On July 4, 2025, the One Big Beautiful Bill Act became law. This wide‑ranging legislation affects taxes, deductions, credits, and other provisions that may have a direct impact on your financial strategy.
At Lindberg & Ripple, we have seen how shifts in tax law can create both opportunities and challenges. While headlines often focus on a few high‑profile changes, the details matter—particularly for individuals and families with significant assets or complex planning needs. In this overview, we highlight fifteen notable provisions and share perspective on what they may mean for your financial plan.
1. Permanent Extension of TCJA Tax Rates
The individual income tax brackets established under the 2017 Tax Cuts and Jobs Act will now remain in place beyond 2026. This certainty allows for longer‑term tax planning. However, the permanence of these lower brackets may also shift strategies around income recognition, Roth conversions, and charitable giving.
2. Temporary Increase in SALT Deduction Cap
From 2025 through 2029, households with income under $500,000 will see the cap on state and local tax (SALT) deductions rise from $10,000 to $40,000. In 2030, the cap returns to $10,000. This creates a five‑year window in which to consider “bunching” deductions or adjusting the timing of state tax payments and charitable contributions to maximize benefits.
3. New Deductions for Tip and Overtime Income
Workers below certain income thresholds may deduct a portion of tip and overtime earnings. While this change will primarily help wage earners, it may also influence hiring and payroll structures for business owners in hospitality and service industries.
4. Deductibility of Auto Loan Interest
Interest paid on loans for qualifying U.S.‑assembled vehicles will now be deductible, subject to income limits and annual caps. This may be worth considering when evaluating the cost of vehicle purchases or fleet replacements.
5. Senior Tax Deduction
Taxpayers aged 65 or older with income below certain limits may qualify for a deduction of up to $6,000. For some, this may offset taxes owed on Social Security benefits or other income streams.
6. Increase in Child Tax Credit
The maximum child tax credit increases from $2,000 to $2,200 per child, with future adjustments for inflation. While the refundable portion remains the same, this still represents a modest but meaningful benefit for families with dependent children.
7. “Trump Accounts” for Children
Children born between 2025 and 2028 will automatically receive a $1,000 deposit into a new tax‑advantaged account, with parents able to contribute up to $5,000 annually. The funds can grow tax‑deferred, creating an early start on long‑term savings.
8. Gradual Reduction of Clean Energy Credits
Several clean energy tax incentives will be phased out, including credits for electric vehicle purchases. For households or businesses considering these investments, acting sooner may allow for greater tax savings before the incentives disappear.
9. Higher Transfer Tax Exemptions
Beginning in 2026, the estate, gift, and generation‑skipping transfer tax exemption will increase to $15 million per individual ($30 million for married couples), indexed for inflation. This may present a significant opportunity for additional lifetime gifting, funding of trusts, or restructuring of estate plans to transfer wealth more efficiently.
10. Tax on Large University Endowments
Large university endowments will now be subject to a graduated tax based on the value of assets per student. While this may not affect most individuals directly, it could influence giving strategies for donors who support higher education.
11. Work Requirements for Certain Benefits
Recipients of Medicaid and Supplemental Nutrition Assistance Program (SNAP) benefits will be subject to new work requirements. States will also be responsible for meeting certain administrative standards.
12. Shorter Retroactive Medicaid Coverage
Retroactive Medicaid coverage will be reduced to two months for traditional recipients and one month for expansion recipients, beginning in 2027. This change may have implications for elder care planning, particularly when it comes to the timing of asset transfers and medical expenses.
13. Debt Ceiling and Spending Provisions
The bill raises the federal debt ceiling and includes funding for border security, defense initiatives, and energy development projects.
14. Expanded Defense and Infrastructure Spending
Additional resources have been allocated to defense systems, the Coast Guard, and public land initiatives. While not directly affecting tax policy, these provisions are part of the broader fiscal context.
15. Higher Immigration‑Related Fees
The Act introduces new fees for asylum applications, employment authorizations, and certain visa categories, which may affect employers who hire foreign talent.
Planning Considerations
The provisions in this bill offer both opportunities to enhance your plan and risks that should be addressed proactively.
Maximizing near‑term opportunities
- The increased SALT deduction cap through 2029 is a limited‑time opportunity for eligible taxpayers. Coordinating the timing of deductible expenses could provide significant benefits.
- The higher transfer tax exemption beginning in 2026 may allow for substantial wealth transfers with reduced tax exposure.
- Families may wish to establish and fund “Trump Accounts” early to take advantage of potential compounding.
Preparing for phase‑outs
- The gradual elimination of clean energy credits means that timing matters for those considering qualifying purchases or improvements.
- Several deductions—such as those for tip and overtime income—are income‑dependent, making annual review essential.
Integrating with long‑term strategy
- The permanence of current tax brackets may warrant adjustments to charitable giving strategies, Roth conversions, or business income planning.
- Estate planning documents should be reviewed to ensure they reflect the new exemption amounts and do not contain outdated formula clauses that could lead to unintended results.
Our Perspective
At Lindberg & Ripple, we have guided clients through many legislative changes. The passage of the One Big Beautiful Bill Act is another reminder that proactive, informed planning can help turn change into opportunity. Every household and business will experience these provisions differently, depending on income levels, assets, goals, and timelines.
Our role is to help you understand the implications in the context of your broader financial picture, and to ensure that your plan remains aligned with both current law and your long‑term vision.
If you would like to explore how these changes may affect your strategy, we invite you to connect with us. Together, we can evaluate your options and determine the best path forward.
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