By Managing Director, Senior Advisor Jennifer Smiljanich, CFP®
While many of us were enjoying fireworks and family time over the July 4th holiday, something else quietly lit up the sky in Washington—Congress passed the long-anticipated One Big Beautiful Bill Act (OBBBA). True to its name, this sweeping piece of legislation covers a wide array of tax and financial provisions designed to impact Americans at nearly every stage of life.
We know “big” legislation can bring big questions. So, in true SJS fashion, we’ve pulled out the key highlights to help you better understand what this new law might mean for your financial picture.
Tax Brackets: The lower individual federal tax brackets enacted with the 2017 Tax Cuts and Job Act (TCJA) were retained, avoiding tax increases for about 62% of taxpayers.[1]
Deductions for Tip Income and Overtime Pay: The law allows for up to a $25,000 deduction for tips and overtime pay through 2028, except for highly compensated employees.
Increased Standard Deduction: The standard deduction level was increased by $1,000/$2,000 for individual/joint filers, helping many filers simplify their returns. Certain seniors also may benefit from up to a $6,000 additional deduction for tax years 2025-2028.
State and Local Tax (SALT) Cap Increases: Filers in higher tax states may benefit from the increase in the SALT deduction cap from $10,000 to $40,000 through 2029, with phase outs for high income filers.
Mortgage Interest Deduction: A deduction is retained for home mortgage interest deductions for debt up to $750,000.
Auto Loan Interest Deduction: Provides up to a $10,000 potential deduction for interest on the purchase of US-made vehicles through 2029, with a phase out for higher income filers.
Estate and Gift Tax Exemptions: The law provides for higher estate and gift tax exemptions of $15 million in 2026, and then adjusted for inflation.[2] These exemptions were set to revert to much lower levels at the end of 2025.
Newborn Accounts: Children born between 2024-2028 may now be eligible for a $1,000 government-funded savings account; taxpayers may contribute up to $5,000 a year to this account, which may grow tax free until the child reaches age 18.
529 Plans: Tax free withdrawals for more education-related expenses are now possible, including for certification and licensing expenses. Amounts up to $20,000 annually may be used for K-12 curriculum and expenses, dual enrollment fees for college courses, and standardized testing fees.[3]
Child Tax Credit: There is an enhanced child tax credit of $2,200 through 2028.
Charitable Donation Deductions: Starting in 2026, donors will be allowed to deduct $1,000/$2,000 (single/joint filers) if they don’t itemize their taxes. For those that do itemize, a portion of their charitable deduction will be disallowed starting in 2026. There may be an advantage to accelerating donations into 2025.[2]
Repeal of Electric Vehicle Tax Credits: Deductions for electric cars will phase out by September 30, 2025.[4]
Whether you're planning for your kids’ education, looking at new tax-saving opportunities, or simply wondering how this bill fits into your long-term financial goals, we’re here to help you make sense of it all.
And if you're a business owner, stay tuned—our next blog post will break down what this legislation means for your business and how to help you prepare for what’s ahead.
As always, your SJS advisor is just a call or email away—and we’re more than happy to collaborate with your tax professional to navigate these changes thoughtfully. From 2025 and beyond, we’ll continue to keep an eye on the fine print so you can focus on the big picture.
Important Disclosure Information & Sources:
"Big Beautiful Bill" House GOP Tax Plan: Preliminary Details and Analysis
How Trump’s ‘Big, Beautiful’ Bill Will and Won’t Change Your Taxes - WSJ Laura Saunders, July 4, 2025
EV Tax Credit 2025: How It Works, Eligible Cars - NerdWallet
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