The One Big Beautiful Bill Act

by Adam Burch, Senior Client Wealth Strategist, CFP®

On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill Act,” a sweeping piece of legislation that dramatically reshapes America’s tax code, federal spending priorities, and approach to social welfare programs. Praised by supporters as a move away from government overreach and economic stagnation, and by critics as a regressive blow to social safety nets, the bill marks one of the most significant legislative shifts in a generation.

A Bold Rewrite of the Tax Code

At the heart of the One Big Beautiful Bill is the extension of most provisions from the 2017 Tax Cuts and Jobs Act (TCJA), including individual income tax rate reductions, a corporate tax rate cut to 21%, a doubling of the standard deduction, and a higher estate and gift tax exemption. While these provisions were originally set to expire at the end of 2025, the new law locks them in indefinitely.

In addition to making the TCJA permanent (at least for now), the law introduces several new temporary deductions:

• A deduction of up to $12,500 for single filers and $25,000 for married couples for overtime pay. This is intended to reward hourly workers and encourage increased labor force participation. This deduction is only applicable for tax years 2025 through 2028.
• A new deduction of up to $25,000 for cash tips, also for tax years 2025 through 2028. This provision phases out at higher income levels.
• An increase in the Child Tax Credit from $2,000 to $2,200 per child, with automatic annual adjustments for inflation. Though modest, this increase is expected to benefit millions of families.
• Deductions for car loan interest on new American-made vehicles. Under this provision, you can take an above-the-line deduction of up to $10,000 per year in interest paid on an auto loan. For single filers, the deduction begins phasing out above $100,000 Adjusted Gross Income (AGI) and for those married filing jointly, it phases out above $200,000 AGI. It’s important to note that only new vehicles assembled in the U.S. qualify and the deduction applies to loans taken between 2025 and 2028.
• Reinstatement of a charitable deduction for those that do not itemize. For tax years 2026 through 2028, the bill allows an above-the-line deduction up to $1,000 for individuals and $2,000 for married couples filing jointly.

SALT Deduction Limit Adjustments

One of the more significant provisions of the bill, although also temporary, is an increase in the State and Local Tax (SALT) deduction. Since 2018, for those that itemize rather than take the standard deduction, the combined annual deduction limit for property, income, and sales taxes has been $10,000. With the One Big Beautiful Bill Act, this limit increases to $40,000 for households earning up to $500,000, offering substantial relief to taxpayers in high-tax states from 2025 through 2029. After that, the cap reverts to the $10,000 limit.

No Changes to Social Security

Although President Trump initially proposed eliminating federal taxes on Social Security benefits altogether, budget reconciliation rules prohibited changes to Social Security through this legislative process. Instead, the bill introduced a senior bonus deduction aimed at providing targeted tax relief to those 65 and older, regardless of Social Security benefits.

• Deduction Amount: Eligible individuals can claim an additional $6,000 deduction, while married couples filing jointly can claim up to $12,000.
• Income Phase-Out: The deduction begins to phase out for individuals with a modified adjusted gross income (MAGI) exceeding $75,000, and for married couples filing jointly with a MAGI over $150,000. The deduction is completely phased out at $175,000 for individuals and $250,000 for couples.
• Eligibility: This deduction is available to both standard and itemizing filers, providing flexibility in tax planning.
• Expiration: The deduction is set to expire at the end of 2028.

Spending Shifts: Cuts and Investments

While the bill introduces sweeping tax relief, it also enacts significant changes in federal spending priorities, with the majority targeting safety-net programs:

• Medicaid: The bill makes substantial changes to Medicaid funding, with the goal of reducing federal spending and requiring work participation among able-bodied adults. States are also given more flexibility to set eligibility standards and cost-sharing requirements.
• Supplemental Nutrition Assistance Program (SNAP): Likewise, families dependent on SNAP may see both smaller benefits and additional hurdles to receive food assistance. The bill reduces the maximum monthly benefit and imposes work requirements for able-bodied adults.
• Clean Energy Tax Credits: These credits, established under the Inflation Reduction Act to support solar and wind development, electric vehicle subsidies, and energy efficiency upgrades, have now been repealed.

On the other side of the ledger, the bill ramps up federal spending in key areas aligned with Trump’s “America First” agenda, including border security, immigration enforcement, and defense and national security.

Other Provisions

In addition to headline changes like tax cuts and entitlement reforms, the bill includes several more nuanced provisions that could have meaningful implications for business owners and families.

• Qualified Business Income (QBI) Deduction: Updates to the QBI deduction provide expanded and more permanent tax relief for entrepreneurs. The 20% above-the-line deduction for small business owners who operate pass-through entities (S‑corporations, LLCs, partnerships) has now been made a permanent part of the tax code, with increased income phase-in thresholds
• Expanded 529 Accounts and “Education Freedom” Allowances: Families can now use 529 savings plans for a wider range of pre-college educational expenses—including homeschool materials and vocational training—as well as higher education.
• Federal Student Loan Updates: The legislation introduces new annual and lifetime federal student loan borrowing caps, with the goal of reducing federal government risk from ballooning student loan balances, placing downward pressure on college costs, and encouraging students to weigh return on investment when choosing degree programs. Repayment plans are also consolidated to only two options:  a standard fixed plan (10–25 years) and a new Repayment Assistance Plan (RAP), where borrowers pay a percentage of income, with forgiveness after 30 years. Several current income-driven plans—including SAVE, PAYE, REPAYE, and ICR—are eliminated.
• Private School Tax Credits/Vouchers: Beginning in 2027, the law introduces a federal tax credit for contributions to scholarship funds that benefit private school attendees.

Political and Economic Impact

The bill passed on a razor-thin margin: 218 – 214 in the House and 51 – 50 in the Senate, with Vice President J.D. Vance casting the tie-breaking vote.

The Congressional Budget Office (CBO) estimates that the One Big Beautiful Bill Act will increase the federal debt by $3.3 trillion to $3.8 trillion over the next decade. This projection reflects a combination of extended tax cuts, reduced corporate revenues, repealed clean energy incentives, and heightened defense and border spending.

Supporters argue the legislation will spur economic growth by increasing disposable income and incentivizing work, particularly among middle- and working-class Americans, and help small businesses through permanent tax cuts. On the other hand, critics warn that the bill is skewed toward the wealthy and does little to ensure long-term growth.

What It Means for Your Financial Plan

Of course, the big question with these updates is how they may impact you personally. With the passage of the Social Security Fairness Act in January and the One Big Beautiful Bill Act following in July, 2025 has proven to be a year of sweeping legislative change—particularly in areas that affect income, taxes, and retirement planning. These developments underscore the importance of collaborative, thoughtful financial planning, which our team is passionate about.

Our team of strategists, planners, and coordinators is carefully evaluating the new legislation to determine how its provisions may help optimize or simplify your financial life. We will integrate these insights into our planning and conversations ahead and will reach out directly if we identify any items requiring immediate attention.

As always, we welcome your questions or updates at any time. Our mission remains helping you succeed in the pursuit of a truly remarkable life—and that focus will continue to guide us as we navigate these changes together.

This article is intended for general informational purposes and does not constitute a recommendation of any type. Please seek advice from your tax, legal, and financial professional prior to taking action. Advisory services offered through Destiny Capital Corporation, an Investment Adviser registered with the U.S. Securities & Exchange Commission.