President Trump signed the “One Big Beautiful Bill Act” into law on July 4, 2025. The law had a number of provisions, with some of them not getting the attention they deserve. In this post, I’ll breakdown the key provisions that could impact your taxes and your finances.
Tax Brackets Made Permanent
The legislation permanently extends the seven-bracket tax structure established by the 2017 Tax Cuts and Jobs Act, with rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These brackets were originally scheduled to expire after 2025, which would have resulted in a reversion to the pre-2017 tax rates for millions of Americans. By making these brackets permanent, the legislation provides certainty for longer term tax planning and ensures that taxpayers won’t face tax increases.
The permanent extension means these rates will remain in effect indefinitely, though future Congresses can modify tax rates through new legislation.
TCJA rates vs previous, higher rates
Enhanced Standard Deduction Made Permanent
The legislation makes permanent the increased standard deduction from the 2017 Tax Cuts and Jobs Act, which was set to expire in 2025. For 2025, the standard deduction increases from $15,000 to $15,750 for single filers and from $30,000 to $31,500 for married filing jointly, with future adjustments indexed for inflation.
2024 Standard Deduction Vs 2017 Standard Deduction (adjusted for inflation)
Senior Bonus Deduction
The legislation introduces a temporary $6,000 “senior bonus” deduction for taxpayers age 65 and older, effective for tax years 2025-2028. The big caveat is this additional deduction phases out for individual incomes over $75,000 and joint filers over $150,000. So if you’re doing something like Roth conversions, that might eliminate this deduction for you.
SALT Deduction Temporary Increase
The package includes an increase to the cap on the state and local tax deduction, raising it from $10,000 to $40,000 for tax years 2025 through 2029, after which it reverts to $10,000 in 2030. This change particularly benefits middle and upper-middle-class families in high-tax states like New York, California, and New Jersey. The temporary increase in the SALT cap also includes a phaseout for taxpayers with incomes over $500,000.
Estate Tax Exemption Expansion
The permanent extension and increase in the gift, estate, and generation-skipping transfer tax exemptions under the Tax Cuts and Jobs Act (TCJA), which would have expired in 2026. The estate and gift tax exemption increases from $13.99 to $15 million per individual in 2026. For married couples, this creates a combined exemption of $30 million through “portability” – a provision that allows the surviving spouse to use any unused portion of the deceased spouse’s exemption in addition to their own $15 million exemption. You still do need to be aware of whatever limits there are in your state, however, as those are unchanged by this legislation.
Charitable Deduction Enhancement
The legislation includes enhanced charitable giving incentives with a new deduction structure that benefits taxpayers regardless of whether they itemize. The new provision allows single taxpayers to claim up to $1,000 in charitable deductions and married filing jointly couples to claim up to $2,000, even if they take the standard deduction. Previously, taxpayers had to itemize to deduct charitable gifts. This starts in 2026, and the amount is not indexed for inflation.
Trump Accounts: Birth-Based Investment Program
Trump Accounts for newborns will be funded with a one-time government contribution of $1,000 for U.S. citizens born in 2025, 2026, or 2027 under a pilot program. Starting July 2026, contributions of up to $5,000 per year (indexed to inflation) can be made by parents or individuals, with no earned income requirement. Employers can contribute up to $2,500 annually, while governments and nonprofits can also contribute on behalf of beneficiaries, with these contributions not counting toward the $5,000 limit.
Funds must be invested in low-cost index funds tracking the S&P 500 or other broad U.S. equity indexes with fees under 0.1%. No distributions are allowed until age 18, when the account functions like a traditional IRA.
Expanded HSA Eligibility
The legislation allows ACA marketplace bronze and catastrophic plans to have Health Savings Accounts by treating them as HDHPs, dramatically expanding HSA access. About 7.2 million Americans currently covered under bronze plans will gain HSA eligibility starting January 1, 2026.
HSAs are powerful tax-advantaged accounts that offer triple tax benefits: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. Unlike flexible spending accounts, HSA funds roll over year to year and can be invested for long-term growth. After age 65, HSA funds can be withdrawn for any purpose without penalty, making them excellent retirement savings vehicles that can cover healthcare costs in retirement.
Roth Conversions Remain Available
The legislation preserves the ability to convert traditional retirement accounts to Roth IRAs, maintaining this important tax planning strategy. Roth conversions allow taxpayers to pay taxes now on retirement account balances in exchange for tax-free growth and distributions later. The preservation of Roth conversions ensures taxpayers can continue implementing sophisticated retirement planning strategies, including tax diversification and legacy planning.
Conclusion
From enhanced standard deductions to Trump Accounts to the new charitable deductions, these changes create new opportunities for tax savings and wealth building across all life stages. Tax planning is a critical component of retirement planning, and you should seek to understand and implement aspects of this plan into your overall financial plan. If you need any help with that, I’d be happy to chat. You can book a call with me here where we’ll create your Financial Action Plan.