What the One Big Beautiful Bill Act Means for You — And How to Plan Around It
The newly passed One Big Beautiful Bill Act (OBBBA) introduces several major updates to the federal tax code. Whether you're a young family, collecting social security, or someone working long hours in a tipping or overtime-heavy industry, this legislation likely affects you.
Below is a breakdown of some of the impactful changes — along with planning insights to help you make the most of them.
Key Tax Changes at a Glance
| Category | Previous | OBBBA Adjustments |
|---|---|---|
| Standard Deduction (Single/MFJ) | $15,000 / $30,000 | $15,750 / $31,500 |
| Child Tax Credit | $2,000 per child | $2,200 per child |
| Senior Bonus Deduction | N/A | $6,000 (with MAGI limits) |
| Tips Deduction | N/A | Up to $25,000 per year |
| Overtime Deduction | N/A | Up to $12,500 per year |
| Car Loan Interest Deduction | N/A | Up to $10,000 (phased out at higher income) |
For a summary view of major changes, download the below PDF with all of the key changes highlighted and compared to prior figures:
Building Wealth for Children
If you have a child born between 2025–2028, the government will seed a new tax-deferred investment account with $1,000. You can add up to $5,000 per year, and your employer can contribute another $2,500 — without it counting as taxable income.
Unlike a 529 plan, withdrawals will be taxed as long-term capital gains when the child turns 18. Investments must be made in US index funds (mutual or ETF).
Planning Tip:
This is a powerful new tool for early compound growth.
Coordinate with employers to leverage matching.
Be aware: These accounts may impact FAFSA eligibility for college aid.
The “Senior Bonus”
Retirees age 65+ with modified adjusted gross income (MAGI) below $75,000 (single) or $150,000 (MFJ) now qualify for a $6,000 deduction — aimed at offsetting taxes on Social Security (which are still in place). It is income sensitive and phases out fully at $175,000 (single) and $250,000 (MFJ).
Planning Tip:
Use QCDs (Qualified Charitable Distributions) to reduce taxable income and stay under MAGI limits.
Consider Roth conversions before RMD age to manage future bracket creep.
Deductions for Tipped Workers, Overtime Earners, and Car Buyers
New deductions include:
Tips: Up to $25,000/year can be deducted (though still must be reported).
Overtime: Up to $12,500/year can now be deducted.
Car Loan Interest: Up to $10,000 can be deducted if income is under $100k (single) or $200k (MFJ).
Most Provisions Expire After 2028
Most of the new deductions and credits under OBBBA are temporary and scheduled to end after December 31, 2028.
The one notable exception is the current federal tax bracket structure, which the legislation has extended beyond 2028. While these rates are now part of permanent law, future legislation could still change them.
Planning window: The next three years present an opportunity to:
• Time Roth conversions to take advantage of today’s bracket structure
• Bundle charitable and other itemized deductions before these provisions sunset
• Strategically manage taxable income, especially for seniors near MAGI limits
Implications for High-Income and Wealthy Households
The OBBBA has introduced permanent changes that affect all taxpayers, but individuals and families with above-average net worth should take special notice. Beyond the modest increase in the standard deduction, this bill locks in several provisions that impact income planning, estate strategy, and investment decisions.
1. Permanent Tax Brackets = Long-Term Income Strategy
With the top federal income tax rate of 37% made permanent by this legislation (though future legislation could change them), high earners have clarity and stability when forecasting their tax obligations. This opens the door to more aggressive long-term strategies like:
Accelerated Roth conversions
Tax-efficient charitable giving (e.g., donor-advised funds)
Strategic harvesting of long-term capital gains in lower-bracket years
2. Estate Planning: Exemption Still High—But for How Long?
While the estate tax exemption remains at $13.61 million per person ($27.22 million per couple) in 2025, there is growing speculation that future administrations may reduce this exemption. Affluent families may use this window to consider:
Lifetime gifting strategies
Set up irrevocable trusts such as SLATs or GRATs
Consider family limited partnerships (FLPs) for business succession and estate tax mitigation
TIP: Consider using your full exemption now. The IRS has confirmed that gifts made under a higher exemption will not be clawed back if the exemption is lowered in the future.
3. Pass-Through Business Owners Still Win
The 20% Qualified Business Income (QBI) deduction remains intact. High earners operating S Corps, LLCs, or sole proprietorships can continue to shield part of their business income from taxation—provided they meet the requirements.
Strategies to maximize this deduction include:
Adjusting reasonable compensation
Segregating qualifying vs. non-qualifying income streams
Reassessing income thresholds if subject to phaseouts
4. Capital Gains & Investment Income
For those with large brokerage accounts or concentrated stock positions, tax-loss harvesting and asset location remain essential strategies in your tax toolkit. No changes were made to the 2025 long-term capital gains tax rates in this bill:
| Income Level (Married Filing Jointly) | Long-Term Capital Gains Rate |
|---|---|
| $0 - $96,700 | 0% |
| $96,701 - $600,050 | 15% |
| $600,050+ | 20% |
What to Do Now: Strategic Moves for High-Net-Worth Individuals
Now that the brackets and QBI deduction are permanent (for now), here’s what to consider:
Review and Update Your Wealth Plan
Rebalance taxable vs. tax-deferred accounts
Fund 529 plans or education trusts
Leverage intra-family loans at historically low rates
Maximize Charitable Giving
Bunch gifts into donor-advised funds (DAFs)
Consider charitable remainder trusts (CRTs) for appreciated assets
Business Succession Planning
Consider early transition strategies
Use valuation discounts while available
Optimize buy-sell agreements
Final Thoughts
The One Big Beautiful Bill Act offers clarity and stability—but that doesn’t mean you should stand still. For affluent families and business owners, this is a pivotal time to reassess your tax, investment, and estate strategies.
Smart planning now can protect wealth for generations.
