On July 4, President Trump signed the “One Big Beautiful Bill Act” into law, finalizing a wide range of tax and spending cuts that have been hotly debated in Congress for the past two months. The nearly 900 pages of new legislation represent a significant victory for the Republican agenda, which includes extending tax breaks enacted in Trump’s first term and undoing others passed by the Biden administration.

While the bill contains dozens of provisions and provides funding for various efforts such as border control and national security, this article will focus on changes that could have a direct and significant impact on our clients’ taxes and related aspects of financial planning. Here’s a rundown of some key provisions to understand.‍

Individual Tax Planning

• Income tax rates made “permanent”: Income tax rates, which were lowered by the 2017 Tax Cuts and Jobs Acts (TCJA), were set to go back up at the end of this year. However, the Big Beautiful Bill makes those lower rates permanent (that is, until a future Congress votes to change them again). The table below shows the pre-2017 tax rates (previous law) compared with current rates that will now continue for the foreseeable future.

• Standard deduction amounts made permanent and enhanced: The IRS’ standard deduction (the alternative to itemizing deductions), which was nearly doubled in 2017, is made permanent AND will receive annual inflation adjustments of $750 for individual filers ($1,500 for married filing jointly) starting this year.

• Bonus deduction added for filers age 65 and older: Whether they itemize or not, seniors 65 and older can claim a bonus deduction of $6,000 through 2028.

• State and Local Tax (SALT) deduction increased: This deduction allows filers who itemize to deduct not only state and local income taxes, but also property taxes. The new law raises the cap on the deduction from $10,000 to $40,000 (phased out for those with income over $500,000) through 2030.

• Mortgage interest deduction made permanent and enhanced: A provision allowing itemizing taxpayers to deduct mortgage interest on loans up to $750,000 will continue, and adds the ability to deduct premiums on mortgage insurance.

• Tax deduction added for tips and overtime: Through 2028, taxpayers may deduct up to $25,000 for qualifying tips and $12,500 for overtime pay.

• Deduction for auto loan interest added; EV credits cut: Through 2028, car buyers may deduct the interest paid on auto loans (up to $10,000) for vehicles assembled in the United States. On a related note, the new legislation eliminates clean energy tax credits for buying electric vehicles.

Education Planning

• “Trump Accounts” created for newborns: The bill establishes a new program to create a “tax-preferred” account for every qualifying child born between 2024-2029, funded with a $1,000 credit from the federal government.
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• 529 Plan Qualified Expenses: The bill expands the types of education expenses that can be paid from a 529 plan. Now, includes more K-12 expenses and postsecondary credentialing expenses. In particular, CPA credentialing would also be allowed; including exam expenses.  

Estate Planning and Charitable Giving

• Estate and gift tax exemptions raised: Lifetime estate and gift tax exclusions, which were nearly doubled in 2017, have been made permanent, and will increase to $15 million (from $13.99 million) for singles and to $30 million (from $27.98 million) for married filing jointly.

Business Planning

• Deduction for pass-through income made permanent: The Section 199A deduction for qualified business income from pass-through entities (which was set to expire after 2025) is now permanent. Also, the phaseout thresholds were increased to $75,000 (single) and $150,000 (filing jointly). This adjustment may prompt small business owners to rethink the way they structure their companies.

• 100% bonus depreciation restored: The bill reinstates 100% bonus depreciation for eligible property acquired and placed into service starting January 1, 2025. This will allow taxpayers to deduct 100% of the cost of a qualifying business asset in year one, rather than spreading out that deduction over the lifespan of the asset.

Make the Most of New Opportunities

Depending on your financial circumstances, the changes introduced by the “One Big Beautiful Bill Act” could barely make a dent in your tax bill, or they could save you thousands of dollars and significantly impact your long-term strategic plan. The smart move is to consult your financial planner to fully understand where you fall on the spectrum.

Reach out to Quotient Wealth Partners for a detailed analysis of how the new laws might work to your advantage or even for just a second opinion on your current financial plan. Call us at (888) 895-4797 to schedule a no-cost, no-obligation consultation.