On July 4, President Donald Trump signed a sweeping new tax and spending bill, the One Big Beautiful Bill Act (OBBBA), into law. At nearly 900 pages long, it’s one of the most ambitious policy packages of his presidency.
The bill includes roughly $4.5 trillion in tax cuts, major changes to federal spending, and significant investments in border security and defense.
Supporters see it as a continuation of Trump-era tax relief and a bold move to bolster national security. Critics, however, point to its steep cuts to safety net programs and the potential $3.3 trillion increase to the federal deficit over the next decade.
The bill’s provisions are likely to affect individuals, families, and businesses across the country. Here’s a closer look at what’s inside and how it could impact you.
One Big Beautiful Bill Act: Key Tax Provisions
Tax Rates and Brackets Made Permanent
The tax brackets introduced by the 2017 Tax Cuts and Jobs Act (TCJA) were originally scheduled to expire in 2025. The OBBBA makes these lower tax rates permanent, keeping the 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets in place indefinitely (or until changed by future legislation).
Standard Deduction Increases Under the One Big Beautiful Bill Act
The standard deduction amounts, which the TCJA nearly doubled, are now permanent and slightly higher for 2025:
- Single Filers: $15,750
- Married Filing Jointly: $31,500
Additional standard deductions for those 65+ also remain, increasing annually with inflation.
New $6,000 Deduction for Older Adults
People 65 and older may qualify for an additional $6,000 personal exemption between 2025–2028. However, this benefit phases out:
- For single filers, the deduction begins to phase out at $75,000 and goes away completely by $175,000 MAGI.
- For joint filers, it phases out between $150,000–$250,000 MAGI.
SALT Deduction Temporarily Expanded
From 2025 to 2029, the State and Local Tax (SALT) deduction cap increases from $10,000 to $40,000, with a phaseout beginning at $500,000 MAGI. The base cap of $10,000 becomes permanent starting in 2030.
New Deductions for Workers
Temporary tax breaks from 2025 through 2028 include:
- Up to $25,000 of tip income excluded from federal income tax (phased out starting at $150,000 MAGI for singles, $300,000 for couples).
- Up to $12,500 of overtime pay excluded for individual filers, and up to $25,000 for joint filers (same income thresholds as above).
- Up to $10,000 of auto loan interest is deductible if the car is U.S.-assembled and the loan originated after 2025 (phased out for singles earning over $150,000, couples over $250,000).
Changes for Retirees and Estate Planning in the One Big Beautiful Bill Act
Social Security Still Taxable
Despite some confusion, the One Big Beautiful Bill Act does not change Social Security taxation. However, with expanded standard deductions and senior-specific exemptions, more retirees may see lower overall taxable income.
ACA Credits Not Extended
Enhanced Affordable Care Act (ACA) premium tax credits—originally introduced during the pandemic—are set to expire at the end of 2025.
Beginning in 2026, income eligibility rules will revert to pre-2021 levels, meaning many households that previously qualified for subsidies may no longer be eligible. According to an analysis from KFF, the average enrollee could see their premiums rise by 75%, making health insurance substantially less affordable for millions of Americans.
However, starting in 2026, all bronze and catastrophic plans purchased on the ACA exchange will qualify the policyholder to contribute to a Health Savings Account (HSA), which could offer a new tax-advantaged savings opportunity for early retirees.
Estate and Gift Tax Exemption Increases
The current estate and gift tax exemption of $13.99 million per person will increase to $15 million in 2026 and remain indexed to inflation going forward. This makes long-term legacy and gifting strategies even more important for high-net-worth families.
Charitable Giving Rules Adjusted
Beginning in 2026, if you don’t itemize deductions, you’ll be able to claim a charitable deduction of:
- $1,000 (single filers)
- $2,000 (joint filers)
Note: Applies regardless of income, but donations to donor-advised funds are not eligible for this deduction.
For itemizers, donations must now exceed 0.5% of AGI before becoming deductible. For example, if your AGI is $100,000, only donations above $500 will count toward your itemized deduction.
Clean Energy Rollbacks
Several clean energy provisions from the 2022 Inflation Reduction Act are rolling back:
- EV tax credits will end after September 30, 2025.
- Home energy efficiency upgrades and clean residential energy systems (like solar or geothermal) must be installed by December 31, 2025 to qualify for tax credits.
- New tax credits are now available for metallurgical coal, a move critics argue slows the transition to greener energy.
Introducing “Trump Accounts” for Children
Starting in 2026, new savings accounts will be available for children under 18. Key details include:
- Named “Trump Accounts,” these operate similarly to Roth IRAs.
- Annual contributions are capped at $5,000, with no upfront tax benefit.
- The federal government will contribute $1,000/year to accounts for children born between 2025–2028.
- Investment options are limited to low-cost index ETFs or mutual funds.
These accounts are designed to encourage early saving, but the complexity of distribution rules and limited utility for most taxpayers means it may take time to understand how widely they’ll be used.
One Big Beautiful Bill Act: The Bottom Line
The One Big Beautiful Bill Act brings sweeping changes to the tax code, health care system, and energy policy. While the full long-term effects are still unfolding, many provisions should deliver short-term savings, particularly for older adults, working families, and small business owners.
That said, the impact will look different for everyone depending on your income, age, and filing status. If you’re unsure how these changes could affect your tax bill, retirement strategy, or estate plan, now is a great time to revisit your financial plan. We’re here to help you cut through the complexity, make informed decisions, and plan confidently for what’s ahead.
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