How the One Big Beautiful Bill Act Could Affect Your Finances
On July 4 of this year, the One Big Beautiful Bill Act (OBBBA) was signed into law—an 870-page piece of legislation that makes several changes to the tax code and financial planning landscape. There is such a variety of provisions in the law that almost everyone will be affected by at least one, so it’s good to get an idea of what is in it.
Below is a high-level summary of the most noteworthy changes. This is not a comprehensive list, so it may not include everything that affects you. We have selected the provisions that are most likely to affect the most people in the demographic that we serve.
Key Changes from the OBBBA
Tax Brackets & Deductions
The current tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) were established as a part of the 2017 Tax Cuts & Jobs Act and were scheduled to change at the end of this year. That is no longer happening; they are now permanent.
The standard deduction usually increases each year to keep up with inflation. The OBBBA increased it slightly more in 2025 for all filers—it is now $15,750 for single and $31,500 for joint filers this year.
The Act established a new additional deduction for taxpayers age 65 and older. The deduction is $6,000 per person, with income phaseouts starting at a Modified Adjusted Gross Income of $75,000 (single) and $150,000 (joint). This is in addition to the increased standard deduction that those age 65+ already (and will continue to) receive. This deduction is only for the tax years 2025-2028 and would require another act of Congress to extend it past 2028.
Charitable Giving
Right now, you only receive a tax benefit for charitable giving if you itemize your deductions on Schedule A. Starting in 2026, those who do not itemize their deductions will be able to deduct up to $1,000 (single) or $2,000 (joint) of cash charitable giving.
While that’s good news for those who don’t itemize deductions, those who do have received a small hit. Starting in 2026, those who itemize their deductions are subject to a new 0.5% of AGI floor before charitable gifts can become an itemized deduction. That means that 0.5% of AGI of charitable giving will no longer be deductible.
Housing & Real Estate
One hotly debated provision of the 2017 tax reform was that state and local taxes (SALT) were limited to only $10,000 being deductible on Schedule A. It was again hotly debated, and the deduction cap has increased to $40,000 for both single and joint filers. However, this is only for tax years 2025–2029, and the cap goes back down to $10,000 in 2030. This higher cap is subject to a phasedown for incomes over $500k for both single and joint filers.
Also, mortgage insurance premiums (PMI) are now included as an itemized deduction. Mortgage insurance is coverage that a homeowner must pay for the benefit of the mortgage company if they have less than 20% equity in their home.
Education & Family
Starting in 2025, the Child Tax Credit increases from $2,000 per child to $2,200 per child and will now be indexed to inflation each year, which means it will go up regularly as the cost of living increases. There are income limitations for eligibility and the phaseouts start at $200,000 (single) and $400,000 (joint).
College savings 529 Plans can now be used for more K-12 expenses, including curriculum and tutoring. Starting in 2026, the annual limit on using 529s for K-12 expenses increases from $10,000 to $20,000. While withdrawals from 529s for K-12 are federally tax-free, they are not state tax-free in every state. You will want to look up your own specific state’s rules before using 529 funds for K-12 expenses.
For those of you who teach, starting in 2026, educator expenses will become an itemized deduction. Also, there will no longer be a dollar cap to the deduction.
New Temporary Deductions
There are several new deductions that will only last from 2025 to 2028. They are also subject to income limitations. Here they are:
- Tips income deduction: up to $25,000
- Overtime income deduction (only the increased pay amount is eligible): up to $25,000 (joint) / $12,500 (others)
- Auto loan interest deduction: up to $10,000/year on loans taken out after December 31, 2024, for new, US-built vehicles.
Healthcare & Retirement
All Affordable Care Act “Bronze” and “Catastrophic” plans are now eligible for Health Savings Accounts (HSAs). Usually, HSA eligibility is based on the deductible amounts in your health plan. HSAs are a great savings vehicle if you’re eligible for one.
Though there was a lot of talk about it, no changes were made to how Social Security is taxed. There was an email that went out from the Social Security Administration that made it sound like Social Security taxation changed, but the real change is the additional senior deduction mentioned above that will lower many senior taxpayers’ tax liability.
Estate & Legacy
Estate taxes are taxes that are due when someone passes away and leaves money to their heirs. There is an exemption that allows many Americans to pass on money without owing taxes. Starting in 2026, the estate tax exemption will increase to $15 million per person ($30 million per couple). That means an individual can pass on $15 million to their heirs before any taxes are owed.
Trump Accounts
The OBBBA created a new type of savings account, nicknamed a Trump Account. It will be available starting in 2026. It is a new tax-advantaged account for minors with a $5,000 annual contribution limit. To encourage adoption, the government is offering a $1,000 credit for children born in 2025–2027. Employers are also eligible to make contributions to these accounts on behalf of their employees’ children. There isn’t a lot of information regarding how it will all work, so if this is relevant to you, watch for more information being released.
Electric Vehicle (EV) & Renewable Energy Tax Credits
While the OBBBA has introduced some new tax-saving opportunities, it has also eliminated some. One is the Electric Vehicle Tax Credit, which will end on September 30, 2025.
The Residential Clean Energy Credit (e.g., solar panels) and Energy Efficient Home Improvement Credit are also going away. They will end on December 31, 2025.
What You Should Do
Some of these changes may help you save on taxes while some may not. As a steward of the resources that the Lord has entrusted to you, it’s important to keep abreast of major tax law changes such as this. Finances, and the US financial system, can be very complicated, so we have found that many people appreciate having an expert guide to walk with them on their stewardship journey. That’s why Guide Financial Planning exists: to walk alongside you and provide guidance as you seek to steward your resources wisely. To learn more about how we serve our clients and how you can become one, schedule a free introductory phone call.
About Guide Financial Planning
Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner® and Certified Kingdom Advisor®. He has a passion for helping people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.