One Big Beautiful Bill Becomes Law: It’s a Time for Planning

On July 4, President Trump signed the One Big Beautiful Bill Act (“OBBBA”) into law, following House approval on July 3. You may remember our article from May 20, 2025 giving an overview of what was in the legislation at that time. In it’s final form, this sweeping legislation brings together a broad range of pro-business and taxpayer-friendly changes. It extends popular provisions from the 2017 Tax Cuts and Jobs Act (TCJA), reinstates and enhances key deductions, and introduces new opportunities for planning across business, international, energy and individual tax areas. Below is a look at some of the ways the OBBBA will affect individuals:

Individual Provisions

Extensions of Key TCJA Provisions

One of the biggest moves in the OBBBA is the extension of many provisions from the 2017 Tax Cuts and Jobs Act (TCJA), which were set to expire at the end of 2025. With this new law, several taxpayer-favorable provisions will remain in place, including:

• The existing tax brackets of 10%, 12%, 22%, 24%, 32%, 35% and 37%
• Repeal of personal exemptions
• Limitation on mortgage interest to $750,000 of acquisition debt ($375,000 for married filing separately) will still be in effect for post-2017 loans
• Continued limitation on casualty loss deductions to federally declared disaster areas, with the new bill also applying disaster loss treatment to certain state-declared disasters
• Repeal of miscellaneous itemized deductions
• Increased Alternative Minimum Tax (AMT) exemption and threshold amounts
• Retention of the higher standard deduction (now made permanent under OBBBA), set for 2025 at:
  • $31,500 for married joint filers (MFJ)
  • $23,625 for head of household (HOH)
  • $15,750 for single and married filing separately (MFS)

What this means: Taxpayers who had moved away from itemizing in recent years should revisit their deduction strategy. With the higher standard deduction staying in place and SALT caps shifting (more below), this is a good time to reassess whether bunching deductions or other timing techniques can reduce your liability.

SALT Cap Modifications

The OBBBA makes the $10,000 cap on state and local tax (SALT) deductions permanent, but with a temporary increase for middle- to upper-income taxpayers.

For tax years 2025–2029:

• The SALT cap increases to $40,000 ($20,000 for MFS)
• The cap phases down as income rises, reducing by 30% of modified adjusted gross income (MAGI) over $500,000 ($250,000 MFS), until it reverts to $10,000 ($5,000 MFS)
• Starting in 2026, the MAGI threshold and SALT cap will increase by 1% each year through 2029
• In 2030, the SALT cap reverts fully back to $10,000 ($5,000 MFS)
• MAGI includes adjusted gross income (AGI) plus foreign earned income exclusions (§911), income from Guam/Samoa/Mariana Islands (§931), and Puerto Rico income exclusions (§933)

What this means: If you've been taking the standard deduction due to the SALT cap, this temporary increase might make itemizing more advantageous. Taxpayers in high-tax states should revisit deduction strategies and consider bunching or deferral.

Child Tax Credit (CTC)

The CTC receives a permanent boost under the new law:

• Increases from $2,000 to $2,200
• Begins indexing for inflation starting in 2026
• Retains elevated income phaseout thresholds of $400,000 (MFJ) and $200,000 (all others)

What this means: The increase may seem modest, but it's a helpful inflation hedge for families and keeps the CTC accessible for a broader range of middle-income households.

New Individual Relief Provisions

Several new deductions and credits were introduced:

• Tip Income Deduction: Up to $25,000 of qualified tips may be deductible (phases out at $150,000 MAGI single / $300,000 MFJ)
• Overtime Compensation Deduction: Up to $12,500 single / $25,000 MFJ deduction for qualified overtime income (same MAGI phaseout)
• Senior Personal Exemption: A $6,000 personal exemption for individuals aged 65+ from 2025 to 2028 (phased out at $150,000 MFJ / $75,000 single, HOH or MFS)
• Automobile Loan Interest Deduction: Up to $10,000 deduction for interest paid on loans for vehicles assembled in the U.S. (phases out at $100,000 MAGI single / $200,000 MFJ; applies to both itemizers and non-itemizers)
• Non-Itemizer Charitable Deduction: $1,000 for single filers / $2,000 for MFJ
• New 0.5% Floor on Itemized Charitable Deductions: Adds a modest threshold for deductibility
• “Trump Accounts” for Newborns:
  • Tax-exempt savings accounts seeded with $1,000 at birth
  • Annual contributions capped at $5,000

What this means: Employers must ensure that tip and overtime compensation are accurately captured on employee W-2s to ensure deductibility. For seniors and those with significant car loans or charitable contributions, the new provisions offer targeted relief, but tracking MAGI will be key.

New Limit on Itemized Deduction Benefit

The previous “Pease” limitation on itemized deductions (which phased out deductions for high earners) is repealed. In its place is a permanent overall limitation of itemized deductions capped at the 35% income tax bracket.

What this means: High-income taxpayers in the top 37% bracket will no longer receive the full value of their itemized deductions. This change could affect effective tax rates, especially for those with significant charitable giving or state tax payments.

Estate and Gift Tax Exemptions

One of the most widely anticipated provisions is certainty on the estate and gift tax exemption amount.

• The lifetime exemption increases to $15 million per person for 2025
• Indexed for inflation going forward

This prevents the prior law’s scheduled drop in 2026, which would have cut the exemption roughly in half.

What this means: This creates much-needed stability for estate plans already in place and opens the door for additional lifetime gifting. Taxpayers with significant estates should revisit their strategies to align with the higher limits and preserve flexibility for the future. 

State-Level Impact

Many of these federal changes could also impact your state tax return. Here’s a snapshot:

• Moving Expenses: Since it’s tied to the calculation of AGI, it will impact those in most states
• Deductions for Tips, Overtime and Car Loan Interest: Only apply in states starting from federal taxable income (unless states enact separate conformity provisions)
• Senior Personal Exemption and Standard Deduction Increases: Will affect those in states that tie to the federal standard deduction or in states that start with federal taxable income
• Itemized Deductions: This will impact those in states that start with the federal taxable income, as well as those states where itemized deductions are tied to federal deductions or adopt federal provisions or definitions.  
• Charitable Deduction for Non-Itemizers: Applies only to those in states that start with federal taxable income for tax calculations
• Qualified Business Income (QBI) Deduction: This, too, only has an impact for people in states that use the federal taxable income as a starting point and in states where the QBI deduction has been adopted
• Federal Tax Rates: They have no direct impact on state taxes
• Child and Dependent Care Credit: Impacts those in the roughly 30 states whose child and dependent care tax credit is based on the federal credit

What this means: Every state is different. It’s essential to understand how, or whether, your state adopts these federal provisions so you can optimize across both tax regimes.

Remittance Tax

Beginning in 2026, a 1% excise tax will apply to certain remittances, including money orders, cashier’s checks and similar transmissions. Transfers from financial bank accounts and debit cards are exempt. This tax applies only to individuals.

What this means: Individuals who owe taxes should pay with direct payments from banks to avoid this tax. 

Bottom line: OBBBA blends permanent changes with time-boxed opportunities, making 2025 a pivotal year to plan. Now is the moment to re-run your itemized vs. standard deduction math, model the SALT cap glide path (2025–2029), capture new tip/overtime and non-itemizer charitable deductions, rethink auto financing, and refresh estate and lifetime-gifting strategies under the $15M exemption—while coordinating for state conformity and the 1% remittance excise beginning in 2026. We’re helping clients build personalized projections and action checklists; if you’d like the same, reach out to your WRFA advisor to turn this law into a concrete, tax-smart plan.

Disclosure: The information provided in this blog post is for educational and informational purposes only and should not be construed as financial advice. While we strive to present accurate and up-to-date information, the financial, tax, and legal landscape is subject to change, and individual circumstances vary. Readers are encouraged to consult with a qualified financial advisor or professional before making any financial decisions or implementing strategies discussed in this post. Our firm does not guarantee the accuracy, completeness, or suitability of the information provided, and we disclaim any liability for any direct or indirect damages arising from the use of this information. Past performance is not indicative of future results. Any investment involves risk, and individuals should carefully consider their financial situation and risk tolerance before making any investment decisions.