The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. As the new rules roll out, we’re hearing a lot of the same questions: What does this mean for me? What should I do next?
When you have tax questions, we have answers. Let’s dive into the changes that may impact your personal taxes so you can continue making smart, confident decisions. (If you have a business, be sure to check out this article on how the OBBBA may impact your company.)
*Phase-outs: There are income thresholds and phase-outs for many of these provisions. Our team will research the applicable phase-outs for your unique situation.
Good News: 2017 Tax Cuts are Here to Stay
Congress made the personal income tax cuts from the 2017 Tax Cuts and Jobs Act permanent. This means the current tax brackets (10% to 37%) will not expire as planned in 2026.
What does this mean for you?
This is a major win for working families and means more money stays in their pockets. For example, a married couple that earns $200,000/year would have seen their top tax rate jump from 24% to 28%, costing them about $6,000 more each year if the cuts had expired. Now, they get to keep that money.
Charitable Giving Deductions are Changing
Beginning in 2026, there will be new limits on charitable giving tax deductions.
If you take the standard deduction, you’ll be able to deduct up to $1,000 (single) or $2,000 (married filing jointly) in donations. (Contributions to Donor-advised funds do not qualify.)
If you itemize, you can only deduct contributions that exceed 0.5% of your adjusted gross income (AGI). For example, with $300,000 AGI, only donations over $1,500 can be deducted. If you’re in the 37% tax bracket, this limitation means that your effective benefit drops to about 35%.
What does this mean for you?
- Smaller donations may no longer reduce your taxes until you exceed the new thresholds.
- High earners will get slightly less tax benefit from charitable giving.
- Those with larger charitable giving strategies will benefit from the now-permanent 60% AGI limit for total deductible gifts.
Child Tax Credit Increases
From tax years 2025 to 2028, the Child Tax Credit (CTC) increases from $2,000 to $2,200 per child.
Lower-income families who earn around $25,000-40,000 per year can receive a refund of up to $1,700 per child, even if they owe no federal income tax.
What does this mean for you?
Families will either reduce their tax bill or increase their refund.
State and Local Tax (SALT) Deduction Cap Increases Temporarily
*Phase-outs
The SALT (State and Local Tax) deduction allows taxpayers who itemize their deductions to write off certain state and local taxes on their federal income tax return.
For tax years 2025-2029, the SALT deduction cap is increasing from $10,000 to $40,000 for most taxpayers.
What does this mean for you?
Taxpayers in states with high property and income taxes, such as California, New York, New Jersey, and Pennsylvania, can deduct up to 4x more property, sales, or income taxes already paid.
Itemizing is now more attractive than taking the standard deduction since only itemizers can claim SALT.
Senior Tax Deduction
*Phase-outs
Each taxpayer who is 65+ will receive a $6,000 deduction on top of the standard (or itemized) deduction, or up to $12,000 total for a qualifying married couple.
What does this mean for you?
Seniors will save on taxes. The Social Security Administration and tax analysts say this deduction will make up to 90% of seniors exempt from paying federal income tax on Social Security benefits — up from 64% before. In many cases, this deduction is what people meant when they said, “No tax on Social Security.”
Auto Loan Interest Deduction
*Phase-outs
The OBBBA introduces a temporary, above-the-line deduction for up to $10,000 in annual auto loan interest on qualifying vehicle purchases, offering modest tax savings for many borrowers between 2025–2028. Actual savings depend on vehicle value, loan structure, your income level, and whether the vehicle qualifies.
Vehicle requirements:
- New (not used)
- For personal use (not leased, commercial, fleet, salvage, or refinanced under ineligible terms)
- Assembled in the U.S.
- Under 14,000 lbs. gross vehicle weight (cars, small SUVs, pickups, motorcycles)
What does this mean for you?
Truthfully, this deduction won’t make a big impact on most borrowers, who pay much less than $10,000/year in auto loan interest.
For example, the average new-car loan is $41,900 at ~7.2% APR. That means you’d pay about $3,000 in interest per year and save around $900 with the new deduction.
Tips and Overtime Deduction
*Phase-outs
For tax years 2025-2028, employees who receive tips or overtime can deduct up to $12,500/year (single) or $25,000/year (married filing jointly).
What does this mean for you?
For many people who earn tips or overtime, this will increase take-home pay, without changing tip reporting or overtime calculations. However, keep in mind you still need to pay Social Security, Medicare, state, and local taxes on this income.
Trump Accounts
The Department of Treasury will automatically contribute $1,000 into a tax-deferred savings accounts for U.S. citizens born between 2025 to 2028. Children born after 2028 can still have one of these “Trump Accounts,” but they will not receive this initial $1,000 seed money. Trump Accounts covert to Traditional IRA accounts once a child turns 18.
These accounts allow individuals and families to build wealth in a tax-advantaged way, without the restrictions or penalties of many other accounts. Earnings on the account grow tax-deferred and are taxed as ordinary income upon withdrawal.
Individuals and employers can contribute up to $5,000 per child. Contributions are not tax-deductible, nor taxed upon withdrawal.
Funds can be used for multiple purposes: retirement, higher education, or buying a first home. But like IRAs, Trump Accounts pose penalties for withdrawals made before age 18 or for nonqualifying uses.
What does this mean for you?
Young people get a head start on saving, and families can grow wealth in a tax-favored way.
Let's Plan Together
Still have questions? You’re not alone! There is so much to understand in this new law, and we’re here to help you make sense of it. Please reach out to your Customer Advocate or contact our office if you have any questions. Our goal is to help you work through these changes thoughtfully and move forward with clarity, calm, and confidence.
