Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) represents the most sweeping tax overhaul in recent years—since President Trump’s first-term Tax Cuts and Jobs Act (TCJA). Clocking in at more than 1,000 pages, the bill makes major changes to the U.S. tax code, extending and reshaping key provisions from the 2017 TCJA while introducing new deductions and programs aimed at families, retirees, and working professionals.
With many of the OBBBA provisions already in effect, now’s the time to familiarize yourself with what’s changed and how it could impact your finances or upcoming tax return. Below is a breakdown of some of the most impactful provisions to pay attention to as you review your strategy.
Tax Cuts and Jobs Act Changes Extended
One of the most prominent and sweeping changes enacted in the OBBBA is the decision to make TCJA-era tax rates permanent. Without this update, the lower individual income tax rates would have expired at the end of 2025, reverting back to higher pre-TCJA levels (though income brackets would have likely been adjusted for inflation). Instead, the current seven-bracket structure remains in place, with a top marginal rate of 37% and expanded income thresholds for each bracket.
The standard deduction also remains elevated—even receiving a small boost in 2025 as it increases to $15,750 for single filers and $31,500 for joint filers this year.
The TCJA originally doubled the federal estate tax exemption limit in 2018, and the OBBBA has made that increase permanent. In 2025, the federal estate exemption limit is $13.99 million per person or $27.98 million per couple.
Expanded SALT Deduction Cap
The previous $10,000 state and local tax (SALT) deduction cap, which has long been a pain point for residents of high-tax states, increases to $40,000 starting in 2025. There will be an additional 1% increase each year between 2026 and 2029, meaning the 2026 deduction cap will be $40,400 and so on.
However, taxpayers with a modified adjusted gross income (MAGI) above $500,000 will be subject to a gradual phase-out deduction—though the deduction won’t drop below $10,000 for high earners.
Child Tax Credit Increase
The Child Tax Credit, which was set to revert back to $1,000 per child in 2026, has instead been increased to $2,200 per child beginning in 2025. This credit is indexed for inflation and could offer significant savings for families with multiple dependents. As of now, the higher credit amount is set to expire at the end of 2028.
Charitable Contributions
Taxpayers making small annual donations to charity will now be able to deduct a portion from their tax return, even if they don’t itemize. Starting in 2026, you’ll be able to claim up to $1,000 (or $2,000 if filing jointly) as an above-the-line deduction for contributions to a qualifying charity or organization.
If you choose to itemize instead, you’ll still be able to deduct charitable contributions, but only if they exceed 0.5% of your adjusted gross income (AGI). This new “floor” goes into effect in 2026, so you’ll need to clear that threshold before your deductions start counting. If you’re already planning a sizable gift, accelerating that donation into 2025 may help you avoid the AGI floor and take full advantage of current rules. Donor Advised Funds (DAFs) can also offer flexibility by allowing you to claim the deduction this year while distributing the funds to charities over time.
It’s also worth noting that beginning in 2026, charitable deductions for taxpayers in the top income bracket will be capped at 35%, a drop from the current allowance tied to your marginal rate.
Looking ahead, starting in 2027, taxpayers can also claim a 100% tax credit of up to $1,700 for donations made to eligible scholarship-granting organizations. That means you could directly support access to education for underserved families while receiving a dollar-for-dollar credit on your tax return.
Any unclaimed charitable deductions may still be carried forward to the next tax year, but with new thresholds, caps, and credits taking effect over the next few years, it’s a good idea to revisit your giving strategy now.
New Deductions Introduced in the OBBBA
While some credits and deductions have been revised or expanded, the OBBBA introduced quite a few new provisions as well for qualifying taxpayers.
Super Deduction for Seniors
For taxpayers age 65 and older, the OBBBA introduces a new “super deduction,” which will be available for the 2025 through 2028 tax years. Eligible seniors with income under $75,000 ($150,000 for couples) will be able to claim an additional $6,000 standard deduction. If both spouses are over 65 and within the income limits, they’ll be able to claim $12,000 total. However, if one spouse is over 65 and the other is not, the super deduction will remain at $6,000.
This added deduction phases out gradually for those with higher incomes, but it does create a small tax break for those middle-income retirees who plan on taking the standard deduction (rather than itemizing).
Tips and Overtime Deductions
The OBBBA introduces new above-the-line deductions for service industry tips and qualifying overtime income. Workers, including those who opt for the standard deduction, can now deduct up to $25,000 in reported tips and up to $12,500 ($25,000 for couples) in overtime income. These provisions start to phase out for those with adjusted gross incomes above $150,000 (or $300,000 for joint filers).
Auto Loan Interest Deduction
A first at the federal level, taxpayers earning under $100,000 ($200,000 joint) can deduct up to $10,000 in interest on loans for U.S.-assembled, non-commercial vehicles. This measure is set to expire after 2028, and there is a phase-out for the deduction for those with AGIs between $100,000 and $150,000 (or $200,000 and $250,000 for joint filers).
Trump Accounts for Children
Parents of children born between January 1, 2025, and December 31, 2028, will be able to open a Trump account through the federal government. In doing so, they’ll receive a one-time $1,000 federal contribution and can contribute up to $5,000 per year until the child turns 18.
While there’s no tax deduction for contributions, the funds grow tax-deferred and can be used for higher education, training, first-time home purchases, or small business costs once the child turns 18. Between ages 18 and 25, the child may withdraw up to 50% of the account’s balance for those qualified purposes without triggering taxes or penalties. At age 25, they can withdraw the full amount. And by the age of 30, funds can be used for any purpose without incurring a tax penalty.
Unpacking the Big Beautiful Bill
The One Big Beautiful Bill Act lives up to its name in terms of size and complexity. While it extends popular tax cuts and introduces new planning opportunities, it also makes proactive tax planning more important than ever.
Since many of these changes went into effect immediately, it’s worth revisiting your tax strategy sooner rather than later. Together, we can take a closer look at the provisions mentioned here and find new opportunities to reduce your tax burden and grow your wealth.
Sean Gerlin, CFP®, CPWA®, ChFC®, CLU®, is the Founder and Principal of Envision Wealth Planners, a fee-only financial advisory firm based in the greater Orlando area. Sean specializes in helping high-income families, business owners, and commercial real estate executives align their wealth with their values through a comprehensive Financial Life Planning approach. Learn more about them at envisionplanners.com.
This material has been prepared in collaboration with Crystal Marketing Solutions, LLC, and has been edited with the assistance of artificial intelligence tools. The information presented is based on sources believed to be reliable and accurate at the time of publication. This material is for educational purposes only and does not necessarily reflect the views of the author, presenter, or affiliated organizations. It should not be construed as investment, tax, legal, or other professional advice. Always consult a qualified professional regarding your specific situation before making any decisions.