(A Before & After Story)
When the One Big Beautiful Bill (OBBB) passed, many families wondered what it might mean for their taxes in real life. Let’s walk through a fictional example that might sound a lot like someone you know — maybe even you.
Meet Jake and Amanda Martinez
Jake (38) works as an operations manager for a logistics company in Houston, Texas. He earns $120,000 a year in W-2 wages and contributes $10,000 annually to his 401(k).
Amanda (36) is a busy mom and a successful realtor who runs her own S-Corp. Her business brings in $100,000 in profit each year, and she pays herself a W-2 salary of $40,000 for reasonable compensation.
They have two young children — Ethan (6) and Lily (2) — and own a modest rental property that nets about $3,000 a year after expenses and depreciation. The couple gives about $15,000 a year to their church and local charities.
Amanda’s SUV, a $45,000 vehicle she uses 90% for business, is financed, with $4,500/year in loan interest.
Like many Texas homeowners, their biggest local tax bill is property tax, not state income tax.
Their “Before OBBB” Tax Picture (2024 rules)
Before the OBBB changes, Jake and Amanda’s taxes looked something like this:
- Standard Deduction: $29,200 for Married Filing Jointly
- QBI Deduction: Limited to about $8,000 because of partial phaseouts
- Bonus Depreciation: Only 60% allowed in the first year for business assets like Amanda’s SUV
- Child Tax Credit: $2,000 per child, phaseouts starting at $110,000 of income
- SALT Deduction: $10,000 cap — limiting how much of their property taxes they could deduct
- Car Loan Interest: Not deductible
- Trump Savings Accounts: Not available yet
- Dependent Care Credit: Mostly out of reach because their income was above $43,000 phaseout threshold
Bottom line under 2024 rules:
Taxable income: ≈ $195,000
Federal tax: ≈ $28,000
Enter the OBBB – 2025 Rules Change the Game
In 2025, several provisions of the OBBB kick in, and they make a big difference for the Martinez familyi.
1. Wider Brackets & Bigger Standard Deduction
Their standard deduction jumps from $29,200 to $31,200, immediately shaving $2,000 off their taxable income before we even talk credits.
2. Full QBI Deduction Restored
Amanda’s S-Corp now gets the full $20,000 QBI deduction on her $100,000 in profit. If the OBBB weren’t in force, this deduction would be completely eliminated.
3. 100% Bonus Depreciation on Vehicles
If Amanda replaces her SUV in 2025, she can now write off 100% of the business portion in year one — and for the first time, also deduct $4,050 in business loan interest.
4. Child Tax Credit Boost
The Child Tax Credit rises from $2,000 to $2,200 per child, and the phaseout threshold for Married Filing Jointly jumps from $110,000 to $150,000. With their income, they now get the full $4,400.
5. SALT Cap Expansion
The SALT deduction cap rises from $10,000 to $40,000, allowing them to deduct more of their property tax bill.
With the income phaseout now starting at $125,000 instead of $15,000, they could capture up to 50% of qualifying dependent care expenses — potentially worth hundreds more.
Before & After Snapshot
|
|
2024 Rules (Before) |
2025 OBBB Rules (After) |
Change |
|
Standard Deduction |
$29,200 |
$31,200 |
+$2,000 |
|
QBI Deduction |
$0,000 (was set to expire in 2025) |
$20,000 |
+$20,000 |
|
Bonus Depreciation |
60% |
100% |
Larger write-offs sooner |
|
Child Tax Credit |
$4,000 |
$4,400 |
+$400 |
|
SALT Cap |
$10,000 |
$40,000 |
More deductible property taxes |
|
Car Loan Interest Deduction |
No |
Yes |
+$4,050 |
|
Dependent Care Credit |
Phased out |
Available |
New eligibility |
|
|
|
|
|
After OBBB (2025 rules):
Taxable income: ≈ $171,000
Federal tax: ≈ $23,500
Annual Savings: ≈ $4,500
How They’ll Use the Savings
Jake and Amanda have a plan. The $4,500 tax savings from OBBB will go straight into:
- $3,500 extra toward their Roth IRAs
- $1,000 toward their kids’ 529 plans for future education
They’re not just lowering their tax bill — they’re building long-term wealth. $4,500 may not sound huge, but if they invest this money in the S&P 500 and receive average growth, this equates to almost $80k at retirement age.
Takeaway for Families Like the Martinezes
The OBBB changes can deliver meaningful savings for middle- to upper-middle-income families, especially those with:
- A small business or S-Corp
- Young children
- Significant property taxes
- Large business purchases on the horizon
The key is planning early — many of these benefits require strategic timing of income, purchases, and contributions.
