The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. It's a comprehensive, 870-page U.S. federal statute passed by Congress. The bill focuses on tax and spending policies that are aligned with President Trump’s second-term agenda. Below is a breakdown of some of the bill’s key provisions:
Permanently extends the 2017 Tax Cuts and Jobs Act (TCJA): These cuts were set to expire at the end of 2025. The reduced marginal tax brackets are now permanent. They are as follows: 10%, 12%, 22%, 24%, 32%, 35%, 37%. Generally speaking, this amounts to lower taxes for most Americans.
Bonus Deduction for Age 65+: Each taxpayer age 65 or older receives a new $6,000 additional deduction, with a benefit phase out beginning at Adjusted Gross Income (AGI) above $150,000 (MFJ) and$75,000 (other filers). Effective for 2025 through 2028. While we didn’t get tax-free Social Security, this is a big step in the right direction.
Raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers earning under $500,000; reverting back to $10,000 after five years (2028)
Qualified Business Income Deduction (QBI): Great news for business owners and self-employed individuals. This 20% deduction on business income is permanently extended. The phase-out range starts at $394,600 (MFJ) and $197,300 (all others) of taxable income in 2025.
Eliminates Taxes on Tips and Overtime Pay: For up to $25,000 in tips and $12,500/$25,000 in overtime for single/joint filers, with income limits of $150,000/$300,000. This is effective 2025 but expires in 2028.
Increases the child tax credit from $2,000 to $2,200 starting in 2025.
Restores 100% bonus depreciation for qualified property and immediate deductibility for domestic R&D expenses, with retroactive options for small businesses.
Raises the Lifetime Estate and Gift Tax Exemption to $15 million: Inflation-adjusted, starting in 2026. Currently the exemption sits at $13.9 million for 2025. Increased to $15 million in 2026 (per person) and indexed for inflation, making it $30 million per couple in 2026.
Auto Loan Interest Deduction: New deduction for auto loans with a maximum deduction of $10,000. This phases out when Modified Adjusted Gross Income (MAGI) exceeds $200,000 (MFJ), and $100,000 (other tax filers). Only effective for auto loans originated in 2025 through 2028.
Trump Accounts: An IRS-funded account created for minors. The IRS will fund the account with $1,000 for children born in 2026 through 2028. It also allows for $5,000 in annual contributions (before the beneficiary turns 18). No distributions before age 18. An awesome tool for investment education!
Remember when Elon Musk & President Trump were engaging in a "Jerry Springer-style" public dispute? The additional government spending introduced by the OBBB served as the culprit. In short, Musk felt as if the D.O.G.E. efforts were being undermined by this increased spending.
The bill is projected to add approximately $3–3.3 trillion to the federal deficit over 10 years. This is derived from tax cuts costing ~$4.5 trillion in revenue, which is only partially offset by ~$1.3 trillion in spending cuts.
Other expenditures included in the bill are $350 billion for border security, with $46.5 billion for border wall construction, $45 billion for immigrant detention, and $32 billion for enforcement and deportation operations.
Only time will tell if the One Big Beautiful Bill is proven to have a positive impact on our economy. But what are the experts currently saying based upon what we know today?
The proponents of the bill claim that it delivers "the largest middle & working-class tax cut in history", estimating approximately $10,000/year in savings for typical families. This should increase consumer spending and overall economic growth.
Antagonists of the bill warn of increased inequality and harm to immigrant communities (based on border security spending) as well as low-income families. This is due to new work requirements in order to receive Medicare benefits, specifically that able-bodied adults must either work or volunteer for 80 hours/month in order to receive benefits.
The One Big Beautiful Bill is very large & complex, wrapped in political emotion. While this guide won't answer all of your questions, it will at least get you started. Getting a handle on your own personal cashflow, tax rate, & investments will help you better understand how this bill impacts your finances.
Feeling overwhelmed? Consider working with an advisor to help get you on track. Click here to schedule a call with me.
Important Disclaimer: The information provided in this guide is for educational purposes only. Nothing here within should be considered investment or tax advice. Please consult with a financial advisor and/or CPA when considering investment and tax decisions.
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