Breaking Down The One Big Beautiful Bill Act – Top 21 Financial Planning Impacts

Yes….we really did have to narrow this down to a list of 21! We’ve tried to keep this as simple as possible, with a goal to highlight new topics that may impact you. 

The recent enactment of the "One Big Beautiful Bill Act" (OBBBA) on July 4, 2025, marks a significant shift in the U.S. tax landscape, introducing changes that will impact individuals, families, and businesses for years to come. 

This bill was filled with many changes, some more significant than others. Perhaps the biggest immediate impact is to provide some much-needed clarity to the income tax landscape. This clarity came through making many provisions permanent that were scheduled to sunset at the end of this year. Beyond making current provisions permanent, there were significant new provisions introduced that allow for unique planning strategies. 

To help make sense of how this impacts you, we’ve broken down the top 21 financial planning and tax planning items from the OBBBA three categories:

• What Stays the Same or is Made Permanent
• What is New but Temporary
• What is New and Permanent

What Stays the Same or is Made Permanent

Many of the foundational changes introduced in 2017 through the Tax Cuts & Jobs Act (TCJA) were set to expire at the end of 2025. The OBBBA provides permanence to some of these key provisions, allowing for more stable long-term financial planning.

1. Individual Income Tax Brackets and Rates: The current seven individual income tax brackets, including the top 37% rate, are made permanent. Without OBBBA, these were scheduled to move higher (back to pre-2018 levels). 

2. Increased Standard Deduction: The significantly increased standard deduction amounts are now permanent. For 2025, these amounts are $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly, with future inflation adjustments. Without OBBBA, these were scheduled to be roughly cut in half (back to pre-2018 levels). 

3. Qualified Business Income (QBI) Deduction (Section 199A): The 20% deduction for qualified business income for eligible pass-through entities is now a permanent fixture, offering ongoing tax benefits for small business owners and self-employed individuals. The deduction also received slight increases in the phase-out range for higher income business owners.

4. Child Tax Credit: The increased Child Tax Credit is made permanent, rising to $2,200 per eligible child starting in 2025, and will be indexed for inflation. The refundable portion of $1,400 is also permanent. The credit has never been indexed for inflation in its 28-year history, so this is beneficial for current and future parents out there.

5. Lifetime Gift and Estate Tax Exemption: The increased exclusion amount for gift, estate, and generation-skipping transfer taxes is made permanent and further increased to $15 million per individual (so $30 million for married couples) starting in 2026, with inflation adjustments thereafter. Without OBBBA, this would have been cut roughly in half (back to pre-2018 levels).

6. Mortgage Interest Deduction Cap: The limitation on deducting mortgage interest to interest on $750,000 of acquisition indebtedness (or $375,000 for single filers) is made permanent. This was set to revert higher to $1 million (pre-2018 levels).

7. Alternative Minimum Tax (AMT) Exemptions and Phase-Outs: The higher AMT exemption amounts and their inflation adjustments are made permanent, though the phase-out thresholds were also adjusted. For many tax-payers AMT is a non-issue, but for those impacted this may be a welcome provision (depending on income level).

8. Business Expensing: Several provisions of the OBBBA impact how businesses expense various costs. Specifically, the 100% bonus depreciation for eligible property is permanently reinstated. Section 179 expensing is now permanent with increased maximum deductions. And Research & Development domestic costs can be immediately expensed for the business beginning in tax year 2025.

9. Opportunity Zones: The tax benefits of Opportunity Zones, including the full exclusion of gain on qualified investments held for at least 10 years, are permanently extended. These were a hot topic back in 2018 but had lost their luster as the uncertainty of tax law clouded their future benefit. It will be interesting to see how much these could expand given the now permanency of the tax benefit.

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What is New but Temporary 

The OBBBA also introduces several new deductions and benefits designed to provide temporary relief and incentives. It's crucial to understand their sunset dates for effective planning.

10. State and Local Tax (SALT) Deduction Cap Increase: The SALT deduction cap is temporarily increased from $10,000 to $40,000 (or $20,000 for married filing separately) for tax years 2025 through 2029. This increased cap phases out for Modified Adjusted Gross Income (MAGI) above $500,000 (or $250,000 for married filing separately). The SALT deduction will revert back to the $10,000 cap in 2030 for all taxpayers. While beneficial to many, this has a larger impact on taxpayers residing where state income taxes and property taxes are higher. (Sunsets end of 2029)

11. Additional Standard Deduction for Seniors (Age 65+): A new temporary additional standard deduction of $6,000 per eligible individual ($12,000 for joint filers where both are 65+) is available for tax years 2025 through 2028. This deduction begins to phase out for MAGI over $75,000 (single) or $150,000 (joint). A key feature of this provision is that it can be taken regardless of whether you utilize the Standard or Itemized Deduction. It also is in addition to the current 65+ increased standard deduction of $1,600 (for Married Filing Jointly) or $2,000 (for Single filers). (Sunsets end of 2028)

12. Deduction for Qualified Tip Income: For tax years 2025 through 2028, individuals can deduct up to $25,000 of qualified tip income. This deduction phases out for MAGI over $150,000 (single) or $300,000 (joint) (Sunsets end of 2028)

13. Deduction for Qualified Overtime Wages: A temporary deduction for qualified overtime compensation is available for tax years 2025 through 2028, limited to $12,500 for single filers ($25,000 for joint filers). This also phases out for MAGI over $150,000 (single) or $300,000 (joint). (Sunsets end of 2028)

14. Deduction for Qualifying Auto Loan Interest: For tax years 2025 through 2028, individuals may deduct up to $10,000 of interest paid on loans used to purchase new, U.S.-assembled vehicles for personal use. This deduction phases out for MAGI over $100,000 (single) or $200,000 (joint). This new feature has a catch: the vehicle must have been purchased and financed after December 31, 2024, AND must have had final assembly in the U.S. 

15. "Trump Accounts" for Newborns: For children born in tax years 2025 through 2028, the bill creates new "Trump Accounts," which are IRA-like savings accounts that receive a $1,000 government deposit for eligible newborns. Other contributions up to $5,000 per beneficiary (annually) are allowed up to age 18. Of note, these will not be rolled out until July 2026, allowing time to get more clarity around the use, custody, and investment of these accounts. Much of this is still unknown. We’ll be covering these in more detail in future posts. (Government deposits sunset end of 2028, but accounts remain permanent)

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What is New and Permanent

Beyond extending prior provisions and creating temporary ones, the OBBBA introduces some entirely new and permanent tax changes that will reshape aspects of financial planning.

16. Charitable Deduction for Non-Itemizers: Starting in 2026, non-itemizing taxpayers can take an above-the-line deduction for charitable contributions, up to $1,000 for single filers or $2,000 for married couples filing jointly. Donations to donor-advised funds are ineligible for this deduction.

17. Charitable Contribution Floor for Itemizers: Beginning in 2026, individuals who itemize deductions will only be able to deduct charitable contributions that exceed 0.5% of their Adjusted Gross Income (AGI). This obviously reduces the tax impact of charitable givers who itemize. There’s also a different provision for those in the 37% federal tax bracket, which minimizes the deductibility of charitable donations to 35% up to limits. Together, these will have an impact on charitable contribution deductibility.

18. Expanded 529 Plan Uses: 529 plans can now be used for tuition, fees, books, supplies, and equipment required for enrollment in recognized certificate, licensing, or apprenticeship programs, even if they are not traditional degree programs. The annual limit on tax-free, penalty-free distributions for elementary and secondary educational expenses also increases from $10,000 to $20,000 for tax years beginning after December 31, 2025.

19. Federal Tax Credit for Education Scholarships: Beginning in 2027, a new, permanent, dollar-for-dollar federal tax credit of up to $1,700 per individual taxpayer is available for contributions to state-approved, federally recognized non-profits that distribute scholarships to eligible children for K-12 private or religious schools.

20. Child and Dependent Care Credit Enhancement: The Child and Dependent Care Credit is permanently increased and includes improved income phase-out ranges for the credit.

21. Elimination of Clean Energy Tax Credits: Several clean energy tax credits were eliminated on both the personal and business side. Focusing on the personal side, tax credits on electric vehicles will expire on September 30, 2025. If you’re in the market for an electric vehicle (and you’re under current income limits), we recommend completing the purchase by the Sept 30^th deadline. Additionally, the “Energy Efficient Home Improvement Credit” and the “Residential Clean Energy Credit” will expire on December 31, 2025. All work must be completed AND paid for by the Dec 31^st deadline. This applies to energy efficiencies such as doors/windows/insulation, as well as renewable energy such as solar. 

One big item that we did not highlight above is taxes on Social Security. Communications around the bill have caused plenty of confusion on this issue. To be clear, the bill did NOT change the way Social Security is taxed. However, taxes on Social Security will likely be reduced due to the increased deductions many recipients of Social Security (age 65+) will receive (as highlighted in #11 above). This additional deduction, along with other standard deductions, will significantly reduce the impact of taxes on all income, including Social Security. In some cases, depending on other income, it will eliminate taxes on Social Security due to the deductions completely covering the taxable portion of Social Security.

It's important to highlight that when we say permanent, we recognize all laws are at the mercy of the next Congress and the next party in the White House. However, knowing that many of these provisions don’t have a sunset currently scheduled allows us to plan with more clarity.

Thanks for sticking with us until the end! Believe it or not, we’ve limited our focus to only a few aspects of this new law. It’s a complex piece of legislation with far-reaching implications. Over the coming months, we’ll expound on some of these provisions and how it will impact financial and tax planning. But most importantly, we’ll be reviewing these impacts in your personal plan as we regularly meet over the coming years through phase-ins and sunsets of the law. 

Don’t hesitate to reach out if you ever have questions on your financial plan. If you found this helpful, feel free to share with others.

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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.  This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

Source: One Big Beautiful Bill Act (Congress.gov)