On July 4, 2025, President Donald Trump signed the “One, Big, Beautiful Bill” (OBBB) into law, introducing major updates to the U.S. tax code for 2025 and 2026. Politicians on both sides of the aisle have developed a habit of bundling major legislation into large, complex bills to appeal to a wide range of constituents, from moderates to hardline conservatives. They then use budget reconciliation to pass these bills with a simple majority, bypassing the Senate’s 60-vote filibuster threshold. This approach allows lawmakers to hide unpopular measures within broadly appealing packages. This is one of the main reasons we have witnessed that, regardless of which party is in charge, the deficit keeps climbing, and I believe our founders would certainly disapprove of how our Congress is managing the country today.
“When the people find that they can vote themselves money, that will herald the end of the republic.”
— Benjamin Franklin
The “beautiful” bill includes over $1 trillion in Medicaid cuts and the repeal of clean energy credits, offset by numerous tax cuts that are likely to increase the federal deficit, complicate budget management, and potentially reduce benefits for future generations. In the short term, however, the OBBB offers several provisions that may benefit you. We are still uncovering what is included in this bill and how it will impact individuals and our economy in the long term, but for now, I’ve summarized the key perks you might find applicable:
Permanent Extension of TCJA Provisions
The OBBB makes permanent the 2017 Tax Cuts and Jobs Act (TCJA) provisions, stabilizing tax planning. Individual income tax rates remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%, and the 2025 standard deduction is $15,750 for single filers and $31,500 for joint filers, adjusted for inflation. This consistency benefits those managing retirement income or business earnings. The estate and gift tax exemption rises to $15 million (single) or $30 million (joint) in 2026, easing tax burdens for those with substantial assets. High-net-worth and ultra-high-net-worth individuals may need to reassess estate plans to optimize tax benefits and look at gifting to use up all the additional exemption amounts.
New Deduction for Older Taxpayers
A $6,000 bonus deduction ($12,000 for joint filers) is available for individuals aged 65 and older, effective 2025–2028, for incomes up to $75,000 (single) or $150,000 (joint), phasing out by $175,000 (single) or $250,000 (joint). For someone with $70,000 in income, combining this with the standard deduction ($15,750) and existing age-based deduction ($3,200) reduces taxable income by $24,950, potentially saving $5,500 in taxes (22% bracket)!
Enhanced SALT Deduction
The state and local tax (SALT) deduction cap increases from $10,000 to $30,000 in 2025, rising 1% annually through 2029, before reverting to $10,000 in 2030. It phases down by 20% for incomes above $200,000 (single) or $400,000 (joint). This change benefits those in high-tax states like California, particularly property owners or business owners, by allowing greater deductions for state income and property taxes.
Business and Investment Opportunities
For those with pass-through businesses, the Section 199A deduction remains at 20%, made permanent, with a $400 minimum deduction for those with at least $1,000 in qualified business income (QBI). This reduces taxable income, freeing up funds for reinvestment. The OBBB reinstates 100% bonus depreciation for short-lived assets and R&D expenses (2025–2029), encouraging equipment purchases. The Low-Income Housing Tax Credit expands, appealing to real estate investors, and qualified small business stock (QSBS) exemptions increase to $15 million from $10 million, benefiting early-stage investors.
Education
The bill terminates income-contingent repayment plans beginning July 2026 and those student loan borrowers could choose from a standard repayment plan or the new “Repayment Assistance Plan“ based on 1% to 10% of their Adjusted Gross Income (AGI). Eliminates Grad PLUS Loans, subsidized Stafford loans for graduate and professional students, starting July 2026. The bill also caps the maximum amount undergraduate, graduate, and professional students could borrow. Beginning in 2026, a 529 account can also be used to pay up to $20,000 of elementary or secondary tuition (up from $10,000 currently).
Autos
The energy credits ($7,500 for new, $4,000 for used) to purchase electric vehicles (EVs) and hybrid vehicles will end on September 30. Taxpayers can deduct up to $10,000 in interest on a loan used to purchase a qualifying vehicle. Certain rules apply, including: the car must be purchased (not leased) between 2025 and 2028, must be for personal use, and final assembly must have occurred in the United States.
Charitable Giving
The OBBB introduces several updates to charitable giving rules, offering new opportunities and limitations depending on how taxpayers file. For those who claim the standard deduction starting in 2026, taxpayers can claim a separate deduction of up to $2,000 ($1,000 for all other filers) for cash gifts, provided they are not made to a private foundation or donor advised fund. Beginning in 2026, only contributions exceeding 0.5% of adjusted gross income will be deductible for those who itemize deductions.
Additional Provisions
The child tax credit rises to $2,200 per child (a $200 increase) in 2025, indexed for inflation, supporting those with dependents. Tips and overtime (up to $25,000 and $12,500, respectively) are tax-exempt from 2025–2028, aiding part-time workers. Creates new tax-advantaged “Trump accounts” structured like individual retirement accounts for children, including a $1,000 tax refund to Trump account contributions for citizens born from 2025 through 2028.
Planning Ahead
If you’re interested in seeing how this bill may impact your financial and retirement plans or are curious about other provisions we didn’t cover here, please don’t hesitate to Talk With Us!
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