One Big Beautiful Bill Act Tax Changes

What the One Big Beautiful Bill Act Means for Your Tax Plan
The One Big Beautiful Bill Act, commonly abbreviated as OBBB, became law on July 4, 2025. The legislation extended several provisions of the Tax Cuts and Jobs Act of 2017, made other provisions permanent, and introduced new deductions and planning opportunities for individuals, families, and business owners.

Although the law contains changes across many areas of federal policy, its tax provisions deserve particular attention. Some changes are permanent, while others are available only for a limited number of years. Income thresholds, eligibility requirements, and phaseouts also mean that the effect will vary significantly from one taxpayer to another.

Here are several of the provisions that may have the greatest impact on personal and business tax planning.

Individual Tax Rates and the Standard Deduction
The individual income tax rates originally established by the Tax Cuts and Jobs Act are now permanent. This includes the current seven-bracket structure, with rates ranging from 10% to 37%.

The law also made the larger standard deduction permanent and increased it for 2025. For that tax year, the standard deduction is:

$15,750 for single filers and married individuals filing separately
$31,500 for married couples filing jointly
$23,625 for heads of household

These amounts increase to $16,100, $32,200, and $24,150, respectively, for the 2026 tax year.

While certainty around the tax brackets can make long-term projections more reliable, taxpayers should still evaluate the timing of income, deductions, charitable gifts, and other transactions from year to year.

New Deductions for Workers and Seniors
The law created several temporary deductions that generally apply from 2025 through 2028.

Eligible workers may deduct as much as $25,000 of qualified tip income annually. The deduction begins to phase out when modified adjusted gross income exceeds $150,000 for single filers or $300,000 for joint filers.

A separate deduction is available for qualified overtime compensation. The maximum annual deduction is $12,500 for an individual or $25,000 for a married couple filing jointly, subject to income-based phaseouts. Importantly, this generally applies to the overtime premium required under federal labor law—not necessarily the employee’s entire overtime payment.

Individuals age 65 or older may also qualify for an additional deduction of as much as $6,000 per person. This benefit is likewise subject to income limitations.

These provisions reduce federal taxable income when their requirements are satisfied. They do not necessarily eliminate payroll taxes or state income taxes on the underlying earnings.

A Temporary Deduction for Certain Auto-Loan Interest
For tax years 2025 through 2028, qualifying taxpayers may deduct as much as $10,000 of interest paid on certain vehicle loans.

The vehicle generally must be new, purchased for personal use, and have undergone final assembly in the United States. The loan must also satisfy the law’s origination and reporting requirements. The deduction begins to phase out at modified adjusted gross income of $100,000 for single filers and $200,000 for married couples filing jointly.

Because of these limitations, the phrase “no tax on car-loan interest” should not be interpreted as a universal deduction for every vehicle or auto loan.

Changes to the SALT Deduction
The cap on the federal deduction for state and local taxes, commonly called the SALT deduction, increased from $10,000 to $40,000 for 2025.

The higher cap is subject to an income-based reduction beginning at $500,000 of modified adjusted gross income for 2025. Both the cap and the phaseout threshold increase modestly through 2029. Under the current law, the cap is scheduled to return to $10,000 in 2030.

This temporary increase may be meaningful for taxpayers in high-tax states, but its value depends on income, filing status, total itemized deductions, and exposure to the alternative minimum tax.

The limited window may also create opportunities to coordinate property-tax payments, charitable contributions, and other deductible expenses. Those decisions should be modeled carefully rather than made solely to maximize one deduction.

Business Investment and Bonus Depreciation
The law restored 100% bonus depreciation for certain qualifying property acquired and placed in service after the applicable 2025 effective date.

Bonus depreciation may allow a business to deduct the full cost of eligible assets in the year they are placed in service rather than depreciating those costs over many years. The provision may be particularly important for companies making substantial investments in equipment, technology, manufacturing capacity, or qualifying real estate components.

A larger immediate deduction is not automatically the best outcome. Business owners should compare the current tax savings with their projected future income, available deductions, financing arrangements, and long-term succession or sale plans.

The law also made the qualified business income deduction under Section 199A permanent, providing additional certainty for many owners of pass-through businesses.

Expanded Qualified Small Business Stock Rules
The law expanded the potential benefits associated with qualified small business stock, or QSBS, for qualifying shares issued after July 4, 2025.

Among the changes are a higher gross-asset threshold for eligible corporations and a larger exclusion limit. The law also introduced a tiered exclusion structure based on how long qualifying shares are held.

These changes could create meaningful planning opportunities for founders, early employees, and investors. However, QSBS qualification is highly technical. The type of business, corporate structure, date of issuance, use of company assets, holding period, and documentation can all affect eligibility.

For a business owner anticipating a future sale, QSBS planning should begin well before a letter of intent or transaction is in place.

Estate and Gift Tax Planning
For 2026, the federal estate and gift tax exemption increased to $15 million per individual, or potentially $30 million for a married couple when properly planned. The exemption will continue to be adjusted for inflation.

Making the larger exemption permanent reduces the uncertainty that previously surrounded a possible reduction after 2025. It does not, however, eliminate the need for estate planning.

Families should still evaluate:

How assets are titled
Whether existing trusts continue to reflect their intentions
Future appreciation outside the taxable estate
State estate or inheritance taxes
Asset protection
Business succession
Charitable and multigenerational goals

Estate planning should be based on more than the current federal exemption. Control, family governance, beneficiary readiness, and long-term tax efficiency remain important considerations.

Trump Accounts for Children
The legislation also created a new type of tax-advantaged account for eligible children. These accounts may begin accepting contributions starting July 4, 2026.

A pilot program provides a one-time $1,000 federal contribution for eligible U.S. citizen children born from 2025 through 2028. Parents, relatives, employers, and other qualifying contributors may also be able to add funds, subject to annual limits and program rules.

The accounts are intended to invest in qualifying diversified funds while the child is young. Their tax treatment is not identical to a Roth IRA or 529 education plan, so families should compare the account with existing education, custodial, retirement, and trust-planning alternatives before deciding how it fits into their strategy.

Earlier Expiration of Several Energy Credits
The law accelerated the expiration of several clean-energy incentives. Certain residential energy-efficiency and clean-energy credits ended after 2025, while credits for qualifying new and previously owned clean vehicles generally ended for vehicles acquired after September 30, 2025.

Taxpayers considering a vehicle, solar installation, home-efficiency project, or commercial energy investment should verify the applicable acquisition, installation, construction, and placed-in-service dates. These details can determine whether a credit remains available.

What Should You Do Now?
A major tax law should not automatically trigger a transaction. It should trigger a review.

The most useful next step is often to prepare a multiyear tax projection that incorporates anticipated income, investment gains, business activity, charitable giving, retirement distributions, and estate-planning objectives.

Consider discussing the following questions with your tax and financial advisers:

Are any temporary deductions available to your household?
Does the higher SALT cap change your itemization strategy?
Should business purchases or deductions be accelerated or delayed?
Could QSBS apply to existing or future business interests?
Do your estate documents still reflect your wealth and family circumstances?
Have expiring credits changed the economics of a planned purchase?
Are your investment, tax, and estate strategies being evaluated together?

The legislation creates opportunities, but the greatest value is likely to come from coordination. A deduction considered in isolation may affect another part of the plan, and a strategy that reduces taxes today may not produce the best long-term result.

At Tidecrest Wealth Management, we help families coordinate investment management, tax planning, estate planning, and other important financial decisions as part of one integrated strategy.

If you would like to understand how the new law may affect your financial plan, we invite you to schedule a conversation with our team.

This material is provided for general educational purposes only and should not be considered individualized tax, legal, or investment advice. Tax laws and regulatory guidance may change. Consult qualified tax and legal professionals regarding your individual circumstances.