What the One Big Beautiful Bill Act Means for Your Finances

Published: August 25, 2025

An Overview of the New 2025 Tax Law

The One Big Beautiful Bill Act, signed into law on July 4, 2025, is a sweeping tax and spending law with implications for nearly all federal tax filers in the United States. At nearly 900 pages, the law encompasses a wide range of provisions that impact both taxation and financial planning.

While the scope of the changes is broad, individuals and families can start here to understand some of the most impactful provisions. The Act also highlights the importance of having a collaborative professional team—financial, tax, and accounting advisors—working together to tailor strategies for your unique circumstances.

Key tax items

Medicare Premium Deductions for the Self-Employed

If you’re still working as a solopreneur, you can now deduct Medicare Part B and D premiums even if you don’t itemize. Supplemental Medicare and Medicare Advantage costs are also deductible. This only applies, however, if you don’t have access to a health plan through your own business or a spouse’s employer.

Tax Rates and Standard Deductions

The Act extends the tax cuts from the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025. These lower rates (10%–37%) are now permanent. Standard deductions were also increased for 2025: $15,750 for single filers and $31,500 for married couples filing jointly.

Gift and Estate Exemptions

Thresholds introduced in the Tax Cuts and Jobs Act were extended and now have no expiration date. The limits had been scheduled to expire at the end of 2025, and reversion to the previously lower thresholds could have had substantial intergenerational wealth implications for families with sizeable estates.

Under the new law, the gift and estate tax exemptions increase from $13.99 million for single filers and $27.98 million for married couples filing jointly in 2025 to $15 million and $30 million, respectively, in 2026.

SALT Cap Expansion

The state and local tax (SALT) deduction cap temporarily rises to $40,000, with a 1% increase each year until 2029. The cap then reverts to $10,000 in 2030. This expanded deduction begins to phase out for taxpayers with more than $500,000 in modified adjusted gross income, though all filers can still claim at least $10,000.

Senior “Bonus” Deduction

Taxpayers age 65 and older receive a new deduction from 2025–2028. A source of some confusion, this deduction is not tied specifically to Social Security. Rather, it applies to all tax filers 65 and older: $6,000 for single filers and $12,000 for joint filers. This deduction begins to phase out at $75,000 modified adjusted gross income for single filers and $150,000 for joint filers.

Charitable Deduction for Non-Itemizers

The law reintroduced and increased the deduction for qualified charitable contributions even for taxpayers who don’t itemize. Effective in tax years following 2025, individuals can deduct up to $1,000 and joint filers can deduct $2,000. Once it takes effect in 2026, this provision does not expire.

Child Tax Credit

The law permanently increased the credit from $1,000 to $2,200 in 2025. The credit begins to phase out for single filers with modified adjusted gross income above $200,000 and joint filers above $400,000.

Car loan interest

For tax years 2025-2028, up to $10,000 of interest can be deductible, provided the vehicle was assembled in the United States. This deduction is subject to income limits for loans acquired after 2024.

Electric vehicle credits

Eligibility was narrowed.

Tips deduction

From 2025 to 2028, workers in eligible industries can deduct up to $25,000 in tips from taxable wages. This deduction begins to phase out for single filers with modified adjusted gross income above $150,000 and joint filers above $300,000.

Overtime pay deduction

From 2025 to 2028, single filers in eligible industries can deduct up to $12,500 in overtime pay, though the deduction begins to phase out at modified adjusted gross income above $150,000. Joint filers can deduct up to $25,000, with the phase out beginning at $300,000.

Key Financial Items

529 savings plans

The law expanded the eligible expenses for which 529 funds can be used. Previously, 529 funds for K-12 students could be used primarily for tuition, with an annual limit of $10,000. Expenses such as tutoring, testing fees, dual enrollment, and educational therapy for children with disabilities are now eligible. And the annual amount was increased to $20,000 starting in 2026.

The law also increased student loan payback from $10,000 to $25,000 per beneficiary, allowed for post-secondary credentialling to pursue a trade or designation, and made permanent rollovers from 529 to ABLE accounts.

New savings accounts for children

The law introduced tax-advantaged accounts for minors. While there are no income or earnings requirements, there are restrictions on withdrawals and investment options.

• Applies to children born between Jan. 1, 2025, and Dec. 31, 2028.
• $1,000 initial government contribution.
• Annual contributions up to $5,000 until age 18.
• Withdrawals allowed at 18, with traditional IRA rules and penalties applying. Distributions will be taxed at ordinary rates for earnings, plus a 10% penalty if applicable.

Student loans

Some borrower-friendly provisions were rolled back, making it important to review repayment and refinancing strategies.

Planning Opportunities Under the One Big Beautiful Bill Act

With tax rates, deductions, credits, and exemptions shifting, the Act highlights the importance of proactive planning. Some opportunities include:

• Maximizing charitable giving under new rules.
• Reviewing estate planning in light of permanently higher exemption thresholds.
• Timing large purchases (like vehicles or real estate) to take advantage of temporary deductions.
• Expanding education funding strategies with enhanced 529 rules.

Having a collaborative professional team, your trusted financial, tax, and accounting advisors, ensures these changes are applied effectively to your unique situation.

FAQs About the One Big Beautiful Bill Act

What is the One Big Beautiful Bill Act?
It’s a 2025 tax and spending law with major provisions affecting taxpayers, estates, businesses, and families.

How does the Act affect taxes?
It makes the 2017 Tax Cuts and Jobs Act (TCJA) tax cuts permanent, raises standard deductions, adjusts the SALT cap, and adds or modifies several new deductions and credits.

What are the key financial planning changes?
Expanded 529 uses, new savings accounts for children, and updates to charitable deductions and estate planning thresholds.

How does the law affect estate planning?
Gift and estate exemptions were permanently increased, reducing the near-term risk of higher estate taxes for families with significant wealth.

Next Steps for Your Financial Plan

From saving strategies to the timing of large purchases, the One Big Beautiful Bill Act creates both new challenges and new opportunities.

As you review these takeaways, consider which apply to you and your family. You may find your tax bill is smaller, or your refund larger, creating opportunities for strategic saving, spending, or charitable giving.

At Hall Financial Advisors, we can help you evaluate these provisions in the context of your overall financial plan.

Schedule a no-obligation consultation today at (866) 865-4442 to explore how these changes may affect your future.

 

Changes in tax laws or regulations may occur at any time and could substantially impact your situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.