One Big Beautiful Bill Act

As we officially hit the halfway mark in 2025, it is hard to overlook the major news hitting our screens every single day. As many of you likely saw, President Trump signed the One Big Beautiful Bill Act (OBBBA) on the Fourth of July, which introduced significant changes to our tax code effective immediately. Spanning over 870 pages, the bill revises provisions from the initial tax code enacted during his first presidency, and outlines the temporary and permanent changes made to our tax code. According to the administration, these updates reflect an effort to address ongoing economic challenges and aim to provide both immediate relief and long-term stability. Understanding these changes is crucial for planning effectively, especially for retirees keen on optimizing their financial strategies.

The natural question on everyone’s mind is, “How will this affect me?” Let’s explore a few key takeaways to help you understand the bill and considerations to keep in mind:

1. Marginal tax rates were made permanent. This means the 10%, 12%, 22%, 24%, 32%, 35% and 37% tax brackets are here to stay until Congress passes new legislation to revise them again in the future.

What does this mean? It is good news for pre-retirees and retirees today. Taxpayers avoid the marginal tax rate increase that was slated to occur for most tax brackets at the end of 2025. For example, take a look at today’s tax brackets and compare how they would have changed if this bill was not passed.

• *NOTE: The average taxpayer avoids a 22% tax rate increase by the enactment of the bill.

What should you consider? Seek guidance from your advisor or tax professional to take advantage of historically low tax rates and take the appropriate action that is best suited for you.

2. A higher standard deduction is permanent and temporarily increased through 2028. This means, for being a US citizen, the first $15,750 (single filer) or $31,500 (married filer) of income earned, you will not owe taxes on these dollars.

• *NOTE: The above amounts will continue to be adjusted for inflation in the future.

What does this mean? Most taxpayers will claim the standard deduction when filing their taxes. This simplifies your return and in many cases, will save you money by reducing the time/work required by your tax preparer to itemize your return. At the end of the day, a higher standard deduction means less taxes you have to pay and more money in your pocket.

What should you consider? Work with your advisor or tax professional to ensure you are taking the necessary steps to maximize your tax deductions each year.

3. Adults over the age of 65 receive ‘bonus’ deduction through 2028. This means, if you are over this age when you file your 2025 taxes, you are entitled to an additional deduction of $6,000 if your modified adjusted gross income (MAGI) is under $75,000 (single filer) or $12,000 if MAGI is under $150,000 (married filer). For every $1,000 over a filer’s MAGI threshold, your $6,000 deduction will be reduced by $60.

What does this mean? A single filer over the age of 65 with MAGI under $75,000 will be entitled to a total deduction of $23,750 when filing their taxes, meaning they pay no taxes on the first dollars earned up to this amount. Married filers over the age of 65 with MAGI under $150,000 will be entitled to a total deduction of $46,700 when filing their taxes, meaning they pay no taxes on the first dollars earned up to this amount.

• *NOTE: The total deduction was calculated by adding the standard deduction plus the existing 65+ deduction and new senior bonus deduction together.

What should you consider? With this new deduction, work with your advisor or tax professional to maximize your deduction and develop a tax plan accordingly.

4. Everyone can deduct charitable contributions now (up to limit). This permanent provision means that if you tithe to your church or give to a charity, you can now deduct up to $1,000 (single filer) or $2,000 (married filer) of all contributions, even if you claim the standard deduction.

What does this mean? In prior tax codes, the only way someone could receive a ‘tax deduction’ on charitable contributions was by having ‘qualified deductions’ that exceeded the standard deduction. In many cases, this required significant gifts or charitable contributions. For 2025, this would be $15,750 for a single filer and $31,500 for a married filer under the age of 65.

What should you consider? Ensure you provide your tax preparer with giving statements or receipts for all charitable gifts made within a calendar year to claim this deduction (if applicable).

5. Eligible to deduct auto loan interest on new car purchases (must meet requirements). This temporary provision means any US citizen who purchases a car whose final assembly occurred in the US, can deduct up to $10,000/year of interest paid on their auto loan.

What does this mean? In prior tax codes, auto loan interest paid was not a ‘qualified deduction’ that could be taken to lower your taxable income. Now, as long as a new car purchased is assembled within the US and a taxpayers modified adjusted gross income (MAGI) is under $100,000 (single filer) or $200,000 (married filer), they are eligible to deduct up to $10,000 of loan interest paid. For every $1,000 over a filer’s MAGI threshold, your $10,000 max potential deduction will be reduced by $200.

What should you consider? If you are in the market for a new car, check with the dealership to confirm where the final assembly of the car occurred before buying.

As our advisor team continues to sort through the One Big Beautiful Bill Act (OBBBA), we encourage you to work closely with your financial advisor and tax professional to create a plan that aligns with your financial goals. This new tax bill presents an array of both permanent and temporary tax provisions that could significantly impact your financial future. We are happy to help you better understand and leverage these changes, so you can position yourself to maximize possible tax savings and better your long-term financial plan. Together, we can maximize the opportunities offered by this legislation, securing your financial legacy and minimizing your tax liabilities for years to come.

We hope that you have found this write up helpful. We encourage you to stay informed about the most recent legislation changes and reach out to your advisor with any questions. If you have a friend who could benefit from sitting down and speaking about their tax plan with one of our advisors, just know we are happy to help!

Matthew Terry, CFP®, EA

Sources:

https://waysandmeans.house.gov/2024/12/30

https://fortune.com/2025/07/04/trump-signs-one-big-beautiful-bill-into-law-what-that-means-for-your-money/

https://www.cnbc.com/2025/07/03/trump-big-beautiful-bill-tax-changes.html

https://www.govinfo.gov/content/pkg/BILLS-119hr1eas/pdf/BILLS-119hr1eas.pdf