What the “One Big Beautiful Bill” Means for You

Congress recently passed the “One Big Beautiful Bill” (OBBB), a sweeping piece of tax legislation that makes many of the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent, while also introducing some brand-new benefits for individuals, families, and business owners.

If you’re wondering what all this means for your financial life, you’re not alone. This is one of the most significant tax updates in years, and it brings new opportunities to adjust your plan for the future.

Here’s what to know—and where to look for planning opportunities.

What’s Staying the Same

Many of the tax benefits originally introduced in 2017 were set to expire in 2025. This new bill locks in several of those provisions, providing more certainty and time to plan ahead.

• Individual Tax Brackets Stay the Same: The seven tax brackets (ranging from 10% to 37%) remain in place. That means most taxpayers will continue to benefit from the lower rates set under the TCJA.
• Standard Deduction Increased and Made Permanent: For 2025, the standard deduction increases to $15,750 for individuals and $31,500 for married couples filing jointly. And it’ll continue to rise with inflation going forward.
• Qualified Business Income Deduction (QBI) Is Here to Stay: Business owners can continue to claim the 20% deduction on qualified pass-through income, now permanently part of the tax code.
• Mortgage Interest Deduction Unchanged: You can still deduct interest on mortgage debt up to $750,000 for joint filers ($375,000 for single filers).

What’s New and Worth Exploring

Along with locking in previous benefits, the bill introduces several new provisions aimed at supporting working families, older adults, and business owners. Here are some highlights:

• Bigger Child Tax Credit: The child tax credit permanently increases from $2,000 to $2,200 per child.
• Bonus Deduction for Seniors (2025-2028): If you’re 65 or older and have income under $75,000 ($150,000 for couples), you’ll get a $6,000 additional deduction. This applies whether you itemize or take the standard deduction.
• No Tax on Tips (2025–2028): If you or someone in your family earns tips as part of their income, this could be a welcome break—though there are restrictions based on employment type and income.
• No Tax on Overtime Pay (2025–2028): Overtime hours will be tax-free up to $12,500 per person ($25,000 for couples), with phaseouts beginning at $150,000 of income ($300,000 for couples). If you regularly work extra hours, this is worth planning around.
• Estate Tax Exemption Increases: Starting in 2026, the lifetime gift and estate tax exclusion jumps to $15 million per person, up from the current level. This can offer new flexibility in legacy and wealth transfer planning, especially for high-net-worth families.
• SALT Deduction Cap Raised: For 2025, the cap on state and local tax (SALT) deductions increases to $40,000 for filers earning under $500,000. The cap will gradually increase through 2029, then revert to $10,000 in 2030. This could be a meaningful change for residents of high-tax states such as NJ, NY, CA, and IL.
• Deduction for Car Loan Interest: If you purchase a U.S.-built vehicle, you may be able to deduct up to $10,000 per year in interest paid on the loan through 2028. This phases out above $100,000 in income ($200,000 for couples).
• Newborn “Trump Accounts”: Starting in 2025, parents who open a custodial account for a newborn can receive a $1,000 tax credit, plus contribute up to $5,000 per year until the child turns 18. This could become a powerful long-term savings tool for families.
• Charitable Deductions for Non-Itemizers: Beginning in 2026, you can deduct up to $1,000 ($2,000 for couples) in charitable giving even if you don’t itemize. This is a permanent change, and a win for generous taxpayers.

For Business Owners and Investors

There’s good news here, too—especially if you own a business or are looking at long-term investments.

• Bonus Depreciation for Assets: Businesses can claim 100% bonus depreciation on property and machinery acquired after January 19, 2025. This can help offset the cost of growth or upgrades.
• R&D Expense Deductions: Deductions for research and development expenses are back, offering another incentive to invest in innovation.
• Qualified Opportunity Zones (QOZ) Made Permanent: Investing in Qualified Opportunity Zones still comes with powerful tax benefits:
  • Gains from new investments made after 2027 can be deferred for up to 5 years.
  • If held for 5 years, you get a 10% step-up in basis.
  • If held for 10 years, any gain on the QOZ investment is completely tax-free.

Opportunity Zones will be redesignated every 10 years starting in 2026, so this could be a good time to revisit your strategy if you’ve been exploring this area.

What This Means for Your Financial Plan

Whether you’re building your future, growing a business, supporting your family, or thinking about the legacy you want to leave, the changes in this bill bring new opportunities to strengthen your financial plan.

If you’re unsure how it all applies to you—or you’re ready to explore how to make the most of what’s new—we’re here to help. Reach out to your Octavia wealth advisor today. Let’s make sure your plan reflects where you are today, where you want to go next, and the goals that matter most to you.