In July 2025, the One Big Beautiful Bill Act (OBBBA), officially Public Law 119-21, became law. Commonly called the Big Beautiful Bill, this legislation includes sweeping tax and spending changes that form the core of President Donald Trump’s second-term agenda. Understanding how this law impacts your finances is crucial for effective planning.
This guide summarizes the key elements of the OBBBA that matter most for individuals and families.
What Is the One Big Beautiful Bill Act (OBBBA)?
OBBBA is a federal law enacted by the 119th Congress, making permanent several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introducing new tax benefits, credits, and deductions. Key highlights include:
- Permanent extension of 2017 tax cuts:
- Individual tax brackets remain from 10% to 37%.
- Standard deduction amounts for 2025 are $15,750 (single), $23,625 (head of household), and $31,500 (joint filers).
- Deductible mortgage debt limit is $750,000, with mortgage insurance deductible after 2025. Private mortgage insurance (PMI) phaseout begins at $100,000 of adjusted gross income (AGI).
- Increased SALT deduction cap:
- From 2025–2029, eligible taxpayers can deduct up to $40,000 ($20,000 if married filing separately).
- Cap gradually rises by 1% annually, reverting to $10,000 in 2030.
- Phaseout begins when modified adjusted gross income (MAGI) exceeds $500,000.
- Enhanced child tax credit:
- Permanently increased to $2,200 per child, indexed annually for inflation.
- Refundable portion increases permanently to $1,700 in 2025.
- Child credit phases out at $200,000 (single) and $400,000 (married filing jointly) MAGI. These thresholds will not be adjusted for inflation.
- $500 credit for other dependents remains permanent.
- Education and savings incentives:
- Trump Accounts introduced in 2026, allowing up to $5,000 annual contributions per child. Children born 2025–2028 may receive a $1,000 government-funded deposit. These contributions are not deductible but grow tax-deferred.
- Expanded 529 plans cover more education expenses, including books, tutoring, testing fees, etc. The distribution limit for K-12 rises to $20,000 annually starting in 2026.
- Charitable contributions:
- Non-itemizers can deduct up to $1,000 ($2,000 for joint filers) starting in 2026.
- Itemizers must exceed 0.5% of adjusted gross income (AGI) before deductions apply.
- Tax benefit is capped at 35%.
- Permanent Expanded Lifetime Gift and Estate Tax Exemptions:
- Limit for both exemptions is $13.99 million for 2025.
- Exemptions increase to $15 million for 2026 and adjust annually for inflation.
- Double the exemption for married couples.
New Temporary Deductions (2025–2028):
| Deduction | Eligibility & Limits | Phaseout Threshold |
|---|---|---|
| Tips deduction | Deduct up to $25,000 of qualified tips received in occupations that customarily earn tips; applies to both employees and self-employed individuals. | Phases out above $150,000 MAGI ($300,000 for joint filers). |
| Overtime deduction | Deduct qualified overtime pay exceeding the regular rate; capped at $12,500 ($25,000 joint). | Phases out above $150,000 MAGI ($300,000 joint). |
| Car loan interest deduction | Deduct interest on loans used to purchase a new personal use vehicle (final assembly in the U.S.); up to $10,000. | Phases out above $100,000 MAGI ($200,000 joint). |
| Senior deduction | Additional $6,000 deduction for taxpayers aged 65+ regardless of Social Security status. | Phases out above $75,000 MAGI ($150,000 joint). |
Social Security Tax and Senior Deduction
Despite earlier proposals, OBBBA does not eliminate taxes on Social Security benefits. Instead, from 2025–2028, seniors (65+) can claim an additional deduction of $6,000 ($12,000 for joint filers), regardless of Social Security eligibility. The deduction phases out when income exceeds $75,000 ($150,000 for joint filers). It’s important to note that people 65 and older already have a bonus deduction ($2,000 for individual filers and $1,600 each for joint filers).
- For 2025, a married couple filing jointly with both spouses over 65 can deduct $46,700 in total — $31,500 base standard deduction, $3,200 age-based deduction, and $12,000 from the OBBBA bonus.
Retirees should strategically manage their income to fully leverage this temporary benefit.
One Big Beautiful Bill Act Summary
The One Big Beautiful Bill Act reshapes the U.S. tax and financial landscape by permanently extending many 2017 individual tax cuts, introducing temporary deductions, and expanding education savings options. While some benefits, like the increased SALT cap and senior deduction, are temporary, other measures such as the enhanced child tax credit and expanded gift and estate tax exemptions are permanent. Most provisions take effect in 2025, with certain benefits and charitable deductions beginning in 2026.
Additionally, OBBBA lifts the debt ceiling by $5 trillion and is projected to increase the federal deficit by approximately $2.8 trillion. This could potentially affect future tax policy and economic conditions.
Given these numerous changes, strategic planning is essential. So, what should you do?
How Trinity Wealth Management Can Help
Trinity Wealth Management helps you navigate the complexities of the OBBBA. Our team can assist by:
- Reviewing your tax situation in light of new deductions, credits, and SALT changes.
- Developing strategies for retirement withdrawals and charitable contributions.
- Advising on education savings and family financial planning.
- Keeping you informed and prepared for ongoing economic and policy changes.
Schedule your consultation today to discuss tailored strategies aligned with your financial goals. Contact us to get started.
Stay Ahead with Expert Guidance
Sources:
1RMDs begin at age 75 for those born January 1, 1960 or later
2Exceptions to the 10-year rule include: surviving spouse, minor children of the decedent, those critically ill or disabled, and those not more than 10 years younger than the original account holder.
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