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Sarah B

The One, Big, Beautiful Bill Act (OBBBA) brings a wide range of tax changes, with several key updates designed to support families. Among the many provisions, here are three with the potential to lower your tax bill.


1. Boosted Child Tax Credit with a New Rule

Beginning in 2025, the Child Tax Credit (CTC) increases to $2,200 per qualifying child under age 17 (up from $2,000). It will be adjusted annually for inflation starting in 2026. The refundable portion (the part you can receive even if you owe no tax) is locked in at $1,700 for 2025 and will also adjust for inflation moving forward.


The modified adjusted gross income (MAGI) thresholds for the phaseout of the CTC remain unchanged and permanent at:

  • $200,000 for single and head of household taxpayers
  • $400,000 for married couples filing jointly


Beginning in 2025, you must include valid Social Security numbers (SSNs) for both the child and the taxpayer claiming the credit. For joint filers, at least one spouse must have an SSN to qualify.


2. The $500 Credit for Other Dependents Lives On

Previously set to expire after 2025, the $500 Credit for Other Dependents (COD) is now permanent. The nonrefundable COD applies to dependents who don’t qualify for the child tax credit, such as college-aged children or elderly parents. The dependent must be a U.S. citizen, national or resident alien and must have a valid Social Security number or Individual Taxpayer Identification number.

The income-based phaseouts are the same as those for the CTC.


3. Adoption Credit Gets a Refundable Benefit

For 2025, the maximum credit is $17,280 per adoption. But the credit phases out at higher MAGI levels than the CTC and COD:

  • Begins phasing out at $259,190
  • Fully phases out at $299,190

These amounts apply to all filing statuses.


Under the OBBBA, up to $5,000 of the credit is now refundable, offering more immediate financial help to some adoptive parents. The nonrefundable portion can be carried forward; the refundable portion cannot.


Your tax advisor can offer more information about the tax side of adoption.


Questions?

These are just three highlights from the OBBBA’s roughly 870 pages of tax updates. Some families stand to benefit, but as always, contact the office to make the most of what’s available to you.

October 2025 Newsletter

By Sarah Bolton • October 3, 2025
Our regularly updated newsletter provides timely articles to help you achieve your financial goals. Please come back and visit often. Feature Articles Enhanced SALT Tax Break Will Help Many Homeowners 2 Important Changes for Businesses under the New Tax Law Tax Breaks for Medical Expenses Tax Tips Can Your Business Benefit from the WOTC? Say Goodbye to Paper Checks Dependent Care Flexible Spending Accounts for Your Business

October 2025: Upcoming Tax Due Dates

By Sarah Bolton • October 3, 2025
October 15 Individuals: File a 2024 income tax return (Form 1040 or Form 1040-SR) if an automatic six-month extension was filed (or if an automatic four-month extension was filed by a taxpayer living outside the United States and Puerto Rico). Pay any tax, interest and penalties due. Individuals: Make contributions for 2024 to certain existing retirement plans or establish and contribute to a SEP for 2024 if an automatic six-month extension was filed. Individuals: File a 2024 gift tax return (Form 709) and pay any tax, interest and penalties due if an automatic six-month extension was filed. Calendar-year bankruptcy estates: File a 2024 income tax return (Form 1041) if an automatic six-month extension was filed. Pay any tax, interest and penalties due. Calendar-year C corporations: File a 2024 income tax return (Form 1120) if an automatic six-month extension was filed. Pay any tax, interest and penalties due. Calendar-year C corporations: Make contributions for 2024 to certain employer-sponsored retirement plans if an automatic six-month extension was filed. Employers: Deposit Social Security, Medicare and withheld income taxes for September if the monthly deposit rule applies. Employers: Deposit nonpayroll withheld income tax for September if the monthly deposit rule applies. October 31 Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2025 (Form 941) and pay any tax due if all of the associated taxes due weren’t deposited on time and in full. November 10 Individuals: Report October tip income of $20 or more to employers (Form 4070). Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2025 (Form 941) if all of the associated taxes due were deposited on time and in full.

Dependent Care Flexible Spending Accounts for Your Business

By Sarah Bolton • October 3, 2025
Employers seeking to offer family-friendly benefits may want to consider flexible spending accounts (FSAs) for dependent care. These FSAs let employees make pre-tax contributions through payroll withholding to help cover eligible expenses. Because of the major tax bill enacted on July 4, 2025, the annual contribution limit, currently $5,000, will rise to $7,500 in 2026. FSA contributions reduce employees’ income tax and payroll tax and employers’ payroll tax. Withdrawals used to pay qualified expenses are tax-free. These include expenses for care for a child under age 13 or another dependent unable to care for themselves due to physical or mental limitations. Contact the office with questions.