The ‘One Big Beautiful Bill Act’ and Its Impact on Relocation
On July 4, 2025, President Donald Trump signed into law the "One Big Beautiful Bill Act," a sweeping piece of tax legislation that makes permanent many of the so-called “temporary” tax provisions originally enacted under the 2017 Tax Cuts and Jobs Act (TCJA). Among the most relevant areas for our industry are the ongoing treatment of moving expenses, marginal tax rates, and several new or expanded deductions that could indirectly impact relocation programs and employer tax planning.
Key Takeaways for the Relocation Industry
Moving Expense Deduction Still Suspended for Most
The Act makes permanent the TCJA's suspension of the moving expense deduction for non-military taxpayers. While qualified active-duty military can continue to exclude certain moving expenses (e.g., shipment of household goods, some storage, and final move expenses), non-military relocations remain non-deductible for Federal tax purposes.
However, six states continue to conform to pre-2018 federal rules, allowing moving expenses to remain excludable or deductible at the state level, even when they are not federally deductible.
Tax Rates and Withholding
One of the most significant features of the bill is the permanent extension of the current marginal tax rates. These were originally scheduled to revert to pre-TCJA levels in 2026, with the top marginal rate rising from 37% back to 39.6%. Additionally, the supplemental withholding rate was set to jump from 22% to 25%, which would have had direct payroll implications. These increases have now been avoided.
What’s Changing in 2025
While many provisions were made permanent, several new or enhanced tax benefits will begin in 2025, some of which may influence employee financial well-being and program cost management. Below are just of the items that are included in the bill:
Standard Deduction Increases
Single or Married Filing Separately: $15,000 → $15,750
Married Filing Jointly: $30,000 → $31,500
Head of Household: $22,500 → $23,625
These will adjust annually for inflation beginning in 2026.
SALT Deduction Expansion (Temporary)
The State and Local Tax (SALT) deduction cap will temporarily increase from $10,000 to $40,000 starting in 2025 ($5,000 to $20,000 if married filing separately). However, a phase-out begins at $500,000 in Modified Adjusted Gross Income ($250,000 if single). The limits will revert back to current law in 2030.
Child Tax Credit Boost
The Child Tax Credit increases to $2,200 in 2025 (originally $2,000) and will be inflation-adjusted starting in 2026.
The Additional Child Tax Credit (refundable portion) will rise to $1,400 in 2025.
Senior Deduction
A new deduction of up to $6,000 will be available for taxpayers aged 65 and older starting in 2025, subject to income thresholds. Uniquely, this applies to both itemizers and non-itemizers. This is a temporary deduction that will be available through 2028.
New Car Loan Interest Deduction
A temporary deduction of up to $10,000 is available in 2025 on new U.S.-assembled vehicles purchased by taxpayers under certain income limits. This also applies to itemizers and non-itemizers alike and is also a temporary deduction available through 2028.
Newborn "Trump Account"
A one-time $1,000 deposit is available for most babies born between 2025–2028. The accounts are invested in low-cost index funds and will grow tax-deferred until withdrawal at age 18+
Estate & Gift Tax Exemption
The exemption has been permanently set at $15M per individual ($30M per couple) in 2026, with inflation adjustments for the following years.
Deductions for Tip & Overtime Income
Two new deductions are available that target specific types of earned income, each with the deductions starting to phase out for AGIs over $150,000 ($300,000 MFJ). These are temporarily available from 2025 through 2028:
Qualified Tip Income Deduction: - Up to $25,000 per year
Qualified Overtime Pay Deduction: - Up to $12,500 ($25,000 MFJ) per year - Only applies to pay above the employee’s regular hourly rate - Employers must now report this separately on Form W-2