Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) contains a variety of provisions that will impact individual investors, families, consumers, and businesses. Our financial planners have analyzed the language of the law in order to better understand such effects. Our aim here is to summarize several pertinent categories of change and provide resources for further education. As always, we welcome your questions and would be glad to discuss your specific situation and how this law impacts your household.
Please note that final regulations have not yet been written, as of July 2025.
Taxes
The OBBBA makes the tax rates from 2017’s Tax Cuts and Jobs Act permanent. The 7 tax brackets will continue to be 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Additionally, the following changes go into effect this year, effective January 1, 2025:
| Standard Deduction | Permanently increased from $15,000 to $15,750 for Single and $30,000 to $31,500 for Married Filing Jointly (MFJ) |
| Enhanced Deduction for Seniors |
$6,000 bonus deduction for seniors
Expires at the end of 2028 |
| Estate and Gift Tax Exemption |
Makes higher exemption permanent $13.99 million in 2025, increasing to $15 million in 2026 |
| State and Local Tax (SALT) Cap |
Increased from $10,000 to $40,000, with 1% increases through 2029
Reverts to $10,000 in 2030 |
| Child Tax Credit |
Increased from $2,000 to $2,200 per child, with $1700 refundable, with inflation adjustments
|
Auto Loans
The OBBBA contains several provisions relating to automobiles, ranging from new deductions to the elimination of EV-related tax credits:
| Auto Loan Deduction (New) |
Deduction Period:
Maximum Deduction:
Qualifying Vehicles:
Assembly Requirement:
Use Restrictions:
Income Limits for Eligibility:
MAGI Phase-Out Details:
|
| Electric Vehicles |
Effective October 1, 2025:
There will be no federal tax credit for electric or plug-in hybrid vehicle purchases after September 30, 2025. |
Trump Accounts
The OBBBA created a new savings vehicle called the “Trump Account” for US children born after December 31, 2024, and before January 1, 2029. This account, designed to encourage saving habits, will receive a one-time $1,000 deposit from the federal government.
- Contributions may be invested, and any growth will appreciate on a tax-deferred basis
- The beneficiary (child) becomes the account owner at age 18
- The full balance can be withdrawn by the beneficiary once they become the account owner
- Withdrawals are taxed at ordinary income rates
- If “qualified” (e.g., for expenses relating to education, small business, first-time home purchase) there are no further penalties
- If “non-qualified” an additional 10% penalty applies to withdrawals for account holders under 59½ years of age
- Beyond the initial deposit, families are eligible to make additional contributions of $5,000 per year until the beneficiary reaches 18
- Employers may also offer limited contributions as an employment benefit
For families wishing to jumpstart savings for children born during this period, the $1,000 initial deposit is a catalyst. The following illustrations represent the 18-year growth of the $1,000 initial deposit, with and without additional contributions, assuming an average annual return of 8%.
Details on the Trump accounts regarding custody, trading, and administrative processes are currently still being ironed out. Stay tuned for developments.
There are many types of savings vehicles for children with varying benefits, requirements, and rationales. Speak with your Financial Planner to better understand the right fit for your financial objectives.
Sources : https://taxfoundation.org/blog/trump-accounts-could-be-better/; https://www.npr.org/2025/07/08/nx-s1-5455647/trump-accounts-babies-what-to-know; https://www.congress.gov/bill/119th-congress/house-bill/1/text/enr
Education Planning
529 Accounts
The OBBBA contains important provisions that relate to Section 529 Education Plans, expanding the definition of and limits on qualified expenses:
- Building upon expansions included in the Tax Cuts and Jobs Act of 2017 (TCJA), so-called qualified expenses have been further expanded to include tuition, fees, books, supplies, equipment, and other expenses to enroll in or attend an approved postsecondary credential program; fees for testing as required to obtain an approved postsecondary credential; and fees for continuing education as required to maintain an approved postsecondary credential. Additionally, there is more coverage for expenses including tutoring, online education materials, and educational therapies. These changes went into effect immediately following the bill enacted as law on July 4, 2025.
- Beginning January 1, 2026, the total limit for all K-12 expenses will rise to $20,000 per year (from $10,000).
- Some state 529 plans may have variations
Student Loans
There are a few changes from the OBBBA that will impact student loan borrowers, including but not limited to the following:
- Changes in repayment plan options and income-driven repayment plans
- Elimination of economic hardship/unemployment deferments
- Limits on borrowing for graduate programs and Parent PLUS loans
|
Before OBBBA |
After OBBBA |
Key Takeaways |
|
| Qualified Expenses (529) | Tuition, Books, Eligible Expenses for approved College/ Apprenticeship Programs | All as before, plus Postsecondary education credentialing fees and materials | Expansion of covered expenses and increased support for a variety of post-secondary pursuits. |
| Annual Limit for K-12 Expenses | $10,000 Annually (provided from (TCJA) | $20,000 Annually (goes into effect in 2026) | Higher limits on qualified K-12 spending from 529 plans |
| Student Loans | Since 2020, student loans can be repaid up to $5,250 per year from compensation, tax free and was set to expire in Jan 2026 | From 2026 forward, this cap will be inflation-adjusted and is now permanent | Must be employed by an employer which has a repayment plan in effect |
Scholarship Tax Credit:
Beginning in 2027, taxpayers can donate up to $1,700 to a “Scholarship Granting Organization” and receive a non-refundable tax credit. Such organizations are designed to support school choice and fund the educational expenses of eligible students.
Things to bear in mind:
- States can choose whether to opt into this program; guidance on which states have opted in is forthcoming
- Details on “approved” scholarship granting organizations are forthcoming
- Taxpayers cannot “double dip” by seeking this tax credit in addition to a charitable deduction. Check with your tax preparer to see which approach most benefits your tax return
Sources: https://www.brookings.edu/articles/obbba-would-extend-a-student-loan-tax-break-that-only-benefits-the-best-off-borrowers/; https://www.elfi.com/what-student-loan-borrowers-need-to-know-about-the-big-beautiful-bill/; https://rothcocpa.com/trend/the-one-big-beautiful-bill-sgo-tax-credits-what-we-know-and-dont-yet-know/
Charitable Planning
With increased standard deductions, several charitable planning updates are important to note.
- Charitable deductions may be taken only to the extent to which they exceed 0.5% of adjusted gross income
- Taxpayers in the 37% bracket are limited to a 35%tax deduction for charitable gifts.
- The higher TCJA-era limit of 60% of AGI for cash gifts made to certain qualifying charities has been made permanent (previously scheduled to expire in 2025)
- Beginning in 2026, and continuing indefinitely, non-itemizers can take a charitable deduction of $1,000 ($2,000 MFJ). Gifts to Donor Advised Funds are excluded
| Before OBBBA | After OBBBA | Key Takeaways |
| Cannot claim a charitable contribution unless you itemize | Some provisions for small cash gifts ($1000, $2000 MFJ) and with other deductions at the SALT level, some may now benefit from itemizing their charitable gifts. Goes into effect in 2026 permanently | Taxpayers may benefit from itemizing charitable contributions under the new law. Speak with your planner or tax preparer for specific strategies. |
| 60% Deduction limit for cash gifts to qualifying charities set to sunset in 2025 | 60% limit is permanent | Higher deductibility for cash contributions |
Increasing standard deductions have made itemizing less common, resulting in a decrease in charitable giving. It is hoped that these new provisions encourage additional giving by enhancing related tax benefits.
Sources: https://www.forbes.com/sites/martinshenkman/2025/07/13/charitable-planning-after-the-big-beautiful-bill-obbba-is-different/; https://doublethedonation.com/nonprofit-fundraising-statistics/
As is evident, the OBBBA contains a multitude of wide-ranging provisions with a variety of impacts – and we’ve only scraped the surface. Our team of planners will continue to synthesize developments and monitor guidance. Please contact us to discuss your situation and how this new law may impact you.
What about business owners? While this article focused on individual taxpayers, the bill also brings many changes for businesses and their owners. Key provisions include the permanent extension of the 20% deduction for qualified business income, an increase in the exemption for Qualified Small Business Stock, and a higher estate and gift tax threshold—now $15 million per person. These updates may create new tax planning opportunities or warrant revisiting existing strategies. For further information, please reach out to your FLP team members.