On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. Much of the bill makes previous tax law changes enacted during the President’s first term permanent, though many additional deductions, changes in credit, and tax incentives have been added.
Here’s a snapshot the most prominent tax changes:
Key Financial Planning Considerations from OBBBA
| Category | 2017 Law | New |
|---|---|---|
| Tax Rates | Tax Cuts and Jobs Act (TCJA) lowered tax brackets and increased standard deductions | Lower tax brackets and increased standard deductions made permanent. Seniors gain additional $6k deduction per person if age 65+, subject to income level restriction, currently effective until 12/31/28. Child tax credit increases to $2,200 starting in 2026. |
| State and Local Tax (SALT) Deduction | Limited to $10,000 | Raised to $40,000, subject to phaseout for high-income taxpayers and limitation of $500k. Currently sunsets back to $10,000 in 2030. |
| Gift and Estate Tax Lifetime Exclusion | $13.9M | Increased to $15M ($30M for joint filers) in 2026 |
| Charitable Giving | Donations deductible up to limits, without requiring contributions to exceed a minimum threshold. | Permanent above the line $1,000 deduction for contributions ($2,000 for joint filers), subject to a 0.5% Adjusted Gross Income floor on itemized donations. |
| 529 Plans | Tax-free withdrawals for tuition, K-12, books, supplies, other qualified expenses up to $10,000. | Expanded include elementary and secondary school, books & tuition and withdrawals up to $20,000 annually. |
| Car Loan Interest | n/a | Allows a deduction of up to $10,000 of auto loan interest for U.S.-made cars 2025 or newer. Currently expires in 2029 and phases out for incomes above $100k single/$200k joint filers. |
We can now look a bit further into these key provisions.
Permanent 2017 Tax Cuts and Jobs Act (TCJA) Provisions
The provisions established in the TCJA were set to sunset at the end of 2025, and the OBBBA extends them. Tax brackets, for example, will remain at their current levels, and the standard deduction will remain higher as well. In 2026, the standard deduction will be:
Permanent 2017 Tax Cuts and Jobs Act (TCJA) Provisions:
- Single: $16,300
- Married filing jointly: $32,600
- Head of household $24,500
New this year, seniors age 65 and older will be eligible for an additional $6,000 tax deduction if their adjusted gross income (AGI) is below $75,000 (or $150,000 for joint filers). This “super deduction” will be available between 2025 and 2028.
The estate tax and lifetime gift tax exemption limit will remain at TCJA levels as well, adjusted for inflation. In 2026, the limit will rise to $15 million for single filers and $30 million for joint filers.
The child tax credit increase stays intact, rising to $2,200 per child from 2025 to 2028. Prior to the OBBBA, it was set to return to $1,000 in 2026.
Newborn Savings Accounts (Trump Accounts)
For children born between January 1, 2024 and December 31, 2028, parents can now open “Trump accounts” and receive a one-time $1,000 contribution from the federal government per child.
Parents will be allowed to contribute up to $5,000 annually to the account, and funds will grow tax-deferred. Once the child turns 18, no additional contributions can be made to the account.
At age 18, tax-free withdrawals can be made up to 50% of the funds for qualifying expenses. At age 25, children may withdraw any amount from the account tax-free for qualifying expenses. At age 30, the account holder can use the funds for any purpose. If withdrawals are not used on qualifying expenses, they will be subject to ordinary income tax plus a 10% tax penalty (up until age 30).
Other Deductions
The act revises many existing deductions, as well as introduces a few new ones:
SALT Deduction Changes
The previous $10,000 SALT deduction limit raises to $40,000 (then $40,400 in 2026). Taxpayers with modified adjusted gross incomes (MAGI) over $500,000 will experience a phaseout limit, though the minimum deduction will still remain at $10,000.
Auto Loan Interest Deduction
Taxpayers earning $100,000 or less ($200,000 for married filers) will now be able to deduct up to $10,000 for qualifying auto loan interest.
The deduction phases out for taxpayers earning between $100,000 and $150,000 (or $200,000 and $250,000) and is not eligible for those earning above $150,000 (or $250,000 for joint filers). To qualify, the vehicle must have been assembled in the U.S. and not purchased for commercial purposes.
Service Worker Deductions
For tax years 2025 through 2028, service workers can take above-the-line deductions of up to $25,000 for qualified tips. The deduction amount starts to phase out once taxpayers exceed $150,000 (or $300,000 for married filers) in MAGI.
Eligible employees will be able to take an above-the-line deduction up to $12,500 (or $25,000 for joint filers) for overtime pay. The limit begins to phase out for those earning a MAGI of $150,000 or more ($300,000 for joint filers).
Additional Deduction Changes
Casualty Loss:Taxpayers experiencing a personal casualty loss as a direct result of a federally declared or state-declared disaster will be allowed to itemize deductions relating to the loss.
Miscellaneous itemized deductions: The OBBBA eliminates miscellaneous itemized deductions. In addition, educators will no longer be allowed to deduct unreimbursed expenses.
Mortgage interest: The mortgage interest deduction is permanently capped at $750,000 of debt.
Charitable deductions: For those looking to itemize and take a charitable deduction, only contributions exceeding 0.5% of their AGI will be allowed to be deducted moving forward. This limits the amount of smaller value donations that are able to be deducted, though you may be able to carry forward unclaimed charitable deductions for future tax years.
Energy-Related Tax Credits
The OBBBA largely terminates and reduces energy-related tax credits and incentives. Some notable credits for homeowners include:
- Energy efficient home improvement tax credit: Previously, taxpayers could claim up to $3,200 for eligible purchases and installations through 2033. This has been eliminated.
- Residential clean energy tax credit: Taxpayers can no longer claim tax credits for renewable energy equipment installed at their residences.
- Energy efficient home tax credit: Contractors can no longer claim a business tax credit for constructing energy-efficient homes.
Your Taxes Could Be Impacted Soon
According to the Council of Economic Advisors, the OBBBA is expected to yield between $7,800 and $13,300 in higher take-home pay for average American families—though everyone’s tax landscape is unique.
Next Steps for Your Financial Planning
By the time tax season rolls around next year, these changes will already be in effect. Now’s your opportunity to start assessing your own tax liability and savings strategy. Our team at Bogart Wealth is keeping a close eye on evolving legislation, and we’re here to help you make the most of these upcoming tax changes. If you have questions or would like to start discussing the potential impact on your own financial well-being, send us a message today.
