One Big Beautiful Bill Act

Passed July 4, 2025, the One Big Beautiful Bill Act (OBBBA) codified much of President Donald Trump's second term agenda.  While its passage seemed uncertain at times, congressional Republicans ultimately fell in-line with the President's directives and united behind him.  Let's take a look at some of the most important parts of the legislation together and note that while there are certainly other very important parts to the law, I've chosen to focus strictly on the financial ones for this writing.  

• OBBBA makes permanent the 2017 Tax Cuts and Jobs Act provisions that lowered individual income tax brackets, raised the standard deductions, and raised both the gift and estate tax exemptions.

• That state and local tax (SALT) deduction cap temporarily increases to $40,000 for some taxpayers (but does revert back to $10,000 in 2030).  This temporarily higher cap does phase out for incomes over $500k/yr.  

• The Child Tax Credit increases to $2200/child.

• Provides for a deduction on tipped income of up to $25,000/yr 

• Provides for a deduction on overtime of $12,500/yr ($25,000/yr for joint filers)

• Filers over the age of 65 will be allowed an additional $6000/yr deduction that begins to phase out at incomes of $75k/yr for single filers and $150k/yr for joint filers).  This is in addition to the existing senior bonus deductions.  Importantly, an email received by millions of Americans from the Social Security Administration a few weeks ago touting the bill's removal of taxes on social security was not, entirely, accurate.  

• Allows for a deduction of up to $10k/yr of loan interest for purchased vehicles whose final assembly took place in the United States.  This deduction only applies to single taxpayers with incomes below $100k/yr or joint filers with incomes below $200k/yr.

• Provides for "Trump Accounts," a new type of savings account for children fundable with $5000/yr and treated similarly to a non-deductible traditional IRA.  At age 18 these accounts will effectively convert to a Traditional IRA. In addition, parents of children born between January 1, 2025 and December 31, 2028 will qualify for $1,000 in federal "seed" money to start the account.  

• Expands the potential uses of 529 accounts to testing fees, tutoring outside the home, educational therapies, etc.  

• Phases out many clean energy credits for purchases like electric vehicles and EV charging stations.

• Expands the types of health plans eligible for HSAs and allows for payments of $150/mo ($300/mo for families) for direct primary care arrangements.

  
  

The OBBBA contains literally hundreds of provisions, too many to review in this newsletter.  The bill's impact on the financial condition of the country ultimately remains to be seen, however, most economists expect the legislation to add a few trillion dollars to the deficit over the next ten years.  This may, ultimately, lead to higher interest rates paid by all consumers on things like credit cards, mortgages, HELOCs, auto loans, etc. 

While I understand many clients of Flatirons Wealth Management have been and will continue to be dismayed by much of President Trump's social policies and agenda, it should probably be noted that most think tanks, economists, news outlets, etc. agree those who stand to benefit the most from the legislation will be the upper middle class and wealthy - i..e. clients of Flatirons Wealth Management.  If you are uncertain or want to talk more about what the OBBBA will mean for you, personally, let's talk about it.