Introduction
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, ushering in one of the most comprehensive overhauls of U.S. tax and financial policy in decades. The bill spans nearly 900 pages and touches everything from income taxes and retirement planning to healthcare, education, and estate law.
For your financial plan, this legislation is more than just a political headline—it’s a roadmap for how your money will be taxed, saved, and spent over the next decade. Whether you're retired, approaching retirement, running or business, or just starting your financial journey, the OBBBA introduces new opportunities and risks that deserve your attention.
Key Highlights That May Impact Your Financial Plan
Tax Cuts and Extensions
Tax Rates Stay the Same: The current tax brackets (how much you pay based on your income) won’t change except for inflation adjustments. This means most people will keep paying the same percentage of their income in taxes as they have since 2017.
Bigger Standard Deduction: Starting in 2026, you can subtract more from your income before taxes are calculated. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married filing jointly. Seniors 65+ get an extra $6,000 off (subject to certain income limits).
SALT Deduction Expansion
You can now deduct up to $40,000 in state and local taxes from your federal taxes—if you earn less than $500,000. This helps people in high-tax states like California save more on their federal taxes. Many taxpayers who may have used the Standard Deduction in recent years might switch to Itemized Deductions given this change.
New Worker Deductions
No Tax on Tips: If you work in a job where you get tips, you can subtract up to $25,000 of those tips from your taxable income. This is subject to income limits.
No Tax on Overtime Pay: If you work extra hours, you can subtract up to $12,500 (or $25,000 for couples) of your overtime pay from your taxable income. Note, you can only deduct the pay above and beyond your regular rate.
Child Tax Credit and Trump Accounts
Child Tax Credit Goes Up: Families will get a 2025 tax credit of $2,200 per child to help with expenses. This amount is indexed for inflation.
Trump Accounts for Newborns: Every baby born in the U.S. between December 31, 2024, and January 1st, 2029 gets a $1,000 investment account from the government. Parents can add up to $5,000 each year. The money is contributed on an after-tax basis, and earnings are subject to income tax when withdrawn. Qualified withdrawals include tuition, first time home purchases, and more.
Auto Loan Interest Deduction
If you buy a car made in the U.S., you can deduct up to $10,000 in loan interest from your taxes.
Estate and Gift Tax Reform
The OBBBA institutes a permanent increase in exemption amounts. This means that you can now give away or leave behind up to $15 million per person (or $30 million for couples) without paying estate or gift taxes.
Charitable Giving Changes
You can only deduct donations that are more than 0.5% of your income.
New simple deduction: $1,000 for individuals or $2,000 for couples, even if you don’t itemize.
529 Plan Expansion
You can now take out up to $20,000 a year for K-12 Expenses from your 529 education savings plan without penalty or taxes. Previously, the limit was $10,000.
You can use 529 money for more things like job training programs—not just college.
Business and Retirement Incentives
Small Business Tax Break Made Permanent: If you own a small business, you can keep using the 20% deduction on your income.
Immediate Expensing: Businesses can now write off the full cost of equipment, buildings, and research right away.
Opportunity Zones Expanded: More areas now qualify for tax breaks if you invest in them.
Healthcare and Medicaid Changes
Work Requirements for Medicaid: Adults without kids will need to work to keep their Medicaid coverage.
Stricter Eligibility Checks: People may lose coverage if they don’t meet new rules.
Conclusion: What Should You Do Next?
The One Big Beautiful Bill Act is a landmark piece of legislation that reshapes the financial landscape for individuals and businesses alike. While many provisions offer new opportunities—especially for middle-income families and small business owners—others introduce complexity and potential risks.
Whether you're looking to optimize your tax strategy, plan for retirement, or adjust your estate plan, now is the time to act.
Schedule a meeting with me to review your financial plan in light of the OBBBA. We’ll look at how the changes apply to your situation and make sure your strategy is aligned with the new law.