What You Need to Know About
The One Big Beautiful Bill (OBBB)
By Ruthanne Monteleone, CFP® & Seth Borders CFP®, CPWA®
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (OBBB) into law—the most comprehensive tax reform since the 2018 Tax Cuts and Jobs Act (TCJA). Since then, we’ve been reviewing the changes and fielding questions from clients eager to understand how it impacts their plans.
Our mission has always been to help you make informed financial decisions, and the level of interest in this bill shows we’re achieving that goal. The question we hear most:
“How does this affect my plan?”
Our first draft of this post was over six pages long and even we struggled to read all the way through it. We decided to include, what we believed to be, the most pertinent and relevant information to our clients. This post is not all encompassing and we believe that’s for the best. If you would like all, and I do mean all, of the details associated with the OBBB we’re happy to provide them to you. While some details are still emerging, here’s what we know so far.
What’s Changing?
Much of the OBBB makes TCJA provisions permanent, including:
- Tax Brackets & Rates: Keeps lower brackets (10%, 12%, 22%) with inflation adjustments.
- Standard Deduction: Permanent increase starting 2025—$31,500 (joint), $23,625 (head of household), $15,750 (others), indexed for inflation.
- Personal Exemption: Permanent elimination
- Child Tax Credit: Permanent with max of $2,200 starting 2026, inflation-adjusted.
- Mortgage Interest Cap: $750,000 limit stays.
- Itemized Deductions: Prior set limits now made permanent; caps value at 35 cents per dollar for top earners. (IE personal casualty losses, miscellaneous itemized deductions, certain moving expenses, etc.)
- AMT Changes: Keeps higher exemption but reverts phaseout thresholds to 2018 levels ($500,000 single/$1 Million Joint), indexed thereafter.
Temporary Enhancements (2025–2028)
- Senior Deduction: $6,000 per qualifying individual, phases out over $75,000 single or $150,000 Joint income
- Tip Income Deduction: Up to $25,000 for workers in tipped industries; phases out above $150,000 Single AGI ($300,000 Joint).
- Overtime Deduction: Up to $12,500 ($25,000 joint); phases out at same thresholds as above.
- Auto Loan Interest Deduction: For U.S.-assembled new cars, up to $10,000, income limits apply.
Other Key Changes
- SALT Cap: Temporarily raised to $40,000 for 2025, increased 1% annually through 2028, then reduced to a flat $10,000 in 2029 and thereafter.
- Charitable Contributions: New permanent above-the-line deduction—$1,000 ($2,000 joint). Also a .5% Floor on itemized deductions for charitable contributions.
- Green Energy Credits: Many credits repealed after 2025.
Social Security Taxation – The Hot Topic
Despite campaign rhetoric, Social Security isn’t fully tax-free. Instead, the OBBB introduces a larger senior deduction ($6,000 single / $12,000 joint), phasing out at higher income levels. This change provides a meaningful break for middle-income retirees without weakening trust funds as much as eliminating taxation altogether.
Many clients are asking—should I change my withholding? Does this change when I should file? Does this mean I can retire early?
The short answer is, it depends. For now, we’re not making immediate changes to withholdings or filing strategies—it’s too early and would be more guesswork than planning. We’ll adjust once the IRS releases detailed guidance.
However, we’re going to update and incorporate these changes into our client’s plans and make sure they understand their impact. An additional deduction will be helpful for everyone who is eligible to receive it, but a $12,000 deduction for couples if unlikely to significantly sway retirement timeframes.
What Should You Do Now?
If you have questions, reach out—we’re here to help you understand how these changes affect your plan.