What’s in the new One Big Beautiful Bill Act?
President Trump signed into law the One Big Beautiful Bill Act (OBBB) on July 4th 2025. After intense negotiations in the House and the Senate, the revised, comprehensive bill is now law.
What’s in it for you?
· Tax certainty – The new law makes permanent many parts of the Tax Cuts and Jobs Act of 2017 (TCJA).1 This tax certainty is helpful to individuals but also businesses who need to plan several years into the future. Without certainty around tax deductions for business investment, businesses can hold back spending and hiring.
· Makes permanent current tax rates.
College
· Expanded uses for 529 college savings plans – Funds can now be used to cover post-secondary training and credentialing.
· Student loan payments by employer – Currently excluded from taxable income up to certain limits; new law extends it and indexes the cap for inflation.
New Trump Accounts
· Establishes new tax qualified accounts for babies born in 2025-2028
· One-time contribution by the US government of $1,000
· Accepting cash contributions beginning January 1, 2026
· Contributions up to $5,000 per year; no more one beneficiary reach 18
· Employer contributions are excluded from income up to $2,500 annually
· Must be invested in an index or diversified portfolio of US stocks
Deductible items
· Slightly increases the standard deduction to $31,500 for 2025 and increases it for inflation in future years.
· Adds a senior deduction of $6,000; phases out when modified adjusted gross income is above $75,000); for 2025-2028 only.
· Permanently eliminates the personal exemption.
· Increases the child tax credit to $2,200 in 2026.
· Makes permanent the home mortgage interest deduction up to $750,000.
· Increases the cap on itemized deductions for state and local income taxes (SALT) to $40,000 for 2025 with further increases through 2029; phases down to $10,000 for incomes above $500,000.
· Limits the amount of itemized deductions for taxpayers in the top tax brackets to 35 cents on the dollar.
· Limits or eliminates other itemized deductions including personal casualty losses, miscellaneous itemized deductions, and certain moving expenses.
· Makes the increase in the Alternative Minimum Tax (AMT) exemption permanent.
· Creates a $1,000 deduction for charitable contributions; $2,000 for joint filers.
· Repeals many of the green energy tax credits such as electric vehicle and residential energy efficiency credits.
· Makes tip income deductible for 2025-2028; deduction phases out for incomes greater than $150,000 (single) or $300,000 (married filing jointly).
· Makes overtime pay deductible for 2025-2028; pay is capped at $12,500 (single), $25,000 (joint); phases out for incomes above $150,000 (single) or $300,000 (married filing jointly).
· Makes auto loan interest deductible for new autos made in the United States for 2025-2028; phases out for incomes above $100,000 (single) or $200,000 (married filing jointly).
Estate taxes
· Increases the estate and gift tax exemption to $15 million (single) and $30 million (married filing jointly) starting in 2026.
As with most tax laws and rules, each new provision has certain limitations and requirements that must be met. This list is intended to provide you with a brief description of the new tax law. You should consult a tax professional for more detailed information.
Figuring out how these changes may affect you may not be straightforward. If you have questions about the new tax law, give me a call. I’m here to help. You can schedule a quick call with me by clicking HERE.
Lyman H. Jackson
Lyman@PlanWithFPS.com
617-630-4978
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1 Without the new bill, tax rates would rise to the higher pre-2018 tax rates.
©2025 by Financial Planning Solutions, LLC (FPS), a Registered Investment Advisor. Reprinting or redistribution only by permission. This blog was written by a professional with 30 years of real-world experience in finance. AI did not write this article. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. The information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see the important disclosures link at the bottom of this page.