July was a busy month for taxes! Congress passed the “One Big Beautiful Bill,” a major overhaul of the tax code. This legislation makes many provisions from the 2017 tax cuts permanent, adds new temporary deductions, and affects various other economic areas. In addition, Wisconsin passed a bill that will impact those receiving retirement income. We’ll have to wait until later this year to see which, if any, of the new federal tax changes Wisconsin will adopt.
Here’s a recap of what will affect your 2025 income taxes:
| Tax provision | New tax law | Prior law | |
| IRS | State & Local Tax itemized deduction (SALT) | $40,000 cap, phased out at income over $500,000 MFJ; reverts to $10,000 afterward | $10,000 cap |
| IRS | Section 179 expense for business equipment | $2.5M expensing limit; $4M phase-out threshold | $1M expensing limit; $2.5M phase-out threshold |
| IRS | Bonus Depreciation | Reinstated and extended to 100% | 40% of qualified property |
| IRS | Estate tax exemption | $15M per individual | $13.99M per individual (was to revert to $5M) |
| IRS | Child tax credit (under 18) | $2,200 per child | $2,000 per child |
| IRS | No tax on tips (after standard deduction) | Up to $25,000; phases out at $150,000 single / $300,000 married | Not applicable |
| IRS | No tax on overtime (after standard deduction) | Up to $12,500 per person; phases out at $150,000 single / $300,000 married | Not applicable |
| IRS | Auto loan interest (after standard deduction) | $10,000 cap for U.S.-made vehicles; phase-out at $100K single / $200K married | Not applicable |
| IRS | Deduction for seniors (after standard deduction) | $6,000 for age 65+; phased out at $75K single / $150K married | Not applicable |
| WI | WI income deduction for seniors 67+ | Up to $24,000 each from qualified retirement plans & IRAs; will lose tax credits | Not applicable |
Other changes to note:
- The bill also adjusted expiration dates for certain energy tax credits:
- Purchasing an electric vehicle: available through 9/30/2025
- Installing EV charging equipment: available through 6/30/2026
- Home improvements: available through 12/31/2025
This bill makes tax planning a bit easier by removing uncertainty around provisions that were set to expire and revert to 2017 rules.
Here’s what’s now permanent:
- Individual tax rates will not increase in 2026
- The Qualified Business Income deduction remains in place (though not made permanent)
- Higher standard deductions are now permanent
- Personal exemptions are permanently eliminated
- Miscellaneous itemized deductions remain eliminated (except for teachers)
We are already incorporating these 2025 tax law changes into our planning. There are additional provisions that will impact future years, and we will continue to include updates in our newsletter. We are still awaiting more IRS guidance on the details.
One final note: the IRS has announced that the 2025 tax return filing season will begin on February 16, 2026—about 20 days later than usual.
Mary Guldan-Lindstrom, CPA