In July, the One Big Beautiful Bill Act (“OBBBA” or the “bill”), yes, that’s the official name, was passed just in time to prevent many provisions of the 2017 tax law from expiring. As is often the case with tax law changes, including with the OBBBA, some changes are permanent while others are temporary. No matter where you are in your career, whether you are just starting out, running your own practice, or planning for a work-optional future, the tax changes in OBBBA could influence how you save, invest, and plan for financial independence.

At more than 300 pages, the legislation is dense. Below is a concise overview of the most relevant changes in the new federal tax law and how they may affect your long-term financial strategy.

Everyday Income Tax Changes

1. Lower tax brackets will continue (effective 2025, with no scheduled end date).

The income tax cuts introduced in 2017 were set to expire but will now remain in place. Certain brackets also receive an extra inflation adjustment, allowing more of your income to be taxed at the lower rates.

2. Higher standard deduction amounts (effective 2025, with no scheduled end date).

The standard deduction increases to $15,750 for single filers and $31,500 for married couples filing jointly. These amounts will be adjusted annually for inflation.

3. Alternative Minimum Tax (AMT) relief continues (effective 2026, with no scheduled end date).

While the higher AMT exemptions remain, it actually increases the risk for high earners by lowering the income level where the exemption starts to disappear and doubling the speed at which it phases out.

Deductions and Charitable Giving

4. State and Local Tax (“SALT”) cap temporarily lifted (2025-2029 unless extended).

If you live in a high-tax state such as D.C., New York, New Jersey, Maryland, or California, this change may matter to you. The federal deduction for state and local income and property taxes rises from $10,000 to a $40,000 cap in 2025 per tax return. The “per tax return” limit is unusual because the $40,000 cap is the same for both single filers and married couples filing jointly. The benefit phases out at higher income levels and, unless Congress acts again, the cap will drop back to $10,000 in 2030.

5. Miscellaneous itemized deductions remain eliminated (effective 2026, with no scheduled end date).

The 2017 tax law removed many small miscellaneous deductions, and OBBBA makes that change permanent.

6. New rules for charitable gifts apply even if you do not itemize (effective 2026, with no scheduled end date).

Starting in 2026, you may deduct up to $1,000 in qualified donations if you file as single, or $2,000 if you file jointly, without itemizing. If you do itemize, only contributions above 0.5% of your adjusted gross income (AGI) can be deducted.

Longer-Term Wealth and Retirement Planning

7. Larger estate and lifetime gift tax exemption (effective 2026, with no scheduled end date).

The scheduled drop in the federal estate and lifetime gift tax exemptions has been averted. Starting in 2026, you can transfer up to $15 million for single filers ($30 million for married couples filing jointly) free of federal estate or gift tax, with the exemption indexed to inflation each year. However, many states, including D.C., Illinois, Massachusetts, Minnesota, Oregon, Rhode Island, and Washington, do not match the high federal exemption. Some have state-level exemptions as low as $1 million, so estate planning tailored to your state and circumstances remains essential.

8. Extra deduction for seniors (2025-2028 unless extended).

Adults age 65 and older can claim an additional $6,000 deduction, subject to gross income phaseouts of $75,000 to $150,000 for single filers and $150,000 to $250,000 for married couples filing jointly.

9. Child tax credit increase (effective 2026, with no scheduled end date).

Beginning in 2026, the credit rises to $2,200 per qualifying child and will be adjusted annually for inflation.

Home and Energy-Related Proposals

10. Mortgage interest limits remain (effective 2026, with no scheduled end date).

The cap of $750,000 on mortgage debt eligible for interest deductions will continue without a scheduled sunset.

11. Energy-related credits rolled back (electric vehicles after September 30, 2025; home improvements after December 31, 2025).

Federal tax breaks for purchasing electric vehicles end for cars acquired after September 30, 2025. Credits for energy-efficient home improvements and residential clean-energy upgrades are eliminated for expenditures made after December 31, 2025.

12. Deduction for car loan interest (2025-2028 unless extended).

Households may deduct up to $10,000 of interest on car loans for vehicles assembled in the U.S.

Education and Family Savings

13. 529 plan uses are expanded (effective 2025, with no scheduled end date).

529 plans are now more flexible: tax-free withdrawals can be used for tutoring, testing fees, certain professional credentials, and homeschool materials.

14. ABLE account rollovers from 529 plans (effective 2025, with no scheduled end date).

The bill makes permanent the tax-free rollover of 529 funds into Achieving a Better Life Experience Act (“ABLE”) accounts established for 529 beneficiaries. An ABLE account is a tax-advantaged savings plan that helps individuals with disabilities save without losing eligibility for certain public benefits.

15. New child savings accounts (2025-2028 unless extended).

Because these accounts are new, many details are still being clarified. Children born between 2025 and 2028 will receive a $1,000 federal deposit to start their accounts. Parents and employers can contribute up to $5,000 per year, with the limit adjusted annually for inflation, and the funds will grow tax-free. Qualified withdrawals will be taxed at long-term capital gains rates.

Key Provisions for Business Owners and Independent Professionals

16. 20% qualified business income (“QBI”) deduction made permanent (effective 2025, with no scheduled end date).

The bill makes the 20% QBI deduction permanent for pass-through businesses such as partnerships, S corporations, and many solo practices.

17. Bonus depreciation restored (effective for property placed in service after January 19, 2025).

Full 100% bonus depreciation is back, allowing business owners and real estate investors to immediately deduct the entire cost of qualifying property in the year it is placed in service. This reinstatement can significantly reduce taxable income for those purchasing new or used business equipment, vehicles, or certain property improvements.

18. Higher expensing limits under Section 179 (effective 2025, with no scheduled end date).

Small businesses can now expense up to $2.5 million of qualifying property immediately. The phaseout threshold is also higher and will be adjusted annually for inflation.

Other Key Notes

19. No change to Social Security taxation.

Contrary to what you may have heard or read, there were no changes to how Social Security benefits are taxed.

20. “Enhanced” Affordable Care Act premium tax credits set to expire (effective end date of December 31, 2025).

During the COVID-19 pandemic, the American Rescue Plan Act of 2021 temporarily increased premium tax credits for those buying health insurance through the Affordable Care Act (ACA) Marketplace. Congress extended these enhanced credits through the Inflation Reduction Act of 2022, but OBBBA does not extend them further. Beginning in 2026, the credits will revert to the 2021 rules, which means no premium tax credits for households with income above four times the federal poverty level.

Putting It in Perspective

Tax laws can change at any time, but OBBBA offers a clearer landscape for the next several years. Coordinating your tax, investment, and estate strategies at both the federal and state levels can help you make the most of these new rules. If you’d like to review how OBBBA may impact your plan, feel free to reach out.

References:

H.R. 1 – One Big Beautiful Bill Act, 119th Congress (2025-2026), https://www.congress.gov/bill/119th-congress/house-bill/1.