The One Big Beautiful Bill Act: What You Need to Know
You’ve probably heard about the sweeping changes to the tax code included in the newly signed One Big Beautiful Bill Act (OBBBA). While the name might sound lighthearted, this law packs a serious punch when it comes to your finances.
From major tax cuts to temporary deductions and expanded credits, the OBBBA is already reshaping the landscape for retirees, families, and anyone planning their financial future. At Olive Branch Wealth Management, we’ve been reviewing the fine print so you don’t have to. Below, we break down the most impactful provisions and what they mean for you.
$6,000 Senior Deduction (2025–2028)
This new deduction allows taxpayers age 65+ to deduct an additional $6,000 per person on top of the current senior deduction ($2,000 for single filers, $1,600 per person if married). However, it begins to phase out at income levels of $75,000 (single) or $150,000 (married filing jointly).
You may have heard rumors that Social Security benefits will no longer be taxed under this bill — that’s not true. While this new deduction may help reduce your overall tax burden, it does not eliminate taxes on your Social Security income or Medicare IRMAA surcharges.
Bottom line: You might pay less in taxes for the next few years, but Social Security remains taxable.
SALT Deduction Cap Temporarily Expanded
For residents of high-tax states like California, New York, and New Jersey, there’s good news — temporarily. The cap on State and Local Tax (SALT) deductions will rise from $10,000 to $40,000 beginning in 2025.
The cap increases 1% annually and phases out for higher earners: $250,000 (single) / $500,000 (joint).
The original $10,000 cap returns in 2030 unless extended again.
Tip: If you’re subject to the Alternative Minimum Tax (AMT), this increase may have limited benefit — be sure to review with your tax professional.
Tax Cuts That Stick Around
The OBBBA locks in the lower income tax rates and expanded brackets introduced by the 2017 Tax Cuts and Jobs Act. That means you won’t see a tax hike in 2026 like we originally expected. Beginning in 2025, the standard deduction will rise to $31,500 for joint filers, $15,750 for single filers, and $23,625 for heads of household. Seniors age 65+ can tack on an additional $2,000 (single) or $1,600 per spouse (joint), further increasing the value of not itemizing for many taxpayers.
Why this matters:
More clarity for long-term tax planning. Knowing that brackets will not automatically jump higher in 2026 makes it easier to forecast lifetime tax liability, decide when to realize capital gains, or convert to a Roth IRA.
Roth conversion window stays open. If your current marginal rate is lower than what you expect in retirement, you still have an opportunity to convert traditional IRA/401(k) money at the lower rate.
Standard deduction versus itemizing. With a permanently higher standard deduction, many households will continue not to itemize. That matters for charitable giving strategy, particularly if you itemize — you may benefit more from bunching gifts into alternating years.
Temporary Deductions with Real Impact (2025–2028)
The bill includes several temporary tax deductions aimed at helping working Americans. These expire after 2028 and phase out for higher earners, so take note:
Tip Income Deduction: Up to $25,000 of qualified tip income is deductible. Servers, barbers, ride share drivers, or anyone whose livelihood relies on tips could reduce taxable income — effectively lowering self-employment tax as well. Keep meticulous daily tip logs; the IRS will likely scrutinize this deduction.
Overtime Pay Deduction: Up to $12,500 (or $25,000 for joint filers). Nurses, police officers, and seasonal workers who rely on overtime can offset the income spike that often pushes them into a higher marginal bracket.
Car Loan Interest Deduction: You can deduct up to $10,000 in interest on car loans — but only for vehicles that were assembled in the United States. This deduction can help reduce the overall cost of financing a new car, but eligibility depends on where the car was built. Be sure to verify the vehicle’s final assembly location (often found in the VIN) before making your purchase.
These deductions phase out at $150,000 (single) and $300,000 (joint) for tips/overtime and $100,000/$200,000 for car loan interest.
Also, starting in 2026, the 1099-MISC and 1099-NEC filing threshold increases from $600 to $2,000, and will be indexed for inflation. This is a helpful change for freelancers and side-hustlers.
Child Savings Accounts (“Trump Accounts”) for Kids
Every child born between 2025 and 2028 will be eligible for a $1,000 government-funded account with tax-free growth. There are no income limits — the only requirements are that the child is a U.S. citizen with a valid Social Security number, and at least one parent must also have a valid Social Security number.
While some rules are still being finalized, here are the key highlights:
Parents, family members or other “taxable entities” can contribute
Converts to a traditional IRA when the child turns 18
The funds are untouchable until the child turns 18
Employers are allowed to contribute $2,500 of the $5,000 annual limit; if they do, it doesn’t count as income for you or your child
No earned income requirement like IRAs
Must be invested in a low-cost index fund tracking a major index like the S&P 500
Partial withdrawals allowed at age 18, full access at age 25, but only for "qualified purposes," including paying for college, starting a business, or buying a first home
If withdrawn for “qualified purposes,” then distributions will be taxed at the capital gains rate of 15% to 20%, which is typically lower than regular income tax rates
At age 30, the child gets full access to the funds for any purpose
Early compounding: A government-seeded $1,000, growing at 9% annually for 18 years, could grow to $4,717 — and potentially much more with additional contributions along the way.
Permanent Increase in the Estate Tax Exemption
If you’re a high-net-worth individual or own a family business, farm, or ranch — this part of the One Big Beautiful Bill Act is worth your attention.
Under the 2017 Tax Cuts and Jobs Act (TCJA), the federal estate and gift tax exemption was nearly doubled. However, those increases were scheduled to expire at the end of 2025, reverting to much lower limits. The OBBBA makes those higher exemption levels permanent, creating new opportunities for long-term legacy planning.
Here’s What Changed:
The lifetime estate and gift tax exemption will increase to $15 million per individual (or $30 million per married couple) in 2026.
These amounts will be indexed for inflation, meaning they’ll likely increase over time.
For reference, the exemption for 2025 is projected to be $13,999,000 for individuals — so this change gives additional flexibility and protection going forward.
Why It Matters
Families who own significant assets — especially those that are land-rich but cash-poor — have historically faced liquidity challenges when trying to pass wealth to the next generation. With the increased exemption, fewer estates will be subject to federal estate tax, reducing the likelihood of needing to sell property or business interests to cover a tax bill. This also means more time and breathing room to implement thoughtful strategies like succession planning, charitable trusts, or conservation easements — rather than being rushed by a nine-month IRS deadline.
Whether you're looking to protect a multi-generational business or pass wealth to your children or grandchildren, this provision offers a much-needed sense of clarity and control over the future of your estate.
Charitable Deduction Updates (Effective 2026)
This bill includes two major changes:
Non-itemizers can now deduct up to $1,000 (single) or $2,000 (joint) — encouraging more people to donate.
Itemizers face new restrictions:
Deduction capped at 35% (even in the 37% bracket). For example, someone in the 37% bracket donating $1,000 would only be able to receive a $350 deduction instead of the current $370. This is effective in 2026.
Only the amount above 0.5% of your AGI is deductible. For example, if your AGI is $300,000, 0.5% of that is $1,500; so you cannot deduct the first $1,500 of your donation, you can only deduct what you give beyond that amount. This is effective in 2026.
Translation: High earners will want to plan their giving carefully, and if you haven’t been itemizing, 2026 opens new opportunities.
The Child Tax Credit Gets a Boost
This one might apply more to your kids or grandkids, but it’s worth noting. The Child Tax Credit increases to $2,200 per child starting in 2025. This is for each child under age 17 at the end of the tax year.
It remains a credit, not a deduction — meaning it comes directly off your tax bill
Phases out at $200,000 (single) / $400,000 (joint)
A tax credit is more beneficial than a tax deduction because a tax credit comes off your tax bill after it’s already been calculated, kind of like using a store credit. It takes more money off your tax bill than a deduction.
If you have younger family members, share this info — it could make a big difference.
Enhanced Child and Dependent Care Tax Relief
Starting in 2026, working parents can contribute up to $7,500 to a dependent care FSA (up from $5,000), and the child and dependent care credit increases to $1,500 for one dependent and $3,000 for two or more. Employers also receive larger credits for providing on-site childcare.
So, What Should You Do Now?
The One Big Beautiful Bill Act has sweeping changes — some are permanent, others are temporary. But all of them impact your financial planning in very real ways. Here’s your action plan:
Review your tax strategy with a professional — especially around Roth conversions and deduction timing.
Map out temporary deduction windows (2025–2028) and coordinate large purchases or work bonuses.
Revisit your estate and charitable giving plans with updated exemption and deduction rules.
Consider Child Savings Accounts if you have kids or grandkids.
Put key deadlines on your financial calendar so nothing slips through the cracks.
Let’s Talk About Your Strategy
The One Big Beautiful Bill Act brings both opportunities and complexities. Whether you’re approaching retirement, running a family business, or just trying to minimize taxes, understanding how this law affects you is critical.
📞 Call us today at (405) 993-6296
🌐 Visit: www.OBWMLLC.com
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Let’s sit down, review your goals, and create a financial strategy that’s beautiful and built for you.
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Disclosure
All content discussed in this article is for informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. Opinions expressed are solely those of Olive Branch Wealth Management, LLC and its staff. The information presented is believed to be from reliable sources; however, Olive Branch Wealth Management, LLC makes no representations as to its accuracy or completeness. This article shall not be construed as an offer to sell or a solicitation to purchase any insurance product in any jurisdiction in which the agent is not licensed. Topics should be discussed with a licensed insurance agent, tax professional, or financial adviser before implementation. Olive Branch Wealth Management, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency.
Sources
Kiplinger Tax Letter, Vol. 100, No. 15 – July 17, 2025
NerdWallet – “What the ‘Big, Beautiful Bill’ Means for Your Finances”
Fidelity – “One Big Beautiful Bill Overview”
Tax Policy Center – “What Is the SALT Deduction and Who Benefits from It?”
Kiplinger – “Should You Start a Trump Account for Your Child?”
Yahoo Finance – “How the New Trump Accounts Work—and Why Some Experts Don’t Love Them”
Fidelity Charitable – “How Tax Reform Impacts Charitable Giving Under the OBBBA”
Kitces – “Tax Planning Under the One Big Beautiful Bill Act”
