What “OBBBA” Means for Your Taxes
On July 4, President Trump signed a sweeping piece of legislation into law – the “One Big Beautiful Bill Act” (OBBBA). Naturally, this has sparked questions from clients and friends alike: Does this affect my taxes? Should I be making changes to my plan?
I’ll spare you my opinions or political takes, and simply want to offer you a grounded overview of the changes that are most likely to impact the people we serve… high-earning families, business owners, and professionals who want their financial lives to reflect their values and long-term goals.
Here’s what you need to know…
TCJA Tax Rates Made Permanent
The lower tax brackets for individuals and corporations first introduced in 2017 by the Tax Cuts and Jobs Act (TCJA) are now permanent [1a+2]. This means lower federal income taxes for the majority of taxpayers, and allows for more confident long-term tax planning.
p.s. when we use the word “permanent”... that means until a future tax legislation replaces it. This is important because the 2017 tax law (as well as this one) have certain features that “sunset” in a planned future year.
Higher Standard Deduction
$15,750 for single filers
$31,500 for married filing jointly (beginning in 2025 and indexed for inflation) [1b]
Child Tax Credit Expanded
Beginning in 2025, the child tax credit increases to $2,200 and will be indexed to inflation [1c]. It remains partially refundable.
SALT Deduction Limit Raised
The cap on state and local tax (SALT) deductions jumps from $10,000 to $40,000 in 2025 and will rise 1% annually through 2029 [1d]. It’s a meaningful boost for taxpayers in high-tax states like New York and California.
Note: the deduction phases out for incomes above $500,000 (MAGI).
Qualified Business Income (QBI) Deduction Made Permanent
This is HUGE for business owners! The 20% QBI deduction – initially set to sunset in 2025 – will now remain in place indefinitely [1e]. This is welcome news for many business owners. The usual income thresholds and limits still apply.
Bonus Depreciation
Effective for this year on properties bought after 1/20/2025, it provides for a 100% bonus depreciation and new expensing for certain real property, including nonresidential property, which can help businesses recover costs more quickly. This is good news for real estate investors and business owners
NEW Car Loan Interest Deduction
A new and surprising twist: interest on car loans (up to $10,000) for new vehicles assembled in the U.S. will now be deductible – even if you don’t itemize [1f+5].
Applies from 2025 through 2028
Includes both gas and electric vehicles
Income phaseouts begin at $100,000 single / $200,000 MFJ (fully phased out at $250k)
NEW Deduction for Seniors (But Social Security Is Still Taxed)
Despite some misleading headlines, Social Security income is still subject to tax. However, starting in 2025, a new deduction is available for taxpayers 65 and older:
$6,000 for individuals
$12,000 for married couples filing jointly
(This deduction phases out above $75,000 / $150,000 in MAGI and is available through 2028 [1g].)
Estate & Gift Tax Exemption Doubled (Again)
The estate and lifetime gift tax exemption is rising to $15 million per person (or $30 million per couple) starting in 2026 [1h+3]. That’s more than double the originally scheduled reversion level and will be adjusted for inflation.
EV Tax Credit Being Phased Out
The electric vehicle tax credit - up to $7,500 for new EVs and $4,000 for used - is on its way out. It ends for vehicles purchased after September 30, 2025, unless Congress acts to extend it [1i+5].
“Trump Accounts” (does he have to put his name on everything?)
Babies born between 12/31/2024 and 1/1/2029 will qualify and receive a $1,000 contribution from the government. These have several nuances to how they’ll work. For now, here’s a bit more.
Final Thoughts
This bill will keep taxes lower for real estate investors, business owners and mid to high earners, etc. This bill is massive, and there is certainly more to unpack. I’ve highlighted just a few provisions that could affect your life in the near term. If you're wondering how this affects your personal plan, your business, or upcoming decisions, reach out to me and we can begin planning alongside your CPA.
Sources:
[1] Congress.gov
[1a] Extension of TCJA (page 216)
[1b] Standard Deduction Amounts (page 217)
[1c] Child Tax Credit (page 221)
[1d] SALT Deduction (page 244)
[1e] Qualified Business Income (page 224)
[1f] Car Loan Interest (page 263)
[1g] Senior Deduction (page 218)
[1h] Estate and Gift Tax Exemption (page 227)
[1i] Electric Vehicle Tax Credit (page 462)
[2] “Permanent” here means not scheduled to expire but subject to future legislation