Hold on to your hats—Congress has passed yet another sweeping tax law.

Since the Tax Cuts and Jobs Act (TCJA) passed in 2017, we’ve seen at least seven major pieces of tax legislation¹. With so many changes, it’s getting harder to keep track—and even harder to plan with confidence.

In this post, I’ll break down the major highlights of the new One Big Beautiful Bill Act (OBBBA) and outline a few key planning strategies to keep in mind.

The TCJA Expiration Cliff Was Avoided

The TCJA created new, lower tax brackets and expanded the standard deduction—but many of those provisions were set to expire at the end of 2025. That looming deadline made long-term planning especially difficult. Should you accelerate income? Lock in Roth conversions? Hope for an extension?

Fortunately, OBBBA makes many of these provisions permanent, including:

• The current tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%)
• The increased standard deduction
• The Qualified Business Income (QBI) deduction
• The Child Tax Credit (now $2,200 and indexed for inflation)
• The higher estate tax exemption (now $15 million per person)

By removing the uncertainty around these sunset provisions, OBBBA establishes a new long-term baseline—a welcome development for financial planners and taxpayers alike.

New Deductions — But Watch the Expiration Dates

While TCJA-era rules now stick around, OBBBA introduces several new deductions, most of which are temporary, applying only from 2025 through 2028. Some of the most notable include:

• Senior Deduction: $6,000 per person age 65+ ($12,000 for joint filers if both qualify), phased out at higher income levels
• Tip Income Deduction: Up to $25,000 for workers who earn income from tips
• Overtime Deduction: Up to $25,000 of overtime compensation
• Auto Loan Interest Deduction: Up to $10,000 for new, U.S.-built vehicles
• Charitable Deduction for Non-Itemizers: Up to $2,000 ($1,000 for single filers)

A key technical detail: these are “below-the-line” deductions—meaning they reduce taxable income, but not adjusted gross income (AGI). Since many tax phaseouts are based on AGI, above-the-line deductions are generally more powerful. Nonetheless, these new deductions may offer meaningful savings for eligible taxpayers during the four-year window.

Changes to Itemized Deductions

OBBBA also makes several notable changes to itemized deductions:

• SALT Deduction Temporarily Increased: The $10,000 cap is raised to $40,000 for tax years 2025–2029, but phases out for incomes starting at $500,000 (single) or $1 million (joint). The cap reverts to $10,000 in 2030.
• Charitable Giving Floor Introduced: Starting in 2026, a new 0.5% AGI floor applies to all itemized charitable contributions—meaning only donations above that amount are deductible.
• Itemized Deduction Cap for High Earners: For those in the 37% bracket, the value of itemized deductions is slightly reduced, limiting the total benefit available at the top marginal rate.
• Mortgage Insurance Premiums: Once again deductible, starting in 2026.

Together, these provisions add complexity for higher earners, especially when coordinating charitable giving, SALT planning, and deduction timing.

New and Noteworthy Provisions

OBBBA also introduces entirely new planning tools and account types:

➢ Trump Accounts

A new type of post-tax retirement account for children under age 18. Key features include:

• $5,000 annual contribution limit (post-tax, no earned income required)
• Investment limited to low-cost index funds (e.g., S&P 500)
• No withdrawals allowed until the year the beneficiary turns 18
• May be eligible for Roth IRA conversion at adulthood (pending IRS guidance)
• Pilot Program: A $1,000 federal contribution (credit) for any U.S. citizen born in 2025, 2026, or 2027

These accounts are designed to jumpstart long-term investing habits for children and represent a novel opportunity for intergenerational wealth building.

➢ Expanded 529 Plan Usage

529 plans can now be used for additional education-related expenses, including:

• K–12 materials, tutoring, and standardized test fees
• Postsecondary credentialing (e.g., CFP®, CPA)
• Dual enrollment programs

➢ Expanded HSA Eligibility

More high-deductible health plans will now qualify for HSA contributions, increasing access to this powerful, triple-tax-advantaged tool.

Cutting Through the Noise

Whenever major tax legislation is passed, rumors and misinformation tend to follow. Here are a few common misconceptions already making the rounds:

• Social Security is still taxable.
  The senior deduction may reduce overall taxable income for retirees, but it does not eliminate Social Security taxation. The existing formula remains unchanged.
• Roth conversions are still allowed.
  Despite online rumors, there is no language in OBBBA that bans or restricts Roth conversions or backdoor Roth contributions. In fact, with the TCJA brackets now permanent, Roth conversions may become more attractive for many².
• Deductions aren’t always as valuable as they appear.
  Several new deductions are below-the-line, and some are phased out at certain income levels. Strategic planning is essential to avoid losing out due to AGI thresholds.

Planning Implications

While OBBBA doesn’t completely overhaul the tax code, it does introduce new complexity and short-term planning opportunities—especially through 2028.

Here are a few considerations:

• Be mindful of MAGI³-based phaseouts for new deductions and credits
• Consider “use it or lose it” strategies for temporary deductions before they expire
• Revisit charitable giving plans, especially with the new 0.5% AGI floor and itemized deduction limitations
• Evaluate Roth conversion opportunities, particularly for those in lower brackets—but watch for hidden thresholds
• Don’t assume the senior deduction eliminates Social Security taxation; the underlying rules still apply
• Coordinate RMDs, QCDs, and charitable strategies under the new deduction framework
• Consider funding Trump accounts for children or grandchildren—especially while the $1,000 federal credit is available

Bottom Line

The new law provides a mix of certainty, opportunity, and added complexity. While some changes simplify the long-term tax outlook (like the permanent brackets), others introduce short-term planning urgency and technical wrinkles.

Now more than ever, coordinated tax planning matters. If you’re unsure how these changes affect your retirement or tax strategy, reach out to your advisor or tax professional.

1. Since 2017, there have been seven major tax laws: TCJA (2017), BBA (2018), SECURE Act (2019), CARES Act (2020), CAA (2020), ARPA (2021), and the Inflation Reduction Act (2022). ↩︎
2. Watch out for “shadow taxes”—those income phaseouts can quietly raise your tax rate and take a bite out of Roth conversion benefits. ↩︎
3. MAGI stands for Modified Adjusted Gross Income—and believe it or not, there are six different ways the IRS calculates it, depending on the rule. ↩︎