The One Big Beautiful Bill Act (OBBBA) has passed.
Today, we dive into key elements of the Act that may have a DIRECT IMPACT ON YOU.
The OBBBA was signed into law by President Donald Trump on July 4, 2025, and is a legislative overhaul impacting federal tax, spending and security policies.
The Act’s provisions are particularly relevant for New Englanders, largely due to our region’s economic characteristics, including elevated property taxes and, for many, considerable income taxes.
However, the increased State and Local Tax (SALT) deduction (discussed in more detail below) may bring you significant, albeit temporary, tax relief.
Given the extensive tax changes, we encourage you to review your retirement plan and adjust accordingly. If you need assistance, reach out any time.
One KEY ITEM to revisit, if you’re currently taking retirement withdrawals, is your 401(k) tax withholdings.
OBBBA Key Provisions: A Quick Overview
Some provisions are permanent; others phase out.
- Extends some 2017 Tax Cuts and Jobs Act (TCJA) terms permanently.
- Increases standard deduction.
- Raises gift and estate tax exemptions permanently.
- Boosts child tax credit permanently.
- Adds a charitable tax break for non-itemizers.
- Eliminates federal taxes on tips (temporary).
- Creates new deductions for overtime pay and auto loan interest (temporary).
- Introduces a $6,000 “bonus” deduction for individuals aged 65 and older (temporary).
- Expands the State and Local Tax (SALT) deduction cap (temporary).
Let’s dive deeper into each of these provisions…
Individual Tax Rates Locked In
The TCJA lowered individual income tax rates through 2025. The OBBBA now makes these lower rates PERMANENT, keeping the seven current brackets (10%, 12%, 22%, 24%, 32%, 35% and 37%) in place beyond 2025. Also, bracket thresholds will adjust for inflation.1
KEY RETIREMENT PLANNING TIP: With rate certainty, it’s now easier to time capital gains harvesting, Roth conversions and retirement income withdrawals. Reach out if you’re considering any of the latter, so we can help guide you through the timing.
Increased Standard Deduction
The OBBBA PERMANENTLY boosts the standard deduction by $750 per person (raising it to $15,750 for individuals and $31,500 for joint filers) in 2025, with inflation adjustments going forward.2
Keep in mind: Deduction increases may impact your ability to itemize.
Gift & Estate Tax
Beginning in 2026, the Act PERMANENTLY raises the gift and estate tax exemption to $15 million per individual ($30 million for married couples filing jointly), with annual inflation adjustments.3
Child Tax Credit (CTC)
The Act makes the TCJA’s expanded Child Tax Credit permanent and raises it to $2,200 per child starting in 2025.4
Charitable Tax Break for Non-Itemizers
Starting in 2026, taxpayers who don’t itemize can deduct charitable contributions, up to $1,000 for single filers and $2,000 for married couples filing jointly. This deduction is permanent under the new law. Some limits apply.5
Deduction on Tips & Overtime: For 2025⎯2028, the OBBBA lets you deduct up to $25,000 in tip income (for certain industries), and $12,500 for single filers/$25,000 for joint filers in overtime pay from your taxable income. The deductions include income-based phaseouts, and payroll taxes still apply. These are “above-the-line” deductions (meaning it’s available regardless of whether you itemize deductions, i.e., they reduce your AGI).6
Auto Loan Interest Deduction
The OBBBA introduces a new deduction for auto loan interest. The tax break starts with purchases made in 2025 through 2028.
You may be able to deduct up to $10,000 in interest annually on loans for new, U.S. assembled vehicles.
This deduction is capped at $10,000 annually and phases out entirely for individuals earning over $100,000 or couples exceeding $200,000 in income.7 (ATVs, trailers and campers aren’t eligible.)
$6,000 “Bonus” Deduction for Ages 65+
The OBBBA provides a new, temporary tax break for those age 65+: a $6,000 deduction on your income, starting in tax year 2025 through 2028. Keep in mind, the deduction phases out once your income exceeds $75,000 or $150,000 if you’re filing jointly.
This new deduction is IN ADDITION TO the current additional standard deduction. (For 2025 it’s $2,000 for single taxpayers and $1,600 for each qualifying spouse when filing jointly.)8
State and Local Tax (SALT) Deduction
A NOTABLE CHANGE is the increase in the cap on State and Local Tax (SALT) deductions from $10,000 to $40,000 (starting in 2025), for taxpayers earning less than $500,000, with a cap phase down thereafter.
The limit then increases 1% each year, however, the deduction cap reverts back to $10,000 in 2030.
How does the updated SALT deduction IMPACT YOU?
Let’s consider just one example, with the following assumptions:
- Married Filing Jointly
- Adjusted Gross Income (AGI): $175,000
- State & Local Taxes Paid (SALT): $25,000 (Includes Property Tax + State Income Tax)
- Increased 2025 Standard Deduction: $31,500
- (New) SALT Deduction Cap: $40,000
Overall, many New Englanders WILL BENEFIT from the increased SALT cap.
Here’s a simple example:
2024 Tax Law (Before OBBBA) | 2025 Tax Law (With OBBBA) | |
Filing Status | Married Filing Jointly | Married Filing Jointly |
Annual Income (AGI) | $175,000 | $175,000 |
Total State & Local Taxes Paid | $25,000 | $25,000 |
SALT Deduction Cap | $10,000 | $40,000 |
Allowed SALT Deduction | $10,000 | $25,000 |
Other Deductions | $10,000 (e.g., mortgage, charity) | $10,000 (same) |
Total Itemized Deductions | $20,000 | $35,000 |
Standard Deduction | $29,200 | $31,500 |
Itemize or Standard? | Take standard deduction | Itemize (saves more) |
Effective Deduction Taken | $29,200 | $35,000 |
Additional Deduction Gained | ⎯ | $3,500 > standard deduction |
Estimated Tax Savings | ⎯ | $770 (22% marginal rate) |
[RESOURCE]: New Tax Provisions vs Employee Benefits
Here’s a comprehensive article by law firm Seyfarth Shaw summarizing how the Act impacts key employee benefits, including:
- Health Savings Accounts (HSAs) & Telehealth
- Dependent Care FSAs & Employer-Provided Child Care Tax Credits
- Student Loan Repayment & Educational Assistance
- 529 College Savings Plans
- New “Trump Accounts” for Children
KEY TAKEAWAYS
The OBBBA has created significant tax shifts and, therefore, a proactive review of your retirement plan is more critical than ever.
We encourage you to connect with one of our financial advisors to help ensure your retirement financial forecast aligns with this new legislation—helping you make INFORMED DECISIONS about everything from capital gains harvesting to Roth conversions and efficient income distribution in retirement.
Rubino & Liang leverages an advanced tax planning software to analyze your unique financial situation. We utilize its robust scenario analysis to uncover strategic tax savings and illustrate how the Act’s provisions could directly impact your retirement planning and investment strategies.
Finally, new tax laws can sometimes create anxiety. To minimize this, check out our article: Retirement Planning: Mastering What You Can (And Can’t) Control.
. . .
Sources:
1 and 2: CRR, CPA and Business Advisors: New Law, New Tax Strategy: Time to Plan Ahead, https://www.crrcpa.com/blog/new-law-new-tax-strategy-time-to-plan-ahead
3: Alston & Bird, Breaking Down the Tax Provisions of the One Big Beautiful Bill Act, https://www.alston.com/en/insights/publications/2025/07/tax-provisions-one-big-beautiful-bill-act
4 and 5: Fidelity: What’s inside the new tax act?, https://www.fidelity.com/learning-center/personal-finance/one-big-beautiful-bill
6: Moore Colson, OBBBA Signed into Law: A Breakdown of Key Tax Changes, https://moorecolson.com/news-insights/obbba-signed-into-law-a-breakdown-of-key-tax-changes/
7: Kiplinger: New GOP Car Loan Tax Deduction: Which Vehicles and Buyers Qualify, https://www.kiplinger.com/taxes/new-gop-car-loan-tax-deduction
8: AARP: What to Know About the New Tax Deduction for Older Adults, https://www.aarp.org/money/taxes/what-to-know-new-tax-law-2025.html
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