On July 4, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBBA), a sweeping tax and spending package spanning nearly 900 pages. The legislation delivers an estimated $4.5 trillion in tax cuts, reshapes federal spending priorities, and allocates significant funding toward border security and national defense.
From business owners to retirees to high-income professionals, the wide-ranging provisions in this bill are expected to touch nearly every corner of the economy. Whether you’re looking to reduce your tax burden or optimize your financial strategy, understanding the OBBBA’s key provisions can help you make informed decisions in the years ahead. Here’s what you need to know.
Key Tax Provisions Made Permanent
One of the key elements of the OBBBA is the permanent extension of several tax provisions originally introduced under the 2017 Tax Cuts and Jobs Act (TCJA). For high earners, business owners, and families with significant assets, this extension brings both opportunity and complexity. It also makes proactive tax planning more important than ever.
Here’s a breakdown of the changes and what they mean for your financial plan:
Individual Tax Brackets Remain in Place
The lower income tax rates set by the TCJA were originally scheduled to sunset after 2025. Under the OBBBA, the 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets are now permanent, (unless changed by future legislation).
Updated Family Tax Provisions
The OBBBA makes several key updates to family tax provisions, including a larger standard deduction, the repeal of the personal exemption, and an expanded child tax credit.
- The higher standard deduction is now permanently extended, rising in 2025 to $15,750 for single filers and $31,500 for joint filers.
- The child tax credit, which was set to drop to $1,000 per child in 2026, will instead increase to $2,200 in 2025, with future adjustments tied to inflation. However, tighter eligibility rules may limit access for higher-income families.
- The law also provides a modest increase to the child and dependent care credit.
Higher AMT Thresholds
The alternative minimum tax (AMT) is now less likely to affect high earners thanks to changes in the OBBBA. The law preserves the elevated exemption and phaseout thresholds and resets them in 2026 to the inflation-adjusted 2018 levels: $500,000 for single filers and $1 million for joint filers.
Additionally, the AMT phaseout rate doubles from 25% to 50% beginning in 2026, meaning the exemption is reduced more quickly once income exceeds the threshold.
Increased Estate and Gift Tax Exemption
Starting in 2026, the federal estate and gift tax exemption was set to be cut nearly in half, dropping from $13.99 million in 2025 to approximately $7.1 million in 2026. The OBBBA reverses that course by making the higher exemption permanent and raising it to $15 million per individual, with future increases tied to inflation.
This change reduces the number of estates subject to federal estate tax and gives high-net-worth individuals and families greater flexibility to transfer wealth in a more tax-efficient way over time.
QBI Deduction Made Permanent
The OBBBA makes the Section 199A deduction permanent, preserving the 20% qualified business income (QBI) deduction for pass-through entities such as LLCs, S Corps, and sole proprietorships, providing a lasting tax advantage for business owners.
Increased SALT Deduction Cap
Under the OBBBA, the state and local tax (SALT) deduction cap increases to $40,000 in 2025, then rises slightly each year through 2029 before returning to the original $10,000 cap in 2030. This temporary relief is especially meaningful for taxpayers in high-tax states like California, New York, and New Jersey, where SALT limitations have long been a point of contention.
Impact of OBBBA on Retirees and Charitable Giving
The One Big Beautiful Bill Act brings several notable updates that affect retirees and charitable donors, while keeping a few key provisions unchanged.
Social Security Still Taxable
The OBBBA leaves the taxation of Social Security benefits untouched, despite early speculation. However, retirees may still see lower taxable income thanks to an expanded standard deduction and a new senior-specific exemption.
Between 2025 and 2028, individuals aged 65 and older may qualify for an additional $6,000 personal exemption. This benefit phases out based on income:
- For single filers, the exemption begins phasing out at $75,000 and is fully phased out by $175,000 of modified adjusted gross income (MAGI).
- For joint filers, the phaseout range is $150,000 to $250,000 MAGI.
These adjustments could help reduce tax liability for many retirees, especially those with moderate income from retirement accounts or part-time work.
ACA Premium Tax Credits Roll Back
Introduced during the pandemic, the expanded premium tax credits under the Affordable Care Act will sunset at the end of 2025. Beginning in 2026, eligibility for subsidies reverts to pre-2021 income thresholds. According to KFF, this could result in a 75% average premium increase for enrollees, making coverage far less affordable for many households.
However, starting in 2026, all bronze and catastrophic ACA exchange plans will qualify for Health Savings Accounts (HSAs). This opens up new planning opportunities for early retirees and the self-employed to save pre-tax dollars for future healthcare needs.
Updated Charitable Giving Rules
Beginning in 2026, taxpayers who take the standard deduction can deduct charitable gifts, up to:
- $1,000 for single filers
- $2,000 for joint filers
This new “above-the-line” deduction is available to all taxpayers regardless of income, though contributions to donor-advised funds do not qualify.
For those who itemize, charitable donations must now exceed 0.5% of adjusted gross income (AGI) before they’re deductible. For instance, if your AGI is $100,000, only the portion of your giving above $500 will count toward your itemized deductions.
New “Trump Accounts” Introduced for Children
Beginning in 2026, a new type of savings vehicle will be available for children under 18. Modeled loosely after Roth IRAs, these so-called “Trump Accounts” come with a few notable features:
- Annual contributions are capped at $5,000 and are made with after-tax dollars (no immediate tax deduction).
- The federal government will contribute $1,000 per year for children born between 2025 and 2028.
- Investment options are limited to low-cost index-based mutual funds and ETFs.
While the accounts promote financial security from a young age, some of the distribution rules are complex, and the practical benefits may be limited for many families. As with any new savings vehicle, it may take time to fully assess when and how to use these accounts most effectively.
New Temporary Tax Breaks for Workers
From 2025 through 2028, the OBBBA introduces several time-limited tax benefits aimed at boosting take-home pay for workers. These deductions and exclusions are subject to income limits and provide targeted relief for those earning below certain thresholds:
- Tip Income Exclusion. Up to $25,000 in tip income can be excluded from federal taxable income. The benefit phases out for single filers with modified adjusted gross income (MAGI) above $150,000 and joint filers above $300,000.
- Overtime Pay Exclusion. Individuals can exclude up to $12,500 in overtime pay, while joint filers may exclude up to $25,000. The same income phaseouts apply.
- Auto Loan Interest Deduction. Workers may deduct up to $10,000 in interest on auto loans, provided the vehicle is assembled in the U.S. and the loan originates after 2025. This deduction phases out for single filers earning more than $150,000 and for couples earning over $250,000.
TrueNorth Wealth Is Here to Help
The One Big Beautiful Bill Act brings significant changes to the tax landscape, with far-reaching implications for high earners, business owners, retirees, and families alike. While this overview highlights many of the key provisions, keep in mind it’s not an exhaustive summary of the nearly 900-page legislation.
It’s also important to remember that not every change will apply to your specific situation. That’s why working with an experienced financial advisor or tax professional is essential.
At TrueNorth Wealth, our team of fiduciary CFP® professionals is here to help you make sense of the new law and what it means for your goals. We’ll work with you to create a tailored strategy that aligns with your broader financial plan, reduces your tax liability, and helps you stay on track, now and into the future.
TrueNorth Wealth is among the top Wealth Management firms in Utah and Idaho, with offices in Salt Lake City, Logan, St. George, and Boise. At TrueNorth Wealth, we focus on helping our clients build long-term wealth while maximizing the enjoyment they receive from their money. We do this by pairing our clients with a dedicated CFP® professional backed by an incredible team.
For our team at TrueNorth, it’s about so much more than money. It’s about serving families all across Utah and helping them achieve freedom and flexibility in their lives. To learn more or schedule a no-cost consultation, visit our website at TrueNorth Wealth or call (801) 316-1875.
