Bring Big Changes?

On July 4^th, 2025, One Big Beautiful Bill Act (OBBBA) was signed into law by President Donald Trump. The legislation has been branded as the president’s signature tax and economic policy to help working class Americans. The question you, as the reader, are asking is if you will benefit from the new law?

Deductions

In President Trump’s first term, he had implemented sweeping tax changes under the Tax Cuts and Jobs Act (TJCA). One of the biggest changes made was to standard and itemized deductions. Everyone has always been entitled to the standard deduction, which is a fixed amount that every taxpayer is eligible to take and is determined by age and filing status. The standard deduction was increased while limitations were put on calculating the itemized deductions.

Itemized Deductions

Previously, taxpayers were able to deduct their total state, local, and property taxes (SALT) paid, medical expenses (subject to limitations), mortgage and investment interest, charitable contributions, casualty losses, and most notably for professional athletes – business related expenses and investment advisor fees. The TJCA limited what could be included as an itemized deduction to medical expenses (with more limitations), SALT, which were capped at $10,000, and charitable contributions. As a result of these changes, most taxpayers began using the standard deduction.

These provisions were set to expire automatically in 2025. One of the biggest impacts on individual taxpayers in OBBBA is it keeps those provisions in place with two changes – one to SALT and another to charitable contributions.

SALT

First, taxpayers who earn under $500,000 can deduct up to $40,000 in SALT but those above $600,000 are still limited to $10,000 (taxpayers earning between $500,000 and $600,000 can deduct more than $10,000 but less than $40,000 depending on their income).

Charitable Contributions

The ability to deduct charitable contributions changes starting in 2026. First, taxpayers who take the standard deduction will be able to deduct up to $1,000 ($2,000 if married) of charitable contributions as an additional deduction.

However, those that itemize will have limitations imposed on how much they will be able to include their itemized deductions based on their income.

Itemized Deductions Conclusion

In essence, professional athletes continue to be hurt by the limitation of itemized deductions. The limitation of SALT taxes exasperated the potential earning disparity between teams that play in no income tax states to those in high income tax states.

Because all NHL players earn more than $600,000 per year, they will face the same SALT cap of $10,000. They will further be hurt by charitable contributions being limited. Going forward, it would benefit high earners who itemize to group as many contributions in the same year as possible and give less frequently instead of giving smaller amounts every year.

Other Deductions

Car Interest

From 2025 through 2028 people who purchase a car for personal use may be eligible to deduct interest payments. To be eligible, the car must weight under 14,000 pounds and have final assembly take place in United States. Additionally, there is an income limit of $150,000 ($250,000 if married) to be able to take any deduction.

To support the deduction in 2025, you will need to provide your loan/purchase agreement along with the vehicle’s VIN. For subsequent tax years, the lender will provide an official tax statement.

Clean/Green Energy

Taxpayers who bought an electric vehicle prior to September 30^th, 2025 are/were eligible for a tax credit up to $7,500. Any vehicle purchase after that date was/is no longer eligible for the credit.

Beginning in 2026, there are no deductions or tax credits available for energy efficient/green energy home improvements.

Child Tax Credit

The child tax credit has been increased to $2,200 per child under the age of 17. It is available to married couples who make under $400,000 per year or single individuals who make under $200,000 per year.

Conclusion

Many of our tax clients will not see any substantial benefits from the passage of OBBBA and are hurt by the bill keeping business related expenses from being deductible. With SALT still limited to a $10,000 deduction for professional athletes because of their income, it remains critical to proactively plan if you are traded or sign with a new organization to ensure you are putting yourself in the most advantageous tax situation. Savings will continue to come from a reduction in state taxes and the disparity between high income and no income tax states remains high.