A Quick Guide to the One Big Beautiful Bill Act (OBBBA)

Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) brings sweeping tax changes with some significant implications for taxpayers (particularly those in or near retirement).

Standing at over 1,000 pages, the bill permanently extends many provisions originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA), while enacting changes across many facets of the federal government and tax code. Below, we’ve zeroed in on a few of the most prominent and impactful changes likely to make a difference in your tax bill over the coming years.

#1. Permanent TCJA Tax Cuts and Deductions

The OBBBA has permanently extended the TCJA-era tax brackets and standard deductions. Without this legislation, these benefits were set to expire in 2026. The top tax rate remains at 37%, and the standard deduction gets a small bump: $15,750 for single filers and $31,500 for married couples in 2025.

#2. New “Super Deduction” for Seniors

Starting in 2025, taxpayers 65 and older with income under $75,000 (or $150,000 for couples) can claim an additional $6,000 deduction, or $12,000 if both spouses are over 65. This benefit phases out for incomes above $175,000 for single filers and $250,000 for joint filers. For now, the super deduction will only be available through the 2028 tax year.

#3. Estate Tax Exemption Limit Remains High

Originally introduced in the TCJA, the elevated federal estate tax exemption will no longer sunset in 2026. In 2025, the estate tax and lifetime gift tax exemption limit is $13.99 million per person or $27.98 million per couple. Considering the TCJA doubled the pre-2018 estate tax exemption limit, this continuation can offer families with significant assets and estates more flexibility with their wealth transfer strategies.

#4. State and Local Taxes (SALT) Itemized Deduction Increase

The state and local tax (SALT) deduction limit increases from $10,000 to $40,000 in 2025, with gradual increases through 2029. High-income households will face some phaseouts, but the exemption limit will never drop below $10,000. This increase in SALT deductions is significant, as it could make itemizing more worthwhile (despite the elevated standard deduction), especially in states with higher state and local taxes like New York or California.

#5. Changes to Charitable Deductions

Taxpayers will have the option to take above-the-line charitable deductions of up to $1,000 per person ($2,000 for couples) starting in 2026. If you do plan on itemizing, however, you’ll only be allowed to deduct donations that exceed 0.5% of your adjusted gross income (AGI). You will have the option to carry forward unclaimed charitable donations to deduct in future tax years.

What Should Taxpayers Focus On Moving Forward?

While some provisions are permanent, others are set to expire in 2028, including the senior super deduction, tip and overtime deductions, and the extra Child Tax Credit. As you and your tax professional or advisor plan ahead, be mindful of these timelines. For example, with higher SALT caps and new available deductions, some taxpayers may benefit from temporarily itemizing instead of taking the standard deduction.

Anytime tax laws change this significantly, it’s important to speak to your financial advisor about the impact it’ll have on your own financial picture. If you have any questions or would like to review these changes together in more detail, don’t hesitate to reach out today.