Understanding the One Big Beautiful Bill Act

The "One Big, Beautiful Bill" (OBBBA) introduces a wide range of permanent and temporary tax changes with real implications for you. This isn't just another political talking point—it’s a transformative law that could reshape your financial strategies, regardless of your income, age, or occupation. Let's break down what this legislation means for you.

Income Tax, Deductions & Credits

The permanent lower income tax brackets from the TCJA are here to stay, with adjusted thresholds. This means more of your income may be taxed at a lower rate. Also, the higher standard deduction continues, adjusted annually for inflation, which can simplify your tax filing.

Changes to the Child Tax Credit include both refundable and nonrefundable amounts, with new income-based phaseouts. The new $10,000 car loan interest deduction benefits those who choose U.S.-assembled vehicles. Additionally, a temporary break on up to $25,000 in tip income is on the horizon, with a list of eligible occupations coming soon.

The increase in the SALT deduction cap to $40,000 might offer relief in high-tax states, though high earners should be aware of phaseouts.

Wealth Transfer, Investment & Retiree Provisions

A temporary $6,000 “Senior Bonus” deduction is available, with eligibility based on income. Estate, gift, and generation-skipping transfer tax exemptions have permanently increased to $15 million, potentially easing your estate planning process.

You might benefit from inflation-adjusted capital gains brackets, helping you stay in lower tax ranges, while permanent relief from the Alternative Minimum Tax (AMT) could mean less complexity, although higher-income earners may see faster phaseouts.

Other Noteworthy Changes

Significant Medicaid changes include $1 trillion in funding cuts, new work/volunteer requirements, and tighter eligibility. “Trump Accounts” for eligible children offer tax-advantaged growth with specific contribution limits and investment structures.

Clean energy and EV tax credits are phasing out soon, so if you’re considering a purchase or home upgrade, now may be the time to act.

The OBBBA affects a diverse group of taxpayers, from low-income families to wealthy investors and retirees. Don’t wait for tax season to assess its impact. Start reviewing your tax strategy now, especially concerning both permanent and temporary provisions. We recommend consulting with a financial advisor or tax professional for tailored advice.