On July 4, 2025, the enactment of the One Big Beautiful Bill Act (OBBBA) introduced changes to federal income tax.
Many of these changes affect U.S. citizens, lawful permanent residents, and other residents-whether they live inside or outside the United States.
Many of the changes in the OBBBA made provisions in the 2017 Tax Cuts and Jobs Act (TCJA) permanent, whilst some are temporary. Yet other changes, such as the Clean Energy provisions, are being ended earlier than they were set to under TCJA, in late 2025 and 2026.
Where changes have been made permanent, there is a flow-on from prior years under the TCJA, with many provisions indexed annually for inflation.
Two notable changes affecting U.S. persons with a foreign element include the requirement to have a SSN to claim some credits and deductions (including the Child Tax Credit), and a 1% remittance tax on cash transfers out of the United States – excluding electronic funds transfers.
Changes in the OBBBA that affect individuals are as follows. Some are relevant to U.S. citizens and residents residing in the U.S. only. Those changes are included in recognition that many U.S. expats have relatives and dependents residing in the U.S, or may be moving into or out of the U.S.
| Before OBBB Act passed | After OBBB Act passed |
| Individual federal income tax rates of 10,12,22,24,32,35,37% set to expire. | Individual federal income tax rates of 10,12,22,24,32,35,37% made permanent. |
| Standard deduction doubling was set to expire. | Standard deduction doubling has been made permanent. |
| The personal exemption repeal was set to expire. | The personal exemption repeal was made permanent. |
| The casualty loss deduction limitation of losses to losses from a federally declared disaster area was set to expire. | The casualty loss deduction limitation of losses to losses from a federally declared disaster area was made permanent. |
| The casualty loss deduction was to federally declared disaster areas with no recognition of state-declared disaster areas. | The casualty loss deduction is now for both federally declared and state-declared disaster areas. |
| The estate and gift tax exemptions, more than doubled under TCJA, were set to expire. | The estate and gift tax exemption levels were made permanent, indexed annually for inflation. |
| The reduction in debt from $1m to $750k upon which mortgage interest deduction could be claimed was set to expire. | The reduction in debt from $1m to $750k upon which a mortgage interest deduction can be claimed was made permanent. |
| The repeal of home equity indebtedness interest deduction was set to expire. | The repeal of home equity indebtedness interest deduction has been made permanent. |
| Permanent repeal of moving expense deduction, except for the armed forces, was set to expire. | Permanent repeal of moving expense deduction, except for the armed forces, has been made permanent. |
| No separate category of “intelligence community” existed for the moving expense deduction. | New moving expense deduction for “intelligence community” with no definition yet. |
| Limitation on state and local tax deduction of $10k was set to expire. | State and local tax deduction has been raised from $10k to $40k, will be adjusted annually by 1% through 2029, reverts to $10k in 2030. |
| $500 credit for other dependents was set to expire. | $500 credit for other dependents has been made permanent. |
| Qualified business income deduction of 20% on qualified business income was set to expire. | Qualified business income deduction has been made permanent at 20%, phase out at $75k/$150k joint. |
| No minimum QBI deduction. | Minimum QBI deduction $400 inflation adjusted minimum with at least $1k of QBI. |
| Rollovers provisions from qualified tuition programmes to ABLE accounts were set to expire. | Rollovers provisions from qualified tuition programmes to ABLE accounts have been made permanent. |
| American Opportunity Tax Credit and the Lifetime Learning Credit could be claimed with an ITIN or a SSN. | American Opportunity Tax Credit and the Lifetime Learning Credit require SSNs. |
| Child tax Credit of up to $2k per qualifying child under 17 was set to expire. | Child tax Credit has been increased to $2.2k for 2025, indexed for inflation. Phase-in at $2.5k earned income, phaseout at $200k/$400k joint. |
| Child tax credit $1.4k refundable credit per qualifying child under 17 was set to expire. | Child tax credit $1.4k refundable credit has been made permanent. |
| Repeal of overall itemized deduction limitation was set to expire. | Repeal of overall itemized deduction limitation has been made permanent. |
| No overall reduction of itemized deductions. | Reduction of itemized deductions by 2/37ths of the lesser of: Amount of itemized deductions and Amount of taxable income that exceeds start of 37% tax bracket. |
| Repeal of miscellaneous itemized deductions was set to expire. | Repeal of miscellaneous itemized deductions has been made permanent. |
| AMT exemption phaseout thresholds of $500k/$1m joint were set to expire. | AMT exemption phaseout thresholds of $500k/$1m joint have been made permanent. |
| No deduction for tips received. | New deduction for tips received 2025-2028, reported to the IRS of up to $25k, qualifying criteria exists. |
| No deduction for overtime. | New deduction for overtime received 2025-2028, reported to the IRS on W-2 or 1099 of up to $12.5k/$25k joint. Phase-out starts at MAG of $100k/$200k joint. |
| No car loan interest deduction. | New car loan interest deduction 2025-2028 capped at $10k on U.S. assembled vehicles. Phase-out at MAGI of $100k / $200k at 200 for each $1k over threshold. Available to itemizers and non-itemizers. |
| Additional standard deduction for taxpayers aged 65 or older of $1,600 (single) or $1,300 for joint filers, per spouse aged 65 or older was set to expire. | New Senior Deduction for taxpayers aged 65 or older available 2025 through 2028 of $6k, phased out at MAGI of $75k/$150k at a rate of 6%, to $175k/$250k joint. |
| No Trump accounts existed. | New Trump accounts can be set up with $5k p.a. maximum contributions from birth to age 18, withdrawals can commence at age 18, SSN is required, $1k initial credit, employer can contribute up to $2.5k, can roll over to ABLE accounts, contributions deductible, distributions taxable. |
| Child and dependent care credit percentage of 35% was set to expire. | Child and dependent care credit percentage of 35% increases to 50%. Phase down with AGI of $75k/$150k, no phase down past 20%. Employer dependent care assistance, $5k to $7.5k. |
| No federal remittance transfer tax imposed on individuals transferring cash out of the United States. | Remittance transfer tax of 1% on transfer of cash, money orders, cashier’s check or similar financial instruments from the United States to another country. Does not include electronic funds transfers. |
| 60% charitable contribution deduction was set to expire. | 60% charitable contribution deduction has been made permanent. |
| No above the line deduction for charitable contributions. | Charitable contribution deduction new deduction above the line of up to $1k/$2k joint and is permanent. |
| No floor on cash contributions to qualified charities but subject to 60% of AGI. | New .5% of AGI floor for individual charitable contribution deductions. |
| Clean Vehicle Credit was set to expire in 2032. | Clean Vehicle Credit terminates on 30 Sep 2025. |
| Residential Clean Energy Credit was set to expire in 2034. | Residential Clean Energy Credit terminates on 31 Dec 2025. |
| Energy-efficient home improvement credit was set to expire in 2032. | Energy-efficient home improvement credit terminates on 31 Dec 2025. |
Disclaimer:
This article is intended for general informational purposes only and does not constitute legal, financial, or tax advice. International taxation is complex and subject to change, and the implications can vary significantly based on individual circumstances, jurisdictions, and treaties in force.
Readers are strongly encouraged to consult with a qualified tax advisor or legal professional before making decisions based on the information herein. While every effort has been made to ensure accuracy, the author and publisher accept no liability for any errors or omissions, nor for any loss incurred in reliance on this content.
References to specific countries, regulations, or filing procedures are current as of the publication date and may not reflect the most recent developments.
