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The newly enacted One Big Beautiful Bill Act includes a wide range of financial reforms, many of which have been covered through a political lens. But for investors, retirees, and business owners, the most important changes are in the technical details.
In this post, we break down many of the provisions that matter most: what’s changed, where the opportunities lie, and how to navigate the new rules with confidence. All explained in plain English. No noise, no spin.
Tax Changes
Q: What are the biggest tax law changes for individuals?
A: There are several, and they go far beyond just brackets. Here’s what you need to know:
1. Tax Bracket Permanence + Indexing
The One Big Beautiful Bill Act makes permanent the lower income tax brackets introduced in 2017 (from the Tax Cuts and Jobs Act) and ensures they are indexed for inflation going forward. This helps provide clarity and predictability; no more looming expiration cliffs.
Planning Insight: This simplifies long-term planning and reduces bracket creep. More of your income will stay in lower brackets over time, which is especially helpful for retirees with Social Security and Required Minimum Distribution (RMD) income stacking on top of each other.
2. Standard Deduction Increases
Starting with the 2025 tax year, the standard deduction will increase by:
- $750 for single filers
- $1,500 for married couples filing jointly
- $1,125 for heads of household
TRPG Take: If you’re not itemizing, and most people aren’t, this boosts your tax-free income floor. For retirees, this may cover more of your Social Security and reduce taxable RMD exposure.
3. New Senior Deduction — and the Real Story on “No Tax on Social Security”
Starting in 2025, taxpayers aged 65 and older get a new deduction of up to $6,000 (single) or $12,000 (married filing jointly) — on top of the standard deduction. It begins to phase out above $75,000 (single) and $150,000 (joint). This deduction applies to all income, including wages, pensions, IRA distributions, and Social Security.
Strategy Angle: For many middle-income retirees, this may eliminate federal income tax on Social Security benefits, helping reduce taxable income, avoid Income-Related Monthly Adjustment Amount (IRMAA) surcharges, and limit taxes on retirement withdrawals. But higher-income retirees may still pay taxes, and lower-income seniors often don’t owe taxes anyway.
Q: Did the bill eliminate taxes on Social Security?
A: Not quite. Instead of eliminating the tax, lawmakers created the new “Senior Deduction” as a compromise — helping many, but not all, retirees.
Q: How long does the deduction last?
A: It’s temporary. The deduction applies to tax years 2025–2028 unless Congress extends it.
Q: So, is this a win for retirees?
A: It’s a partial win — meaningful tax relief for many, but not the total repeal that was originally discussed.
4. New Itemized Deductions (2025–2028 window only)
Several temporary deductions were added to give targeted relief to working families and consumers. These include:
- Tips and overtime pay (up to $25,000)
- Auto loan interest on new U.S.-built cars (up to $10,000)
- Overtime bonuses and certain union dues
- Adoption-related expenses and child care credits extended
Heads-Up: These provisions are set to sunset in 2028 unless renewed. Use them while they last, and plan major expenses accordingly.
5. SALT Deduction Cap Raised
The SALT (state and local tax) deduction cap increases to $40,000 for individuals earning under $500,000 per year. The cap reverts to $10,000 for higher earners or after the sunset period ends.
Planning Insight: For clients in high-tax states like California, New York, or Illinois, this creates a valuable, but possibly temporary, window to reduce federal tax through property and income tax deductions.
6. Bigger, Longer-Lasting Child Tax Credit
Parents take note — the Child Tax Credit is getting a meaningful boost starting in 2025:
- The base credit increases to $2,200 per child, and it will adjust with inflation each year going forward.
- The $1,400 refundable portion (the amount you can get back even if you owe no tax) is now permanent — and also indexed to inflation.
- Income thresholds remain generous: the credit starts to phase out at $200,000 (single) and $400,000 (joint).
- The $500 credit for other dependents (like college-aged kids or elderly parents) is also retained.
Strategy Angle: This change provides more predictability and purchasing power for families, especially those earning too much to qualify for the earned income credit but still carrying major child-related expenses.
7. EV Tax Credits Expire Soon — Clock’s Ticking for $7,500 Savings
Q: Are electric vehicle tax credits going away?
A: Yes — under the One Big Beautiful Bill Act, both major federal electric vehicle tax credits are being phased out:
- The $7,500 credit for new EVs (Section 30D)
- The $4,000 credit for used EVs (Section 25E)
TRPG Tip: Don’t wait if an EV is in your near-future plans. Your purchase must be completed (not just ordered) on or before September 30, 2025. Consider accelerating your timeline to lock in the federal tax credit while it’s still available. This could save you thousands — especially if you’re considering a higher-end model that qualifies under the current program.
8. Gambling Loss Deductions Just Got a Haircut
Q: Can I still deduct gambling losses under the new law?
A: Yes — but not as much as before. A new amendment to IRC Section 165(d) redefines how wagering losses are treated:
-
You can still deduct losses related to gambling, but now…
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The deduction is limited to 90% of your wagering gains in the same tax year.
Q: What’s the impact in plain English?
A: If you win $100,000 gambling, the maximum you can deduct in losses or expenses is $90,000 — even if you spent $110,000 chasing that win.
Family, Child, & Education Planning
Q: Is it true I get $1,000 for every newborn?
A: Yes, every child born after January 1, 2025, will receive $1,000 federally seeded in an account. It functions like an IRA and grows tax-free over the child’s lifetime.
Q: Can others contribute to it?
A: Absolutely, and this is where the real opportunity lies. Anyone, including parents, grandparents, and even businesses, can contribute up to $5,000 per year in after-tax dollars (note that there is no tax deduction for the contributor).
Long‑Game Opportunity: Starting with that seed and adding modest annual gifts can lead to six-figure, tax-deferred balances by retirement, essentially an IRA account that starts at birth with decades to compound.
Q: Were there any changes to 529 education savings plans in the new bill?
A: Yes — the bill expands qualified expenses and limits:
Category |
Prior Law |
New Law (Post-2025 Amendments) |
|
K–12 Tuition |
Up to $10,000/year for tuition only at public, private, or religious elementary/secondary schools |
Limit increased to $20,000/year starting in 2026 |
|
K–12 Qualified Expenses |
Only tuition was covered |
Expanded to include: curriculum, books, online materials, tutoring (with licensed instructors), standardized test fees, dual enrollment, and educational therapies |
|
Postsecondary Credentialing |
Only expenses at eligible higher education institutions (e.g., colleges, universities, trade schools) were covered |
Now includes recognized credentialing programs (e.g., certifications, licenses, apprenticeships) even if not part of traditional colleges |
Business Owners & Deductible Luxury
Q: Did the bill really bring back 100% write-offs for business assets?
A: Yes, the bill revives full bonus depreciation for certain business purchases, including private jets, large SUVs, heavy equipment, and even yachts, if used primarily for business.
Loophole Alert: Structured correctly, a business owner can deduct 100% of the purchase price in the first year. Even used aircraft qualify if they meet IRS standards.
Perfect Storm: If you’re selling a business, had a windfall year, or expect a large tax bill, this could slash it dramatically. However, the IRS will be watching, so your usage logs and documentation must be airtight.
Estate Planning & Gifting
Q: Did the bill extend the estate tax exemption?
A: Yes, and not just extended, but made permanent and bigger than ever.
Before the bill, the estate and gift tax exemption was set to fall by nearly half in 2026, from around $14 million per person in 2025 to about $7.2 million. That “sunset” created a rush among high-net-worth families to transfer wealth before the cutoff.
The One Big Beautiful Bill Act eliminates that sunset and locks in a $15 million per-person federal exemption, or $30 million per married couple, indexed annually for inflation.
Q: Can I now deduct charitable contributions if I don’t itemize?
A: Yes — the bill introduces a brand-new above-the-line charitable deduction for non-itemizers. Starting in 2026, you can deduct:
- Up to $1,000 if you’re single
- Up to $2,000 if married filing jointly
This applies to cash contributions made to qualified charitable organizations.
TRPG Insight: This brings back a version of the popular pandemic-era “universal charitable deduction” — and makes charitable giving more accessible to households who use the standard deduction.
Q: What if I do itemize? Does anything change?
A: Yes — the bill adds a small hurdle for itemizers. Your charitable deduction is now subject to a 0.5% “floor”. That means:
- Your deduction is reduced by 0.5% of your contribution base (typically adjusted gross income).
- So if your AGI is $200,000, your first $1,000 of charitable giving wouldn’t be deductible.
Why It Matters: This slightly reduces the tax benefit of charitable giving for higher-income households. But for those giving well above the floor, the impact may be minimal.
TRPG Insight: If you’re planning a large gift — especially if you regularly itemize — consider front-loading contributions into a Donor-Advised Fund (DAF) this year, before the 0.5% floor takes effect. You’ll secure the full deduction under current rules and preserve flexibility for future charitable grants.
Bottom Line: Non-itemizers get a new deduction. Itemizers face a small haircut. And corporations must navigate tighter thresholds. Still, the bill broadly supports charitable giving — and offers new planning opportunities for households and businesses alike.
Default or Intentional?
The One Big Beautiful Bill Act rewards intentionality. It creates advantages, but only for those who proactively plan. This is a rare chance to:
- Rethink your tax plan
- Update your estate approach
- Build wealth across generations
- And, if you’re a business owner, potentially write off large purchases in a single year
Need help navigating it all?
That’s what we’re here for. At The Retirement Planning Group, we build integrated, intelligent plans so nothing is left to chance.