The One Big Beautiful Bill was signed by President Trump on July 4, 2025. Here are some of the tax changes.
The State and Local Tax Deduction (SALT): Previously capped at $10,000. Now capped at $40,000 for 2025 for taxpayers with adjusted gross income of under $500,000. Those with income over that will have a limit that phases down, but no less than $10,000. Pass through entity (PTE) tax elections for partnerships and S-corporations are still allowed.
New Senior Deduction: An additional $6,000 per individual over 65 from 2025 to 2028. The deduction is reduced for those with adjusted gross income over $75,000 ($150,000 married filing joint).
No Tax on Tips: Temporary deduction for tax years 2025 – 2028 of up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. Allowed in addition to the standard deduction. Deduction is limited for taxpayers with adjusted gross income over $150,000 ($300.000 if married filing joint.
No Tax on Overtime: Temporary deduction of up to $12,500 ($25,000 in the case of a joint return) for qualified overtime compensation received by an individual for tax years 2025 - 2028. Allowed in addition to the standard deduction. Deduction is limited for taxpayers with adjusted gross income over $150,000 ($300.000 if married filing joint).
Car Loan Interest: For the years 2025 through 2028, eligible buyers may deduct up to $10,000 of interest paid on new auto loans if the vehicle is assembled in the U.S. The deduction will be reduced and phase out for taxpayers with income more than $100,000 ($200,000 if married taxpayers filing jointly).
Child Tax Credit: Increases to $2,200 for 2025. $1,400 is refundable if credit exceeds taxable income.
Qualified Business Income Deduction: Remains at 20% but is now a permanent deduction. It was previously set to expire.
Estate Tax Exemption: Increased to $15 million ($30 million married filing joint)
Itemized Deduction Limitation: Now reduced by 2/37th of the higher of itemized deductions or taxable income that exceeds the start of the 37% tax bracket. For most people the reduction amounts to $740 per $10,000 of itemized deductions.
Employee Bicycle Commuting Reimbursements Taxable: The bill permanently excludes qualified bicycle commuting reimbursements from the list of qualified transportation fringe and other commuting benefits, making them taxable to employees.
Moving Expense Deduction: Permanently eliminates deduction for moving expenses, except for members of the armed forces and certain members of the intelligence community.
Gambling losses: Now limited to 90% of the loss amount. Losses are deductible as an itemized deduction only to the extent of gains from gambling during the tax year.
Student Loan Debt Discharge: The bill makes permanent the exclusion from gross income student loans that are discharged on account of death or disability.
Trump Accounts: Tax-free savings accounts for minors, called Trump accounts, a form of individual retirement account (IRA) for the exclusive benefit of individuals under 18. Contributions up to $5,000/yr. can be made in calendar years before the beneficiary turns 18 and distributions with tax free earnings can be made starting in the calendar year the beneficiary turns 18. Employers may contribute to employee accounts. The employee is not taxed on these contributions. A contribution pilot program provides a $1,000 tax credit for opening a Trump account for a child born between Jan. 1, 2025, and Dec. 31, 2028. The bill appropriates $410 million, to remain available through Sept. 30, 2034, to fund Trump accounts.
New Charitable Contribution Deduction: A new deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for cash charitable contributions. Not required to itemize deductions. May claim in addition to the standard deduction. Personal contributions are reduced by 0.5% of the actual contributions. Corporate contributions are reduced by 1% of the corporation’s taxable income and may not exceed10% of taxable income.
Contributions to Scholarship-Granting Organizations: Allows a credit of the greater of $5,000 or 10% of adjusted gross income for charitable contributions to scholarship-granting organizations. Caveat: The credit comes with a $4 billion annual cap (starting in 2027), and the credit will be allocated on a first-come, first-served basis, up to that cap.
Energy Credits: Discontinued for Federal (State may still allow these credits) as follows:
• Energy-efficient home improvement credit and residential clean energy credit (the solar credits) terminates after Dec. 31, 2025
• Previously owned clean vehicle credit terminates after Sept. 30, 2025
• Clean vehicle credit terminates for vehicles acquired after Sept. 30, 2025
• Qualified commercial clean vehicle credit terminates after Sept. 30, 2025
• Alternative fuel vehicle refueling credit terminates after June 30, 2026
• Energy-efficient commercial buildings deduction terminates for property the construction of which begins after June 30, 2026
• New energy-efficient home credit terminates after June 30, 2026
Bonus Depreciation: Permanently extends the bonus depreciation deduction, allowing a deduction of 100% of property acquired and placed in service on or after January 19, 2025.
Paid Family and Medical Leave Credit: Previously set to expire, is now a permanent credit for employers.
Form 1099 Reporting Threshold: Increases the information-reporting threshold to $2,000 in a calendar year (from $600).
Third-party Network Transaction 1099-K Reporting Threshold: Previously scheduled to be reduced to $600, the annual reporting threshold reverts to $20,000 and or 200 transactions.
Disclaimer: The above information does not represent the full Bill and may be subject to change and interpretation. The State of Hawaii may or may not follow these changes.
The State and Local Tax Deduction (SALT): Previously capped at $10,000. Now capped at $40,000 for 2025 for taxpayers with adjusted gross income of under $500,000. Those with income over that will have a limit that phases down, but no less than $10,000. Pass through entity (PTE) tax elections for partnerships and S-corporations are still allowed.
New Senior Deduction: An additional $6,000 per individual over 65 from 2025 to 2028. The deduction is reduced for those with adjusted gross income over $75,000 ($150,000 married filing joint).
No Tax on Tips: Temporary deduction for tax years 2025 – 2028 of up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. Allowed in addition to the standard deduction. Deduction is limited for taxpayers with adjusted gross income over $150,000 ($300.000 if married filing joint.
No Tax on Overtime: Temporary deduction of up to $12,500 ($25,000 in the case of a joint return) for qualified overtime compensation received by an individual for tax years 2025 - 2028. Allowed in addition to the standard deduction. Deduction is limited for taxpayers with adjusted gross income over $150,000 ($300.000 if married filing joint).
Car Loan Interest: For the years 2025 through 2028, eligible buyers may deduct up to $10,000 of interest paid on new auto loans if the vehicle is assembled in the U.S. The deduction will be reduced and phase out for taxpayers with income more than $100,000 ($200,000 if married taxpayers filing jointly).
Child Tax Credit: Increases to $2,200 for 2025. $1,400 is refundable if credit exceeds taxable income.
Qualified Business Income Deduction: Remains at 20% but is now a permanent deduction. It was previously set to expire.
Estate Tax Exemption: Increased to $15 million ($30 million married filing joint)
Itemized Deduction Limitation: Now reduced by 2/37th of the higher of itemized deductions or taxable income that exceeds the start of the 37% tax bracket. For most people the reduction amounts to $740 per $10,000 of itemized deductions.
Employee Bicycle Commuting Reimbursements Taxable: The bill permanently excludes qualified bicycle commuting reimbursements from the list of qualified transportation fringe and other commuting benefits, making them taxable to employees.
Moving Expense Deduction: Permanently eliminates deduction for moving expenses, except for members of the armed forces and certain members of the intelligence community.
Gambling losses: Now limited to 90% of the loss amount. Losses are deductible as an itemized deduction only to the extent of gains from gambling during the tax year.
Student Loan Debt Discharge: The bill makes permanent the exclusion from gross income student loans that are discharged on account of death or disability.
Trump Accounts: Tax-free savings accounts for minors, called Trump accounts, a form of individual retirement account (IRA) for the exclusive benefit of individuals under 18. Contributions up to $5,000/yr. can be made in calendar years before the beneficiary turns 18 and distributions with tax free earnings can be made starting in the calendar year the beneficiary turns 18. Employers may contribute to employee accounts. The employee is not taxed on these contributions. A contribution pilot program provides a $1,000 tax credit for opening a Trump account for a child born between Jan. 1, 2025, and Dec. 31, 2028. The bill appropriates $410 million, to remain available through Sept. 30, 2034, to fund Trump accounts.
New Charitable Contribution Deduction: A new deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for cash charitable contributions. Not required to itemize deductions. May claim in addition to the standard deduction. Personal contributions are reduced by 0.5% of the actual contributions. Corporate contributions are reduced by 1% of the corporation’s taxable income and may not exceed10% of taxable income.
Contributions to Scholarship-Granting Organizations: Allows a credit of the greater of $5,000 or 10% of adjusted gross income for charitable contributions to scholarship-granting organizations. Caveat: The credit comes with a $4 billion annual cap (starting in 2027), and the credit will be allocated on a first-come, first-served basis, up to that cap.
Energy Credits: Discontinued for Federal (State may still allow these credits) as follows:
• Energy-efficient home improvement credit and residential clean energy credit (the solar credits) terminates after Dec. 31, 2025
• Previously owned clean vehicle credit terminates after Sept. 30, 2025
• Clean vehicle credit terminates for vehicles acquired after Sept. 30, 2025
• Qualified commercial clean vehicle credit terminates after Sept. 30, 2025
• Alternative fuel vehicle refueling credit terminates after June 30, 2026
• Energy-efficient commercial buildings deduction terminates for property the construction of which begins after June 30, 2026
• New energy-efficient home credit terminates after June 30, 2026
Bonus Depreciation: Permanently extends the bonus depreciation deduction, allowing a deduction of 100% of property acquired and placed in service on or after January 19, 2025.
Paid Family and Medical Leave Credit: Previously set to expire, is now a permanent credit for employers.
Form 1099 Reporting Threshold: Increases the information-reporting threshold to $2,000 in a calendar year (from $600).
Third-party Network Transaction 1099-K Reporting Threshold: Previously scheduled to be reduced to $600, the annual reporting threshold reverts to $20,000 and or 200 transactions.
Disclaimer: The above information does not represent the full Bill and may be subject to change and interpretation. The State of Hawaii may or may not follow these changes.