Whether you’re a small business owner, a real estate professional, retiree, or just a W-2 employee – the 2025 tax changes may affect you more than you think. With the passing and implementation of the One Big Beautiful Bill Act (OBBBA), there are several changes to now be considered with the end of the year right around the corner.
The first change and item I wanted to bring to your attention is the change in the State and Local Tax (SALT) deduction limitation.
To explain what this is, SALT is an itemized deduction on Schedule A that can include state and local income (or sales) taxes and real-property taxes paid during the year. Since 2018 this deduction has been capped at $10,000 — an amount many taxpayers easily exceed — and any amount above the $10,000 was lost for good with no tax benefit derived.
That limitation has been increased to $40,000 for tax years 2025–2029 (please note that if you are Married Filing Separately, the limitation is $20,000), with a phase-out range starting once you reach $500,000 of Modified Adjusted Gross Income (MAGI). If your MAGI is above $600,000, then your SALT limitation goes back to the previous $10,000 cap.
To summarize:
This change should open the door for more taxpayers to itemize their deductions, meaning there may be more tax savings on the table.
For example, let’s say you are Married Filing Jointly and earn $300,000, paying $15,000 in state income tax and $20,000 in property taxes. Previously, you were limited to $10,000 for SALT, losing $25,000 in potential deductions. For 2025–2029, you’ll be able to deduct the full $35,000.
With the 2025 standard deduction at $31,500, you’d already be itemizing — giving you more flexibility for year-end planning. Add a mortgage with $10,000 in interest and $1,000 in charitable donations, and your deductions increase even more.
For tax years 2018 – 2024:
For tax years 2025 – 2029:
As you see, with the OBBBA you now have an additional $14,500 deduction ($46,000 – $31,500) to help offset your income for this year, which could provide significant tax savings.
Because you’re itemizing, each additional deductible dollar — like charitable giving — can now reduce your tax liability based on your marginal rate (10–37%). So, getting to feel charitable around the holidays and saving money on taxes? Sign me up!
The second major change is the return of 100% bonus depreciation — a huge benefit for small business owners.
This provision allows you to fully deduct the cost of new business assets in the year they’re purchased. Eligible assets for 100% bonus must be placed in service AFTER January 19, 2025.
Example:
If you’re an electrician who decides in December to replace aging work trucks, as long as you take delivery of the new trucks before year-end, you can deduct the entire cost (even if financed).
This strategy can improve cash flow — you may spend little upfront while recognizing major tax savings. It can also free up funds to help the business operate more smoothly or for business expansion.
In short, the return of 100% bonus depreciation offers valuable planning opportunities for business owners. Just remember that some states may not conform to federal rules, so check with your tax professional before making major purchases, as they will be able to provide more personalized strategies and consultation.
Additional Deduction for Seniors
Vehicle Loan Interest Deduction
New Deductions for Overtime and Tips
Child Tax Credit Increase
The 2025 tax year brings meaningful opportunities for savings and strategy under the OBBBA — but also new complexities. At Equilibrium Wealth Advisors, we’re happy to help you navigate these complexities. Contact us today at (412) 991-1385 to see how our services can help you save.
Disclaimer: This article is for general informational purposes only and is not intended as tax advice.
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