By Colleen Weber, CFP®, CPA

The One Big Beautiful Bill Act (OBBBA) became law on July 4th, following a narrow Senate passage and House approval. At 940 pages, this comprehensive legislation extends many Tax Cuts and Jobs Act provisions that were set to expire while reshaping the tax landscape for individuals and businesses alike.

As both a CPA and CERTIFIED FINANCIAL PLANNER®, I’ve spent considerable time analyzing this complex legislation to understand its implications for my clients’ financial situations. The Act makes permanent several individual tax provisions, including the lower tax brackets and enhanced standard deduction, while temporarily raising the SALT deduction cap to $40,000 for high-tax state residents. Significant changes also affect business owners, from permanent 100% bonus depreciation to enhanced estate planning opportunities with a $15 million exemption.

The tax changes will affect everyone differently, and with some provisions being permanent while others are temporary, the details matter. Here’s my breakdown of the key provisions and what they might mean for you.

Extension of the TCJA Tax Provisions and New Deductions

• The OBBBA makes many of the TCJA permanent, including tax brackets (topping out at 37%) with certain inflation adjustments.

• The OBBBA made the expiring federal estate tax exemptions permanent and increased the limits to $15 million and $30 million for single/MFJ taxpayers, respectively, indexed for inflation. This would also apply to the generation-skipping transfer tax (GSTT).

• The controversial SALT deduction for state and local taxes is increased from $10,000 to $40,000 until 2030 for those with an adjusted gross income (AGI) under $500,000 (see more on how this impacts high earners below).

• The Act extends the TCJA standard deduction along with an increase to $15,750 for single filers, $23,625 for head of household, and $31,500 for MFJ taxpayers, inflation-adjusted after 2025.

• In addition, there is a new “senior deduction” of $6,000 for those 65 and over with an AGI of less than $75,000 single/$150,000 married. Phaseouts occur above these.

• The OBBBA raises the nonrefundable child tax credit to $2,200 per child and provides for annual inflation adjustments to the credit amount beginning in 2026.

• The new Trump accounts are government-funded savings accounts for babies born between 2025 and 2028, starting with a $1,000 federal contribution and allowing families to contribute up to $5,000 per year. They provide a powerful, IRA-like wealth-building tool for higher-income families.

• Higher-income taxpayers may enjoy the now-permanent higher alternative minimum tax (AMT) thresholds taking effect in 2026. 

• The OBBBA simplifies the overall limitation on itemized deductions. It also eliminates miscellaneous itemized deductions for all but educator expenses and creates a percentage cap on deductions for higher-income individuals. 

• In a nod to the president’s campaign promise to eliminate taxes on gratuities, the Act includes deductions for tips and overtime pay. For tax years 2025-2028, up to $25,000 in tips and $12,500 (single), $25,000 (married) in hourly overtime wages (not salaries) may be deducted with phase-out for higher income earners ($150,000 single, $300,000 joint).

• New car loan interest may be deductible up to $10,000 from 2025-2028. Eligible vehicles must have final assembly in the USA, and this deduction phases out after $100,000 of income.

• Federal financial aid and student loans underwent significant changes. Key among them: greater eligibility for low-income Pell Grants, but lower caps on undergraduate and graduate student loan limits as well as low caps on parental loans (PLUS) at just $20,000 per student per year and a $65,000 cap. 

• The legislation expanded the Section 199A deduction for small businesses.
  

​​The New SALT Deduction: What High Earners Need to Know

The One Big Beautiful Bill Act significantly raises the cap on the state and local tax (SALT) deduction from $10,000 to $40,000 — but only through tax year 2029, and with a critical caveat for high-income households.

For those with adjusted gross income (AGI) over $500,000, the expanded SALT deduction phases out sharply. Specifically, the deduction is reduced by 30% of the amount your AGI exceeds $500,000. This means your effective tax rate on income above that threshold can be substantially higher than your nominal marginal rate.

For example:

• • If you earn $600,000, the additional $100,000 of income reduces your SALT deduction by $30,000 (30% of the excess over $500,000). That means your taxable income actually increases by $130,000, pushing more income into higher tax brackets and resulting in an effective federal marginal tax rate on that slice of income of roughly 45%, before considering state taxes, payroll taxes, or other impacts. 

This has meaningful planning implications. For high-earning professionals like physicians, attorneys, or business owners, there’s a clear incentive to carefully manage income recognition. Whether that means slowing Roth conversions, timing capital gains, or even reducing hours, thoughtful planning could help keep AGI under the phaseout threshold and preserve more of the expanded SALT deduction.

This is where tax planning becomes especially critical. Our team can model different income scenarios to help you understand the true after-tax benefit of earning (or deferring) additional income under these new rules.

Greater Savings With the New Act

• Section 529 educational savings accounts may now be used for more than just K-12 tuition, including books, tutoring, test preparation, and homeschool materials; and allowable distributions are expanded from $10,000 to $20,000 per year. Distributions from these accounts are also now tax-free for special education such as speech and occupational therapies and learning software expenses. 

• Newborn savings accounts may now be established and seeded with $1,000 from the federal government from 2025-2028. Further contributions may be added up to $5,000 per year and may be used for educational, first home purchase, or business start-up expenses after age 18.

What Was Taken Away

Along with the projected $3.3 trillion of additional national debt, the major criticism of the Big Beautiful Bill was the reduction of federal Medicaid and the Supplemental Nutrition Assistance Program (SNAP). There were also reductions in federal spending on many other programs. 

The new legislation:

• Reduces federal Medicaid funding by $1 trillion through reporting requirements, limits to state tax arrangements, and restrictions on state-directed payments. New work requirements of 80 hours per month are required for applicable recipients and eliminate benefits for approximately 1.4 million undocumented immigrants.
• According to the Congressional Budget Office (CBO), the legislation will cut about $490 million from Medicare funding, due to statutory pay-as-you-go laws from 2010.
• Reduces funding for SNAP by $186 billion through 2034. In addition, the new rules tighten work requirements for benefits and require state funding by 2028. 
• Affordable Care Act rules were tightened. Automatic ACA re-enrollment was eliminated and income/immigration status must be verified annually, starting in 2028. Subsidies for premiums will now expire and the enrollment window was shortened.
• Clean energy funding was sharply reduced, as investment credits were eliminated for wind, solar, electric vehicle, and home-efficiency credits. Funding and credits were maintained for carbon capture and biofuels.

What Does All This Mean for Your Financial Future?

The One Big Beautiful Bill Act represents one of the most significant tax changes we’ve seen in years, and it will take time for financial professionals to fully understand how these complex provisions apply to individual situations. Every family’s circumstances are unique, and maximizing the benefits from these new rules typically requires guidance from someone who understands both the tax and planning implications.

As both a CPA and CFP®, I’m actively analyzing this legislation and working with clients to understand how these changes might impact their financial strategies—whether that involves timing major decisions, updating estate plans, or simply navigating the new tax landscape.

If you’d like to explore how the Big Beautiful Bill might affect your particular situation, I invite you to reach out. You can schedule a complimentary consultation online or call me at (952) 470-0750 to discuss what these changes could mean for your financial planning objectives.

About Colleen

Colleen Weber is a fee-only financial advisor, CERTIFIED FINANCIAL PLANNER® professional, and CPA based in Chanhassen, Minnesota. With more than 20 years of financial planning experience, Colleen provides comprehensive financial planning and wealth management. She specializes in serving clients nearing retirement, retirees, busy professionals, and women. She is passionate about developing financial plans that save clients on taxes and investment strategies that help them pursue their goals. Learn more about Colleen by connecting with her on LinkedIn or booking a complimentary phone call meeting.