NEWS & RESOURCES

Authored by: Charlie Miracle, CPA, Wealth Advisor

What Washington Taxpayers Should Know About the “One Big Beautiful Bill Act”

As tax season approaches, you may have heard chatter about the new “One Big Beautiful Bill Act” (OBBBA). While the name may raise an eyebrow, this sweeping federal tax package brings a mix of permanent and temporary changes that will affect nearly every taxpayer—individuals and businesses alike—beginning with 2025 returns. Here’s a breakdown of some of the most significant updates to know:

Lower Tax Rates, Made Permanent. The OBBBA locks in the lower individual income tax rates that were first introduced under the 2017 Tax Cuts and Jobs Act (TCJA). Those lower brackets were originally set to expire at the end of 2025, but the new law removes the sunset provision—offering some long-term predictability for taxpayers and planners alike.

Bigger Child Tax Credit. Families with qualifying children will see a boost to the Child Tax Credit, which has been permanently increased to $2,200 per child beginning in 2025. Starting in 2026, that credit will also be indexed to inflation, helping it keep pace with the rising cost of living.

Standard Deduction Increases. For 2025, the standard deduction rises to $15,750 for single filers and $31,500 for married couples filing jointly. This change means more taxpayers will find that taking the standard deduction offers a greater benefit than itemizing.

A New Deduction for Older Taxpayers. Individuals age 65 and older can now claim a new $6,000 deduction, though income limits apply. This change is designed to provide additional relief to retirees on fixed incomes.

Temporary Deductions for Tips and Overtime. Workers in certain industries will enjoy two new (but temporary) tax breaks through 2028:

• Qualified Tips Deduction: Up to $25,000 for reported tips received in eligible industries.
• Overtime Pay Deduction: Up to $12,500 for individuals or $25,000 for joint filers for overtime earnings that exceed the regular rate of pay.

Employers will report qualifying amounts, so workers should watch their year-end tax documents closely to make sure everything is properly recorded.

Key Benefits for Business Owners. The OBBBA brings a host of changes for business owners as well, many of which reverse or solidify provisions that had been in flux in recent years:

• Research and Development (R&D) Expenses: Businesses can again fully deduct R&D costs in the year they are incurred. Small businesses may also retroactively claim this deduction back to the 2022 tax year.
• Qualified Business Income (QBI) Deduction: The popular 20% deduction for certain pass-through income is now permanent, providing much-needed certainty for small business owners and self-employed professionals.
• Bonus Depreciation: The Act makes 100% bonus depreciation permanent for qualified property placed in service after January 19, 2025, as long as the asset’s useful life is 20 years or less.

Together, these provisions may significantly impact year-end planning for Washington’s entrepreneurs, especially those considering equipment purchases or expansion projects.

What It Means for Washington Taxpayers
While many of these changes are taxpayer-friendly, they also introduce new complexities. For individuals, the expanded deductions and credits may reduce taxable income—but only if properly claimed. For businesses, the restoration of full R&D expensing and permanent QBI deduction could shift strategies for capital investment, hiring, and growth.

The Bottom Line
The One Big Beautiful Bill Act is one of the most comprehensive tax updates in recent years—offering welcome relief for many, while also reshaping how individuals and businesses approach their returns. Whether you’re a retiree, a family with young children, or a small business owner, the new rules could have a meaningful impact on your 2025 filing.

Now is a good time to review your financial picture and ensure you’re positioned to take advantage of the opportunities these changes create. At Cordell, Neher & Company, PLLC, we specialize in tax planning and responding to ever changing tax laws. Reach out to our team to learn more about how we can support your business. Contact us at cnccpa.com or call (509) 663-1661. We’re here to provide you with a complete financial team in your corner.

Charlie Miracle, CPA has than 30 years of accounting and financial leadership experience—including roles as CFO and controller. Charlie specializes in helping businesses strengthen operations and streamline processes. A Wenatchee native, he holds an accounting degree from Central Washington University and an MBA from Washington State University. Outside of work, Charlie enjoys family game nights and volunteering with local organizations.