The Big Beautiful Bill isn’t just good news for business owners– it’s a game-changer for individual taxpayers. With lower tax rates now permanent, a set Child Tax Credit, and even temporary tax-free treatment for tips and overtime, individual taxpayers finally get some consistency. This legislation reshapes how everyday Americans file, plan, and keep more of what they earn. Here’s how these changes could impact your tax strategy moving forward.
Tax Rates Stay Lower– For Good
One of the most significant wins for individual taxpayers in the final tax bill is the preservation of current income tax rates. Originally scheduled to increase in 2026, the lower rates established by the 2017 Tax Cuts and Jobs Act are now set to become permanent. This means the top rate holds at 37% instead of climbing to 39.6%, and lower brackets, like 12%, stay below 15%. These stable rates provide much-needed predictability for tax planning and budgeting over the long term. It’s not just a policy win– it’s a foundation for lasting financial security for taxpayers across almost every bracket.
Child Tax Credit Locked at $2,200
The Child Tax Credit just got an upgrade with lasting impact. Under the new bill, the credit increases to $2,200 per child (up from $2,000) and more importantly, it won’t drop back down next year as previously scheduled. It’s also now permanently adjusted for inflation, safeguarding its value in the years ahead. This change provides families with a bit more breathing room and greater certainty when planning for the future. While the credit doesn’t jump significantly, even a small increase is a step toward long-term stability for millions of households.
Tax-Free Tips, Overtime, and Social Security
A major win for service workers, hourly earners, and retirees: tips, overtime pay, and a portion of Social Security income will be tax-free for many individuals through 2028. Tips up to $25,000 and overtime pay up to $12,500 are excluded from taxable income for individuals earning less than $150,000 annually. Social Security income enjoys a similar tax break– up to $6,000 for individuals earning up to $75,000. By easing the tax burden on these supplemental earnings, the bill aims to support working-class and middle-income households that rely on multiple income streams to make ends meet.
Temporary SALT Cap Increase
The SALT deduction cap has been raised from $10,000 to $40,000 for most taxpayers, offering substantial relief to individuals in states with high property, income, and sales taxes. This increase can significantly reduce taxable income for many, especially those previously limited by the lower cap. However, the expanded deduction begins to phase out once income surpasses $500,000, gradually reducing the benefit for higher earners. With smart timing and strategy, taxpayers can make the most of the increased deduction to lower their overall burden.
The Key Takeaway?
The new law preserves lower tax rates, boosts key credits, and expands deductions– all designed to keep more money in taxpayers’ pockets. But many benefits phase out as income rises, so understanding where your income falls on these thresholds is essential to maximize on available opportunities and turn these changes into real financial gains. Take the time to update your projections, revisit your W-4, and ensure you’re positioned to capture all the benefits the Big Beautiful Bill has to offer. When the tax code opens a window, smart taxpayers step through it.
Ready to dive deeper into the bill and get strategic for 2025? Watch the full Main Street Business podcast episode with Mark and Matt for tips your CPA might be missing:
