On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. Spanning nearly 900 pages, this sweeping legislation introduces changes that will affect income taxes, retirement planning, estate strategy, small business tax treatment, and more.
Whether you’re retired, raising a family, managing a business, or building a legacy—these updates could affect you, and it’s important to stay informed.
While many details are still unfolding, I’m closely tracking everything so you don’t have to. Below is a summary of the key changes, organized by topic, along with insights on how we’ll factor these into your personal financial planning.
What’s Relevant to Everyone
Several updates apply broadly to individuals and families across income levels:
- Standard Deduction Permanently Increased
For 2025, the new deduction levels are: - $15,750 for single filers
- $23,625 for heads of household
- $31,500 for married filing jointly
These amounts will adjust for inflation moving forward. - State and Local Tax (SALT) Deduction Increased
The SALT deduction cap is now $40,000 through 2029 (up from $10,000), though the deduction phases down for higher earners and is scheduled to revert in 2030. - Charitable Giving: New Above-the-Line Deduction
Taxpayers who take the standard deduction may now deduct up to $1,000 (single) or $2,000 (married) in charitable contributions. For those who itemize, deductions must now exceed 0.5% of adjusted gross income to be deductible. - Temporary Car Loan Interest Deduction
Through 2028, a deduction is available for interest paid on qualified new car loans—up to $10,000 annually—provided the vehicle was assembled in the U.S. and used for personal purposes. This deduction is subject to eligibility requirements and phaseouts at higher income levels.
For Families with Children & Individuals with Disabilities
Several new provisions support younger savers and families caring for children or individuals with disabilities:
- Expanded 529 Plan Flexibility
Qualified expenses now include postsecondary credentialing programs. In 2026, K–12 expenses such as books, tutoring, and enrichment classes will also be eligible. - Trump Accounts: A New Child-Focused Savings Tool
This new account type allows contributions of up to $5,000 per year for children under 18. - Funds grow tax-deferred
- Income distributions for qualified uses (education, first home, small business) are taxed as capital gains
- Accounts must be fully distributed by age 31
- A $1,000 tax credit is available for accounts opened for children born between 2025–2028
Note: These are not traditional IRAs and have specific contribution and distribution rules.
- ABLE Accounts Permanently Enhanced
The increased contribution limits and ability to roll over 529 plan funds to ABLE accounts are now permanent and adjusted for inflation—giving families more tools to support loved ones with disabilities.
For Retirees
Many of my clients are retired or approaching retirement, so let’s focus on provisions that may directly affect your income and tax strategy:
- New “Senior Deduction” for Taxpayers Age 65+
A temporary $6,000 deduction ($12,000 for couples) is now available through 2028. This deduction phases out starting at $75,000 MAGI (single) or $150,000 (married filing jointly).
Note: This deduction may reduce overall taxable income, but it does not eliminate taxes on Social Security benefits and may have limited impact depending on your income level.
- Itemized Deduction Limits Changing in 2026
Starting in 2026, a new formula may reduce your itemized deductions based on income. We’ll evaluate whether the enhanced standard deduction or itemizing remains the more effective strategy for you. - Alternative Minimum Tax (AMT) Phaseout Adjusted
The phaseout threshold has been lowered, which may affect higher earners. We’ll keep this in mind when planning Roth conversions, investment income, or multi-year withdrawal strategies.
For Estate Planning
If you're thinking about legacy and wealth transfer, the OBBBA brings important changes:
- Estate Tax Exemption Increased in 2026
Beginning in 2026, the federal estate tax exemption will rise to $15 million per individual, adjusted annually for inflation.
This may open new opportunities for tax-efficient gifting and trust strategies—but planning ahead will be key.
- Charitable Deduction Limits Tightened for Itemizers
Individuals who itemize will now need their charitable gifts to exceed 0.5% of AGI to qualify for a deduction. This may require adjustment to your annual giving strategy if you itemize.
For Business Owners
Several provisions support small business growth and capital investment:
- 100% Bonus Depreciation Restored
For property placed in service after January 19, 2025, 100% bonus depreciation is back—helping offset capital expenses faster. - Section 179 Expensing Cap Raised
Businesses can now expense up to $2.5 million annually. The phaseout starts once total qualifying property exceeds $4 million. - Qualified Small Business Stock (QSBS) Rules Updated
Stock acquired after the law’s passage now qualifies for: - 50% exclusion after 3 years
- 75% after 4 years
- 100% after 5 years
The asset threshold for eligibility is also raised to $75 million. - Full Expensing of U.S.-Based R&D
U.S.-based research and development expenses can now be fully expensed immediately. Expenses incurred outside the U.S. still require amortization over 15 years.
Final Thoughts: Personalized Guidance Through Every Change
While laws like this one can feel overwhelming, you don’t have to figure it out alone.
I’m here to help you make sense of what matters—to you personally—and to provide clear, thoughtful guidance on how to adapt your financial plan in light of these changes.
If you have questions or want to review how any of this applies to your situation, I welcome you to reach out. Even a small shift could reveal new strategies worth exploring.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.