The One Big Beautiful Bill Act made permanent changes to the tax code and introduced short-term tax breaks with strict limits until 2028 or 2029. The act temporarily boosts the state and local tax deduction cap to $40,000 from 2025 to 2029, benefiting married couples and singles.

To maximize benefits, compare total itemized deductions, including mortgage interest and state taxes, to the standard deduction. Watch income levels, as the $40,000 SALT cap phases out for MAGI over $500,000, reverting to $10,000 at $600,000. The act includes temporary above-the-line deductions for middle-income workers.

Temporary deductions like qualified overtime pay, tips income, and auto loan interest have strict limits based on MAGI. For example, the overtime pay deduction is capped at $25,000 for married couples and phases out at $300,000 MAGI. Similarly, the tips income deduction phases out at $300,000 for married couples.

The OBBBA also offers a temporary deduction for seniors up to $12,000 for married couples and $6,000 for singles, but it phases out quickly for higher earners. Beware of the MAGI trap, as deductions disappear for MAGI over $150,000 for couples and $75,000 for singles.

For 2025, plan to influence your MAGI and consider 2026 income to avoid phaseouts. Smart planning can help avoid unexpected limitations and phaseouts, ensuring significant tax savings. Be prepared and consult with an advisor to navigate the changing tax landscape effectively.

Read more at Yahoo Finance: 4 Smart Moves to Cut Your 2025 Tax Bill Under New Rules