Beautiful or Ugly is a Matter of Perspective
When President Trump signed the One Big Beautiful Bill Act (OBBBA) into law July 4, 2025, many people cheered while others were less enthusiastic. OBBBA is massive, containing hundreds of provisions affecting tax policy, spending, and social welfare programs. A few key provisions include:
Tax cuts made permanent: The bill permanently extends many of the individual and business tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA), providing certainty for long-term financial planning.
Increased SALT deductions. It raises the cap on state and local tax deductions to $40,000 for those making under $500,000 but reverts back to $10,000 in five years.
Increased child tax credit: It boosts the Child Tax Credit to $2,200 per child, up from $2,000, indexed for inflation.
Increased tax deductions for seniors: It offers a special $6,000 deduction for seniors, subject to income limits, that will eliminate taxes on Social Security for about 88% of seniors, up from about 65% previously, but it will expire after 2028.
Estate tax exemption increase: The estate and gift tax exemption is permanently raised to $15 million for individuals and $30 million for couples.
New temporary deductions: The bill offers temporary tax deductions through 2028 for qualified overtime pay, tip income, and interest on auto loans for U.S.-assembled vehicles.
Small business benefits: Key provisions like the 20% Qualified Business Income (QBI) deduction and 100% bonus depreciation for capital investments are made permanent, offering significant tax savings for business owners.
"Trump Accounts" for children: A new tax-advantaged savings account is created for children, with an initial $1,000 government contribution for those born between 2025 and 2028.
Expanded 529 plans: The law increases the annual limit for tax-free 529 plan distributions used for Kâ12 tuition and expands eligible expenses to include trade programs and vocational training.
Higher national debt: Increases the debt limit by $5 trillion, adding $2.8 trillion to the national debt by 2035 as projected by the Congressional Budget Office (CBO).
Cuts to social programs: Reduces federal funding for Medicaid by an estimated $800 billion and the Supplemental Nutrition Assistance Program (SNAP) by $186 billion.
Climate and clean energy rollbacks: It phases out or eliminates numerous clean energy tax credits from the Inflation Reduction Act and promotes fossil fuel production.
Immigration policy changes: The bill significantly increases funding for immigration enforcement and boosts application fees for asylum and other immigration processes.
Depending on your perspective, there are many things in OBBBA to cheer or lament, but everyone can agree it is complicated. By introducing many new deductions with varying expiration dates, the bill adds layers of complexity to the tax code for individuals and businesses alike. Most taxpayers should consult a tax professional when assessing the impact on their bottom line. And, as ever, we encourage you to partner with a fee-only financial planner so you have an experienced partner dedicated solely to your success.