President Trump signed the much-anticipated “One Big Beautiful Bill Act” (OBBBA) into law on July 4, 2025. The massive piece of legislation includes a wide range of provisions that span multiple aspects of Americans’ lives. How could this legislation impact your financial plan? I’ll start by summarizing some of the bill’s provisions, then address what these changes could mean for you.

Tax provisions

The OBBBA includes the following changes to tax provisions.

• Permanent extension of the 2017 Tax Cuts and Jobs Act (TCJA) – President Trump’s administration passed the TCJA during his first term, yet many of its provisions were scheduled to sunset at the end of 2025. OBBBA makes those provisions permanent. Sources estimate that if TCJA had expired as scheduled, 62% of Americans would have faced a tax increase.¹

• Higher standard deduction threshold – OBBBA makes TCJA’s higher standard deduction permanent. In 2026, the deduction will increase to $16,000 per individual or $32,000 for married couples filing jointly.

• Child tax credit increase – OBBBA increased the child tax credit from $2,000 to $2,200, effective in 2025. Beginning in 2026, this amount will be indexed for inflation.

• Reduced tax on overtime and tips – Through 2028, taxpayers can deduct up to $25,000 of qualifying tip income and overtime pay, with phase-outs for higher-income earners.

• Car loan interest deduction – OBBBA allows a deduction of up to $10,000 of auto loan interest for U.S.-made vehicles. This provision expires in 2029.

• Higher state and local tax (SALT) deduction – OBBBA increases the maximum SALT deduction from $10,000 to $40,000, with gradual phase outs for taxpayers with adjusted gross incomes between $500,000 and $600,000.

• Phase out of clean energy tax credits – The bill phases out incentives for electric cars, wind and solar energy.

• Savings accounts for newborns – OBBBA allows each newborn to receive up to $1,000 as a government-funded contribution to a newborn savings account. Parents can contribute an extra $5,000 per year in after-tax contributions.

• Small business deduction – OBBA expands the Section 199A small business deduction from 20% to 23% of qualified business income.

• Immediate expensing for businesses – The bill reinstates businesses’ ability to immediately expense 100% of machinery, equipment and R&D costs.

• Expensing for new factories – In an effort to encourage domestic manufacturing, OBBBA allows full expensing for new factories.

Spending cuts

In addition to modified tax provisions, the OBBBA implements the following spending cuts.

• Medicaid – The bill includes nearly $1 trillion in Medicaid funding cuts over 10 years and implements new work requirements for Medicaid eligibility, including a minimum 80 hours per month of work, education or service for able-bodied adults with no dependents (beginning in 2026).

• Supplemental Nutrition Assistance Program (SNAP) – OBBBA reduces SNAP spending by $267 billion over 10 years and expands work requirements for parents with children under age 7. It also shifts 5% of benefit costs and 75% of administrative costs to states (beginning in 2028).

• Affordable Care Act (ACA) – OBBBA ends automatic reenrollment and requires annual verification of each individual’s immigration status and annual income (beginning in 2028). It also shortens the open enrollment period to December 15 and allows certain premium subsidies to expire.

How the provisions of OBBBA may impact you

The provisions above are the ones most likely to impact Americans’ financial plans, yet they are just the tip of the iceberg when it comes to the legislation included in the OBBBA. It’s wise to review the following aspects of your financial plan to determine how OBBBA may impact your strategies.

• Investment portfolio – If you anticipate higher income due to OBBBA’s tax cuts, consider growing these additional assets by investing them in a diversified portfolio. Consult with your financial advisor to identify any necessary changes to your asset allocation and ensure your investment strategies continue to meet your changing needs.

• Tax planning – In light of OBBBA’s significant tax law changes, it’s vital that you review your current tax planning strategies to ensure they continue minimizing your tax exposure while optimizing your wealth-building potential. Work with your wealth and tax advisor to assess the potential impact of the new standard deduction, small business deductions, child tax credit, business incentives, SALT threshold and more.

• Education planning – OBBBA now allows nonprofit organizations to award scholarships to pay for the cost of private and charter schools. It also expands 529 qualified expenses to include K-12^th grade expenses, such as textbooks, test preparation and online learning. 529 funds can now also be used to pay for special education expenses, such as speech and occupational therapy. Consult with your financial advisor to determine if any of these changes can benefit your family.

• Estate planning – TCJA included a significant increase to the lifetime gift and estate tax exemption, which was scheduled to sunset at the end of 2025 had Congress not taken action. OBBA made the higher exemption amount permanent and expanded it to $15 million per individual, $30 million per married couple filing jointly, beginning on January 1, 2026. If you made changes to your estate plan in anticipation of the exemption dropping significantly, be sure to work with your financial advisor and estate planning attorney to readjust your strategies.

If you could use some help determining how the provisions of the OBBBA may impact your financial planning strategies, we would love to have a conversation. Please reach out to schedule a call with a member of our team.