How the “One Big Beautiful Bill” Could Impact Your Taxes – And What You Can Do About It

IIPS
Jul 28
3 min read

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) became law. If you’ve been wondering what will happen to the tax cuts from 2017, or what changes might affect your family’s finances, this bill answers a lot of those questions.

This post breaks down some of the major tax changes such as what’s staying, what’s new, and what you can do now to make the most of the new law.

What’s Staying: Key Provisions Made Permanent

Many of the temporary tax cuts from the Tax Cuts and Jobs Act (TCJA) of 2017 were set to expire at the end of 2025. OBBBA makes several of them permanent starting in 2026:

Lower Tax Rates: The 10% and 12% tax brackets are now wider which means more people may qualify for the lower marginal tax brackets.
Standard Deduction Increase: The standard deduction is here to stay—and it’s been increased slightly for 2025. $15,750 for single filers and $31,500 for married filing jointly.
Mortgage Interest Rules: The limit on mortgage interest deductions remains at $750,000 for new loans. Interest on most home equity loans remains non-deductible.
No Miscellaneous Deductions: You still can’t deduct things like tax prep fees or unreimbursed work expenses—except for one change: educators can no longer deduct out-of-pocket teaching expenses.
Child Tax Credit: The child tax credit is now permanently higher at $2,200 (adjusted for inflation).
ABLE Accounts: People with disabilities can continue to make larger contributions to their ABLE accounts.
Qualified Business Income (QBI) Deduction: Small business owners can continue to deduct up to 20% of their business income.

What’s New: Fresh Changes Starting in 2025

Here are some of the standout changes to keep an eye on:

Bonus Deduction for Seniors: If you're 65 or older, you could get an additional $6,000 off your taxable income—up to $12,000 for married couples. (Phases out at higher incomes.)
State and Local Tax Deduction (SALT) Cap Raised: The limit on state and local tax deductions jumps from $10,000 to $40,000 through 2029. Helpful for high-tax states.
New “Trump Accounts” for Kids: Think of this as a new kind of IRA for kids under age 18. Money grows tax-free and can be used for not only retirement, but also education, a first home, or starting a small business. Kids born from 2025–2028 can get a $1,000 contribution made on their behalf by the government.
Expanded 529 Use: You can now use 529 plans to pay for elementary and high school, homeschool expenses, and trade certifications—tax-free.
No More Energy Credits: Energy-efficient home and vehicle credits are going away after 2025.
Charitable Deduction for Standard Filers: Even if you don’t itemize, you can deduct up to $2,000 for donations—so save those receipts!
New Education Tax Credit: Starting in 2027, you may get a dollar-for-dollar tax credit of up to $1,700 for donating to approved organizations that fund private school scholarships.

Other Notable Additions

Some changes may only apply to specific situations, but they’re worth knowing:

Overtime and Tips: You can now deduct up to $25,000 in qualified tip or overtime income (phases out at higher incomes).
Car Loan Interest: Interest on loans for new U.S.-built cars (up to $10,000) is deductible from 2025–2028.
Estate & Gift Tax: The lifetime exemption is now permanently set at $15 million per person, adjusted for inflation.

What Should You Do Next? Financial Planning Ideas

Here are a few strategies that could help you take advantage of the new law:

1. Diversify Your Tax Buckets

Instead of only trying to minimize taxes this year, think long-term. A mix of taxable, tax-deferred, and tax-free accounts gives you more control in retirement.

2. Consider Roth Conversions

If you think your tax rate will go up in the future (or your income will increase), now could be a great time to convert some traditional IRA money to a Roth IRA.

3. Bunch Your Deductions

With the higher SALT cap and new car loan and charitable deductions, it may make sense to “bunch” expenses—pay two years’ worth of property taxes, mortgage interest, and donations in a single year to itemize every other year.

4. Use 529 Plans for More Than Just College

With the expanded uses, these accounts are now much more versatile. They can even be helpful for families using private or home school options.

5. Finish Energy Upgrades in 2025

If you’ve been planning solar, energy-efficient windows, or electric vehicle purchases, do it before the end of 2025 to still qualify for energy credits.

Final Thoughts

The One Big Beautiful Bill Act brings some long-awaited clarity to our tax system, locking in many favorable rules and offering new benefits for families, retirees, and small business owners. But the details matter—and small choices now could have a big impact later.