The One Big Beautiful Bill Act

What it is and how it may impact you

Congress just made decisions that directly affect you and your financial future.

On July 4th, 2025, lawmakers passed the “One Big Beautiful Bill Act”—an 870-page

economic package that touches nearly every aspect of your financial life:

• Income Taxes

• Bonus deduction for seniors

• Changes for kids

• Effect on cars

• Small Business Taxes

• No tax on tips and overtime

• Estate Planning

• And Much More!

This legislation has sparked much debate, and our role is to cut through the noise and

clearly outline how these changes affect your hard-earned money.

If you’re like most people and have better things to do than read 870 pages of

Congressional jargon, we’ve got you covered!

7 Key Takeaways

1. What’s new with your tax return

One key feature in the One Big Beautiful Bill Act is the extension and revision of some

of the tax laws that were part of the 2017 Tax Cuts and Jobs Act (TCJA). Here’s a quick

summary of the three changes we found the most interesting:

Extension of Tax Rates 

The bill extends the current tax rates of 12 percent, 22 percent, 24 percent, 32 percent

and 37 percent, respectively. If the TCJA expired, the rates were scheduled to revert

back to 15, 25, 28, 33 and 39.6 percent. 

Standard Deduction

It also increased the standard deduction to $15,750 for single filers and $31,500 for

those filing jointly for 2025. Both are a slight increase from the current rate. Note: The

standard deduction will be adjusted for inflation starting next year.

State and Local Tax Deduction (SALT) 

Big change here. The SALT is increasing to $40,000 in 2025, and will increase 1

percent annually until 2030. But in 2030, the SALT will revert to $10,000. Note: SALT

has a $500,000 threshold for both single and married filers. Having some familiarity with the updated tax rules can only help when managing personal finances.

2. How the “Bonus” deduction for seniors works

The new “bonus” deduction for older Americans has received a lot of attention since the

One Big Beautiful Bill Act was passed on July 4. Here’s what’s changing for seniors with

the new bill.

Bonus Deduction 

Starting in 2025, the bill provides a $6,000 bonus deduction for filers 65 and up in

addition to the standard deduction available to all taxpayers. The new amount will be

$7,600, and $8,000 for unmarried/non-surviving spouses. Note: The bonus deduction

ends in 2028.

Phase Out 

The deduction begins to phase out for individuals with incomes starting at $75,000, or

joint filers with an income of $150,000. It phases out completely for individuals earning

more than $175,000, and couples earning $250,000. The “bonus deduction” has caused some confusion about how the deduction works.

3. What’s included for kids

There was a basket of tax law changes for children included in the One Big Beautiful Bill

Act that many of you might want to review. Here’s a quick summary.

Child Tax Credit

Starting in 2025, the child tax credit is increasing to $2,200 from $2,000. The credit also

has a COLA (cost-of-living adjustment) attached.

Dependent Care

The bill, which will take effect in 2026, increases the dependent care flexible spending account limit to $7,500 from $5,000. Note that the bill also raises the maximum

percentage of qualified expenses for dependent care from 35 percent to 50 percent.

American Family Account

The government will make a one-time $1,000 payment into an account for babies born

between 2025 and 2028. Note: Parents can add up to $5,000/year. No withdrawals are

allowed before age 18.

529 Expansion 

The bill extends the 529 umbrella to cover non-tuition expenses related to elementary or

secondary school attendance. In addition, starting in 2026, the cap for tuition-related

expenses increases from $10,000 to $20,000.

4. Is your car affected?

Automobiles were also included in the One Big Beautiful Bill Act. Here’s a “fast take” on

the two key changes.

New Car Loans

Between 2025 and 2028, a $10,000 deduction on new car loan interest will be available,

but some limitations apply (such as the car needing to be brand-new). First, the

deduction will be reduced by $200 if your gross income exceeds $100,000 or $200,000

if you are married. Plus, the car's final assembly must occur in the U.S. to qualify for the deduction.

Termination of EV Subsidies

EV credits for new and used cars will end after September 30, 2025. Note: Some EV

home improvements (such as windows) and residential energy credits (adding solar)

end after December 31, 2025. These new rules may influence how some of you view your current car or your future car-buying ideas.

5. Updated rules for business owners

a few key tax law changes for business owners. One extended an existing tax law, one

restored a provision, and one eliminated a requirement.

Small Business Deduction

The new law permanently establishes the deduction of up to 20 percent of qualified

business income for sole proprietorships, partnerships, and S-Corps.

100 Percent Expensing of Capital and Factory Investments

The bill restores the provision that allows businesses to expense 100 percent of capital

investments made on or after January 19, 2025. However, some limits may apply.

1099-K

The new law sets the reporting limits at $20,000 and 200 transactions for transactions

on cash apps. Note: The rule starts in 2025. It rolls back the $600 threshold set under

the American Rescue Plan.

This is a high-level overview since the new rules for business owners only apply to a

select number of people.

6. No tax on tips and overtime

No two changes in the One Big Beautiful Bill Act received more attention than "no tax on tips" and "no tax on overtime." Here’s a high-level overview:

No Tax on Tips

A new $25,000 deduction was created for tips starting in 2025 and ending in 2028. The

deduction is reduced if your gross income exceeds $150,000 or $300,000 if

married. Note: The tax on tips provision is allowed even if you take the standard

deduction.

No Tax on Overtime

A new $12,500 deduction (single filers) and $25,000 (married filing jointly) was created

for overtime starting in 2025 and ending in 2028. Note: Like no tax on tips, the

deduction is reduced if your gross income exceeds $150,000 or $300,000 if married.

The new bill has added complexity to the tax code, so I anticipate the IRS will issue

guidelines on how to interpret the updated rules later this year.

7. What’s new for your estate?

Charitable Contribution Recordkeeping

Charitable contributions of $1,000 for individual filers and $2,000 for married couples

filing jointly can now be deducted even if you don’t itemize your deductions.

Estate and Gift Tax Exemption

The bill increases the estate and gift tax exemption starting in 2026. This year, the

exemption is capped at $13.99 million for single filers and $27.98 million for married

filing jointly. In 2026, it increased to $15 million for single filers and $30 million for

married filing jointly. Note: The exemption will increase with inflation.

Ever since the Tax Cuts and Jobs Act was passed in 2017, there’s been an ongoing

concern that the estate and gift tax exemption would revert back to the 2017 level in

2025. And although the new bill extends the rule, it’s possible that it may change again

sometime in the future. 

So often, the best approach to estate management is proactive. Reviewing your estate

strategy periodically can help you stay current on the most recent trends and

developments.

Final Thoughts

The One Big Beautiful Bill Act emerges during a time when it’s challenging to find

objective information without politics muddying the picture.

The reality is that politics has been a prevalent theme throughout modern history.

We can either make informed decisions in response to the things within our control, or

we can get caught up in the noise that’s hammering our eardrums and eyeballs at every

turn.

If you think the changes may affect you or you’re not sure, please reach out. You should

also consider speaking with your tax professional to see if you need to make any

adjustments during 2025.

This commentary is provided for general information purposes only, should not be

construed as investment, tax or legal advice, and does not constitute an attorney/client

relationship. Past performance of any market results is no assurance of future

performance.

Securities and investment advisory services offered through Osaic Wealth,

Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or

marketing names, products or services referenced here are independent of Osaic

Wealth.