On July 4, 2025, the One Big Beautiful Bill Act of 2025 (OBBBA) was signed into law, introducing sweeping and long-lasting changes to the federal tax code. Many of the provisions make temporary reforms from prior legislation permanent—while introducing new rules that may affect individuals, families, and students across the country.
Below is a high-level overview of several major components of the law and what they could mean for your financial planning strategy.
Key Provisions for Individuals & Families
1. Individual Tax Rates
The individual tax rates introduced under the 2017 Tax Cuts and Jobs Act (TCJA), which were scheduled to expire in 2025, are now made permanent. This means taxpayers will not face an automatic rate increase in 2026.
2. Standard Deduction Increase
For tax years beginning after 2024:
- $15,750 for Single filers
- $23,625 for Head of Household
- $31,500 for Married Filing Jointly
These amounts will be indexed for inflation going forward.
3. Personal Exemptions
Previously suspended under the TCJA, personal exemptions are now permanently repealed.
4. New Senior Deduction
A new $6,000 deduction is available (2025–2028) for individuals aged 65 and over, subject to phaseouts starting at $75,000 (single) or $150,000 (joint).
Deductions Expanded or Introduced
5. State and Local Tax (SALT) Deduction
The previous $10,000 cap is raised to $40,000 for households earning under $500,000 through 2029. It reverts to $10,000 in 2030.
6. Child Tax Credit
Increased from $2,000 to $2,200 per child and indexed for inflation in future years.
7. Deductions for Workers (2025–2028):
- Qualified Tips Deduction: Up to $25,000, phased out starting at $150,000 MAGI.
- Overtime Pay Deduction: Up to $12,500 ($25,000 for joint filers), with the same phaseouts.
- Car Loan Interest Deduction: Deduct up to $10,000 in interest on U.S.-assembled new vehicles, even for non-itemizers. Income phaseouts apply starting at $100,000 MAGI ($200,000 joint).
8. Charitable Giving
Beginning in 2026, non-itemizers may deduct up to $1,000 ($2,000 joint) in qualified cash donations.
Itemized Deductions and the AMT
9. Itemized Deduction Cap
The overall limitation on itemized deductions is permanently repealed and replaced with a new formula (details pending).
10. Alternative Minimum Tax (AMT)
AMT exemption amounts are made permanent. The phaseout threshold for joint filers will revert to $1,000,000 in 2026.
Estate, Gift & Generation-Skipping Transfer Taxes
11. Estate Tax
The basic exclusion amount increases to $15 million for decedents dying after 2025 and will be inflation-adjusted annually.
12. Generation-Skipping Transfer Tax
The exemption amount is similarly increased to $15 million for transfers occurring after 2025.
Higher Education Loan Reform
13. Graduate PLUS Loans
Eliminated under the Act. Lifetime borrowing is capped at:
- $100,000 for graduate students
- $200,000 for doctoral or professional students
14. Parent PLUS Loans
New lifetime borrowing cap of $65,000 per student.
15. Student Loan Repayment Options
For new borrowers, only two repayment plans will be available:
- A 10-year standard plan
- A 30-year Revised Affordable Plan (RAP)
Deferments and hardship relief will no longer be available for new borrowers.
Federal Tax, Benefit, and Energy Policy Changes
16. Remittance Tax
A new 1% tax applies to international money transfers originating in the United States.
17. Medicaid Reform
A nationwide requirement for recipients to work at least 80 hours per month is introduced. Additional co-pays and verification rules apply.
18. SNAP (Food Assistance)
Tighter work requirements, state-level cost sharing, and administrative penalties for excessive error rates are established.
19. Energy Policy
The Act repeals most tax credits for green energy (solar, EVs, home upgrades) after 2025, shifting support toward fossil fuel and rural energy development.
What Does This Mean for You?
This legislation contains both opportunities and challenges, with provisions that touch nearly every aspect of financial life—from income taxes and family deductions to estate planning and student loans. Some elements may require adjustments to your financial plan or present opportunities for proactive tax positioning.
Important Disclaimer
Haven Financial Planning does not provide tax or legal advice. This summary is for general informational purposes only and should not be interpreted as financial or tax advice. Always consult with a certified public accountant (CPA), attorney, or qualified tax professional before making decisions based on this legislation.
How Haven Financial Planning Can Support You
While we do not provide tax advice, we work closely with our clients and their tax professionals to help ensure that financial strategies align with evolving laws and long-term goals. From retirement readiness and estate planning to college funding and charitable giving, our team is here to provide clarity.
If you have questions about how these new rules may interact with your broader financial picture, we’re happy to help guide that conversation.
Schedule a consultation today to begin your next chapter with confidence.