On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill Act” (OBBBA). The 1,100-page bill extends the tax cuts of Trump’s first presidency while also overhauling a wide range of provisions that impact Americans’ everyday lives. How could this new tax legislation impact your financial plans? Here, we offer a summary of the bill’s provisions and some financial planning considerations that result from the changes.
#1 – Tax provisions
OBBBA includes a variety of tax provisions.
- TCJA – Congress passed the 2017 Tax Cuts and Jobs Act (TCJA) during Trump’s first presidential term, and many of its tax cuts were scheduled to expire at the end of 2025. Had this occurred, 62% of taxpayers could have experienced a tax hike. The OBBBA extends the TCJA tax cuts and maintains the current top income tax rate of 37%.1, 2
- No tax on overtime and tips –The bill allows workers to deduct up to $25,000 in tips and $12,500 ($25,000 for married filing jointly) in overtime pay from their taxable income through 2028.3
- Standard deduction – The bill increases the standard deduction by $1,000 ($2,000 for married filing jointly). It also offers a temporary $6,000 increase for seniors that expires in 2028.
- Gift and estate tax exemption –TheOBBBA increases the lifetime gift and estate tax exemption from $13.99 million to $15 million for individuals and from $27.98 to $30 million for those married filing jointly.
- Child tax credit – The OBBBA increases the child tax credit by $200 in 2025, which will be adjusted for inflation in future years. The bill stipulates that the credit is only available to families with Social Security numbers.
- Newborn savings accounts – The bill creates “Trump accounts” for newborns that will be funded with an initial $1,000 contribution from the government. Parents are eligible to supplement the savings with up to $5,000 per year in after-tax contributions.
- Car interest – Until 2029, individuals can deduct up to $10,000 of auto loan interest for U.S.-made vehicles.
- SALT – The bill increases the state and local tax (SALT) deduction from $10,000 to $40,000. This amount will continue to increase by 1% each year through 2029 and return to the $10,000 limit in 2030. The deduction is reduced for higher-income earners.
- Small business deduction – The bill expands the Section 199A deduction for small businesses.
- Business incentives – The bill’s provisions provide for 100% immediate expensing of machinery, equipment and R&D expenses. To encourage domestic manufacturing, it also allows full expensing for new factories.
- Clean energy tax credits – The bill phases out incentives for electric cars as well as wind and solar energy.
#2 – Spending cuts
In addition to tax benefits, the OBBBA includes spending cuts to a variety of programs, including the following.
Affordable Care Act (ACA)4
- An end to automatic ACA reenrollment
- Annual income and immigration status verification requirement beginning in 2028
- Expiration of certain premium subsidies
- Shortened open enrollment period, with a deadline of December 15
Medicaid5, 6
- $700 billion cut in Medicaid funding over 10 years
- New eligibility requirements, including 80 hours per month of work, education or service for able-bodied adults with no dependents (beginning in 2026)
- Elimination of benefits for 1.4 million undocumented immigrants
Supplemental Nutrition Assistance Program (SNAP)7
- Spending reduction of $267 billion over 10 years
- Expanded work requirements for able-bodied parents with children over age 7
- Extended work requirements until age 64
- Requirement that states take on 5% of benefit expenses and 75% of administrative expenses starting in 2028
Loan forgiveness
- Repeal of the Biden-era student loan forgiveness program
#3 – Border security and immigration
The OBBBA allocates the following money to support border security and immigration efforts:8, 9
- $46.5 billion to construct 701 miles of border wall and 900 miles of river barriers
- $45 billion for ICE detention facilities
- $14 billion for deportation expenses
- $4.1 billion to hire 10,000 new ICE agents, 5,000 customs officers and 3,000 border patrol agents, plus $2 billion for bonuses
- Remittance tax on cash payments sent by non-citizens from the United States to their home countries
#4 – Miscellaneous
The bill also includes the following provisions:
- Funding to modernize the country’s air traffic control systems
- The repeal of Biden-era methane taxes and a streamlined process for fossil fuel project permitting
- Plans to close the U.S. Department of Education and move responsibilities to other departments
- $20 billion in tax credits for donations to voucher schools, as well as capital gains tax exemptions for stock donations that support private education
- Increased funding to support the U.S. Coast Guard in protecting Arctic sovereignty and combatting illegal drugs and migration
- A 25% increase in national forest logging
- Elimination of the $200 excise tax on gun silencers and the removal of gun silencers from the National Firearms Act
How the OBBBA May Impact Your Financial Plan
As with any piece of significant tax legislation, it is important to carefully review your financial planning strategies to make sure they continue to meet your needs and optimize your wealth-building potential. Work with your financial advisor to identify any necessary changes to the following aspects of your plan.
- Investment portfolio – TheOBBBA offers significant savings and increased income opportunities for many Americans. A great way to boost your wealth-building potential is by investing these additional assets in a diversified investment portfolio. Work with your financial advisor to identify any updates to your investment strategy necessary to keep up with your changing needs and additional opportunities.
- Estate plan –TheOBBBA provides much-anticipated clarification regarding the ongoing gift and estate tax exemption. Had the TCJA provisions not been extended, it is likely that the exemption amount would have been significantly reduced in 2026. Fortunately, the continuation of the higher exemption amount provides an opportunity to maximize the impact of your financial legacy. Work with your financial advisor and estate planning attorney to make sure your strategies continue to meet your needs.
- Tax strategies – The OBBBA includes significant tax law changes, and it is important to ensure your tax planning strategies are optimized to take advantage of the new benefits. This means understanding the potential impact of the new standard deduction, SALT thresholds, small business deductions, child tax credit, car interest deduction, small business incentives, etc. Your financial and tax advisors can help you make any necessary changes to your tax planning strategies.
- College savings –If your financial goals include paying for a loved one’s education, it is probably wise to review your savings strategies in light of the new legislation. The OBBBA allows nonprofit organizations to give scholarships for students to attend private or charter schools. It expands the permitted use of 529 college savings funds to include K-12 expenses related to textbooks, tutoring, test preparation and online learning expenses. It also allows 529 funds to be used for special education expenses, such as occupational and speech therapy.
Could you use some help reviewing your financial plan in light of this new legislation? We would love to have a conversation. To learn more about how United Capital Financial Advisors can help you keep up with an ever-evolving economic landscape, please contact us.
- https://apnews.com/article/big-beautiful-bill-trump-tax-cuts-medicaid-00ce1ff8a7b7fea7a894d38398748c6b
- https://taxfoundation.org/research/all/federal/big-beautiful-bill-house-gop-tax-plan/
- https://www.congress.gov/bill/119th-congress/senate-bill/129
- https://www.npr.org/sections/shots-health-news/2025/06/11/nx-s1-5429677/obamacare-aca-big-beautiful-bill
- https://www.pbs.org/newshour/politics/house-republicans-narrowly-passed-trumps-big-beautiful-bill-heres-what-in-it
- https://www.whitehouse.gov/articles/2025/06/50-wins-in-the-one-big-beautiful-bill/
- https://apnews.com/article/big-beautiful-bill-trump-tax-cuts-medicaid-00ce1ff8a7b7fea7a894d38398748c6b
- https://www.cbsnews.com/news/whats-in-trumps-one-big-beautiful-bill-medicaid-taxes/
- https://www.whitehouse.gov/articles/2025/06/50-wins-in-the-one-big-beautiful-bill/
