Congress recently passed the “One Big Beautiful Bill Act”, which President Trump has now signed into law. The One Big Beautiful Bill Act (OBBBA) is a sweeping piece of legislation that extends many of the 2017 tax cuts and introduces new provisions aimed at individuals, families, and businesses.
Below are many of the key features of the Act:
Tax Changes
Tax Cuts Made Permanent
Back in 2017, Congress passed the Tax Cuts and Jobs Act (TCJA) that lowered tax rates for many Americans. Those cuts were set to expire in 2025. If they had expired, most people would have seen a big jump in their tax rate. This new bill makes the 2017 tax cuts permanent, meaning the lower tax brackets in place since 2017 will continue and the top income tax rate of 37% will remain.
Bigger Standard Deduction
The standard deduction reduces your taxable income by a certain dollar amount, lowering the taxes you owe. It’s the most common way people reduce their taxable income.
Here’s what’s changing:
- Individuals: deduction increases by $1,000 to $16,000
- Married couples filing jointly: increases by $2,000 to $32,000
- Seniors (65+): receive an extra $6,000 deduction through 2028
The “Seniors” added standard deduction essentially takes the place of Trump’s campaign promise of eliminating taxes on Social Security and adds another $12,000 deduction for married couples over the age of 65.
No Federal Tax on Overtime or Tips (Through 2028)
To boost take-home pay for working Americans, overtime earnings and tips will not be subject to federal income tax for those below certain income levels. This creates a bigger incentive for hourly workers to take on extra hours.
Car Loan Interest Deduction (Through 2029)
If you finance the purchase of a U.S.-made vehicle, you can now deduct up to $10,000 in interest on that loan from your taxable income. This is similar to how mortgage interest works—you’re getting a tax break for borrowing money to buy a car, as long as it’s made in the USA. This deduction ends after 2029.
Child Tax Credit Increased
Families with children under 17 can now claim an additional $200 per child in 2025. This amount will be adjusted for inflation each year after that. To qualify, the child must have a valid Social Security number. The credit helps reduce the amount of tax you owe directly, so it’s a dollar-for-dollar savings on your tax bill.
SALT Deduction Cap Temporarily Raised
If you pay a lot in state income tax or property tax, you’ve likely run into the “SALT deduction” limit. Previously, you could only deduct up to $10,000 of those taxes from your federal return. Now, that cap has been raised to $40,000, and will go up by 1% per year through 2029.
However, in 2030, it will drop back down to $10,000 again. Also, higher earners won’t be able to claim the full deduction—the benefit is reduced for wealthy households. For 2026, the phaseout begins at $250,000 for single filers and $505,000 for those married and filing jointly.
We often get asked what a SALT deduction is. Here is a quick recap:
SALT stands for State and Local Taxes—these include:
- State income taxes
- Property taxes
- Local (city/county) income taxes
- Sales taxes (in some cases)
Under normal federal tax rules, if you itemize your deductions, you can deduct what you’ve already paid in these state and local taxes from your federal taxable income. This prevents “double taxation”—being taxed twice on the same money.
Estate Tax Exemption Increased
Estate tax exemptions increase to $15 million per individual and $30 million per couple—creating new estate planning opportunities. This is up from $13.99 million for individuals and $27.98 million for married couples under the previous law. This exemption is indexed to inflation.
Newborn Savings Accounts
Every child born in the United States will now receive a $1,000 government-funded savings account at birth. These accounts are designed to encourage long-term savings and financial literacy. In addition to the initial government contribution, parents or guardians may contribute up to $5,000 annually in after-tax dollars, similar to contributions made to a Roth IRA or custodial account. While specific investment rules and tax treatments for growth within the account are still being finalized, the intent is to create a portable, tax-advantaged savings vehicle that can later be used for qualified expenses such as education, a first home, or even retirement.
Spending Cuts and Program Reforms
To offset some of the tax relief and continued expansion of the government deficit, the bill reduces funding for certain federal programs:
Medicaid Cuts
Medicaid is government-provided health insurance for low-income Americans.
- The tax bill cuts $700 billion in funding over 10 years.
- Starting in 2026, able-bodied adults (people who can work and don’t have dependents) must complete 80 hours a month of work, school, or volunteering to keep their coverage.
- Also, 1.4 million undocumented immigrants will lose access to Medicaid.
What this means: Fewer people will qualify for Medicaid unless they meet work or citizenship requirements.
SNAP (Food Stamps) Changes
SNAP provides grocery assistance to low-income families. SNAP replaced the food stamps program in 2008.
- The tax bill cuts $267 billion from SNAP over 10 years.
- Parents with children over age 7 must meet work requirements to continue receiving benefits.
- The work requirement age increases to 64, meaning more older adults must meet work rules.
- Starting in 2028, states will be responsible for 5% of benefit payments and 75% of administrative costs, making it more expensive for states to run the program.
What this means: Food assistance will become harder to qualify for, especially for older adults or parents who aren’t working full-time.
Changes to the Affordable Care Act (Obamacare)
The new tax law makes several changes to the ACA (healthcare coverage for those not covered by an employer or Medicare):
- Ends automatic re-enrollment — you must manually renew your coverage each year.
- Starting in 2028, you must verify income and immigration status annually to receive coverage.
- Some subsidies will expire, meaning fewer people will receive government help paying premiums.
- Open enrollment period is shortened — it ends on December 15 each year.
What this means: It will become more important to act early and be organized when renewing your health insurance each year, or you could lose coverage or financial help.
Student Loan Forgiveness Repealed
The OBBBA repeals the student loan forgiveness program that was introduced during President Biden’s term. If you were hoping for federal student loan debt to be wiped out under that plan, that will no longer happen.
What this means: Borrowers will be responsible for repaying their full student loan amounts unless they qualify for forgiveness under older programs.
Final Thoughts
This new law contains a lot of moving parts—some will benefit taxpayers directly through lower tax bills or new deductions, while others may restrict access to public assistance or healthcare programs. These changes will likely impact your tax planning, retirement strategy, estate planning, or potentially certain benefits moving forward. If you have any questions, please do not hesitate to reach out.