If you have been paying attention to the headlines, you know that the tax landscape has just shifted—again. On July 4, 2025, President Trump signed a major tax reform package into law, informally known as the “One Big Beautiful Bill Act.”

Now that the “Big Beautiful Tax Bill” is law, it is important to understand what has changed and how to prepare for the 2025 tax year and beyond. The Act permanently extends many provisions from the Tax Cuts and Jobs Act (TCJA), including the elimination of personal exemptions. Below is a summary of the key provisions in the bill affecting freelancers and how they differ from previous tax laws.

Standard Deduction Gets a Boost

One of the most notable changes is the increase in standard deduction. For 2025, the deduction amounts have risen to $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers. This change provides a higher income exclusion for those who do not itemize their deductions, potentially lowering taxable income. For many freelancers who don’t have large mortgage interest or medical expenses, this is a welcome simplification that reduces both paperwork and tax liability.

Two other individual filing notes:

1. The new bill reverts tax rates back to 2018 levels and,
2. It provides a temporary $6,000 deduction under Sec. 151 for individual taxpayers who are age 65 or older. 

The senior deduction begins to phase out when a taxpayer’s MAGI (Modified Adjusted Gross Income) exceeds $75,000 ($150,000 in the case of a joint return). It will be in effect for the years 2025 through 2028.

Expanded SALT Deduction Cap

The state and local tax (SALT) deduction cap has been increased from $10,000 to $40,000 for the 2025 tax year. This cap will increase by 1% annually by 2029 before reverting to its previous limit in 2030. However, this benefit is phased out for higher-income taxpayers, so not all freelancers will be able to take full advantage. 

The cap is reduced by 30% of the amount by which the taxpayer's modified adjusted gross income exceeds a threshold amount. That threshold amount is $500,000 for 2025, with a one percent increase each year through 2029. 

For those in high-tax states, this change could provide meaningful relief, but it is critical to also be aware of how the potential state-level workarounds mentioned below might impact you.

State-Level SALT Workaround for Businesses

In response to the SALT deduction cap, several states have implemented workarounds to help businesses mitigate its impact. For example, New York State has introduced the Pass-Through Entity Tax (PTET), which allows businesses to pay state taxes at the entity level rather than the individual level. This workaround enables businesses to bypass the SALT cap and potentially reduce their overall tax burden. The new federal bill has no impact on these state-level workarounds. However, freelancers operating pass-through entities should always monitor the specific developments related to SALT in the states where they do business closely.

Tip and Overtime Income Deductions

Two new deductions have been introduced that may benefit freelancers working in service-based industries:

• First, the Tip Income Deduction allows up to $25,000 in tip income to be deducted from taxable income without itemizing. This deduction phases out at $150,000 in income.
• Second, the Overtime Deduction permits employees who receive overtime pay to deduct up to $12,500, with a phaseout beginning at $100,000 in income. While these deductions are especially relevant to freelancers in hospitality, beauty, or gig work, they also signal a broader shift in the tax code toward recognizing non- traditional income streams.

These deductions are currently set to expire after 2028, so freelancers should take advantage of them while they last.

1099-MISC Reporting Burden Relief

The BBB aims to reduce the paperwork burden on small businesses and workers receiving income from the gig economy by increasing the 1099-MISC reporting threshold for payments for services performed by an independent contractor or subcontractor from $600 to $2,000. 

Qualified Business Income (QBI) Deduction Made Permanent

One of the most significant changes for freelancers is the permanent extension of the 20% Qualified Business Income (QBI) deduction for pass-through income. If you operate as a sole proprietor, LLC, or S-corporation, you can continue to deduct up to 20% of your qualified business income, subject to income thresholds and business type. This deduction has been a major benefit for freelancers since its introduction in 2018, and its permanence adds much-needed stability to long-term freelance business tax planning.

Expanded 529 Plans and “Trump Accounts”

Freelancers with children may benefit from two new provisions aimed at supporting family financial planning.

• First, 529 Plans have been expanded to cover K–12 and homeschooling expenses, offering more flexibility in how education savings can be used.
• Second, the bill introduces “Trump Accounts,” new tax-favored savings accounts for newborns. These accounts are seeded with a $1,000 government contribution and are modeled after IRAs.

While these provisions aren’t direct business deductions, they offer new ways to manage family finances and reduce future tax burdens—particularly for freelancers  balancing business ownership with parenting responsibilities.

Automobile Loan Interest

Previously, interest on an individual’s automobile loan was treated as nondeductible personal interest. The Act includes a deduction of up to $10,000 for interest paid on an automobile loan in 2025 through 2028 for a car purchased after 2024. The deduction is available for both itemizers and non-itemizers.

Gambling Income Faces Higher Taxes—and New Complexity

The 2025 tax reform introduces a controversial and potentially devastating change to how gambling winnings and losses are treated under federal tax law. Beginning in 2026, gamblers will only be allowed to deduct up to 90% of their gambling losses against their winnings. This marks a significant departure from the previous rule, which allowed a full 100% deduction of losses—effectively taxing only net winnings.

Under the new provision, even gamblers who break even or incur a net loss could face a tax bill. For example, a recreational gambler who wins $100,000 and loses $100,000 in the same year would now only be able to deduct $90,000 of those losses, resulting in $10,000 of taxable income despite having no actual profit. In a more extreme case, a gambler who wins $500,000 and loses $500,000 would be taxed on $50,000 of phantom income.

Professional gamblers are expected to be hit hardest. Because they often operate with high volumes and narrow margins, the inability to fully deduct losses and business expenses could result in being taxed on income they never actually earned. For instance, if a professional poker player earns $500,000 in winnings, incurs $440,000 in losses, and spends $50,000 on business-related expenses, they would be taxed on $59,000 of income—nearly six times their actual net profit of $10,000. This provision applies regardless of whether gambling activity results in a net gain or loss. This effectively requires gamblers to earn at least a 10% return on investment just to break even after taxes. If you have a freelance gambling business or gambling professionally as a side gig, now is the time to consult a tax professional.

What You Should Do Now

To make the most of the new tax law, freelancers should take several proactive steps.

1. Review your 2025 estimated tax payments to ensure they reflect the new deductions and rate changes.
2. Track all income sources carefully—especially tips and overtime—to support your eligibility for the new deductions.
3. Maximize your QBI deduction by confirming that your business structure and income qualify.
4. Plan ahead for 2026 and beyond, as some provisions, such as the tip and overtime deductions, are set to expire after 2028.

Staying organized and informed will help you avoid surprises and take full advantage of the opportunities available under the new law. Be sure to watch for updates to these and other tax provisions which may impact your freelance business.

New Tax Laws Can Benefit Your Freelance Business with Professional Guidance

The 2025 tax reform brings a mix of benefits and challenges for freelancers. By understanding these changes and planning accordingly, you can take advantage of new opportunities while minimizing potential liabilities. As the implications of the bill continue to unfold, stay informed and consult with a tax professional who understands the freelance economy. With the right guidance, you can ensure your business remains compliant, efficient, and financially resilient in the years ahead.