The Big Beautiful Bill

and… What It Means For YOU

By Teresa Talton, CFP^®and Tara Maxwell, CFP^®

On July 4, 2025, Congress passed a sweeping budget reconciliation measure known as the “One Big Beautiful Bill Act,” or simply the “Big Beautiful Bill.” This comprehensive legislation includes hundreds of provisions that will significantly reshape federal policy across a wide range of areas that impact everyday life.

One of the most notable elements of the bill is the permanent extension of the Tax Cuts and Jobs Act (TCJA), a major tax reform law originally enacted in 2017 during President Trump’s first term. The TCJA was set to expire at the end of 2025, but this new legislation helps ensure its provisions remain in effect indefinitely.

To help clarify the scope and impact of this legislation, we’ve outlined some of the key provisions:

Permanent Tax Changes (No Scheduled Sunset)

Tax Brackets

The 2017 Tax Cuts and Jobs Act (TCJA) reduced tax rates will be made permanent. The legislation includes a top rate of 37% for higher earners and a bottom rate of 10% for lower earners and will adjust for inflation after 2025.

An additional year of inflationary adjustment is added to the end of the 10% and 12% brackets.

The Standard Deduction

The larger standard deduction amounts of the TCJA will be made permanent and will increase to $15,750 for single filers, $31,500 for joint filers, and $23,625 for head of household for 2025.¹

These amounts will be indexed for inflation after 2025.

Charitable Contribution Deduction

Those who take the standard deduction can also deduct up to $1,000 in cash donations for single filers and up to $2,000 for married filing jointly filers.

For taxpayers who itemize deductions, the bill creates a new 0.5% of AGI floor for charitable contributions. The existing AGI limitations remain, reduced by 0.5% of the taxpayer’s contribution base.

This new floor lowers the amount eligible for a deduction.

Lifetime Gift and Estate Tax Exclusions

The old estate tax exclusion was $13.99 million, as adjusted for inflation, per taxpayer, but has been increased to the following beginning in 2026:

$15 million per taxpayer, which means a $30 million total lifetime exemption for a married couple, with further inflation adjustments thereafter.

Qualified Business Income (QBI – Section 199A)

QBI remains unchanged at the current 20% with adjusted phase out limits.

The Child Tax Credit (CTC)

The CTC will increase from $2,000 to $2,200 per child starting in tax year 2025, subject to income phaseouts of $400,000 (joint) or $200,000 (single).

The refundable portion of the credit will remain at $1,700 for the 2025 tax year.

The Mortgage Interest Deduction and Mortgage Insurance

The mortgage interest deduction is limited to interest on mortgages no greater than $750,000. Referred to as “acquisition indebtedness” ($375,000 for single filers), this deduction includes loans used to buy, build or improve the taxpayer’s residence.

The new provision reinstates the deductibility of mortgage insurance premiums (PMI / MPI).

Moving Expense Deduction

The previous rule allowed a deduction for moving expenses related to work, but has now been permanently eliminated, except for members of the armed forces.

Qualified Opportunity Zone Funds (QOF)

QOFs were established in 2017 to stimulate private investment in economically disadvantaged / lower-income communities by providing tax incentives to investors for a set period of time. In the original legislation, one could invest the gain (only) on the sale of qualifying assets and achieve tax deferral through 2026. Further, the taxpayer would avoid taxes entirely on any appreciation attributed to the new investment in the QOF so long as it was held for ten years.

With the OBBB, investments made on or after January 1, 2027, will be treated as follows:

Rolling 5-Year Gain Deferral – Qualifying gains invested into Qualified Opportunity Funds (QOF) are eligible for tax deferral for 5 years from the date of entry. This means that if the gain is recognized in 2027, the tax will not be due until 2032.
- Qualifying gains include a variety of capital gains: investment property, marketable securities (stocks/bonds), K-1 partnerships and business sales.
- Previously, all tax was due in 2026 regardless of the year of entry. The new rules allow a five-year window for all taxpayers regardless of entry time.

Increased Cost Basis – When taxes become due (2032 in our example), the taxpayer will receive a 10% reduction on the original taxable gain (ex: gain of $100 is reduced to $90), thereby reducing the tax due.
- The reduction of the gain is increased to 30% for investment in rural property.
- Previously, there was the opportunity for an additional 5% depending on the year invested. However, this and the original 10% phased out over time. Now there is no phase out for the new 10% reduction.
Capital Gain Elimination
- The primary tax benefit of the QOF is that the capital gain on the second investment (into the QOF) is completely avoided if held for ten years or more. This benefit applies for up to 30 years post-investment. Again, this results in tax avoidance, not tax deferral.

These changes only apply to investments made beginning in 2027. For existing investors in QOFs, whose deferred gains will be recognized in 2026, there is no way to extend that deferral further. Those gains will still be taxable as planned. This makes investing in a QOF less attractive until the second half of 2026, since the taxpayer has 180 days to make an investment in a QOF to receive benefits.

Temporary Tax Provisions

Increasing State and Local Tax Deduction (SALT) (2025-2029)

The cap on the SALT deduction limit will increase from $10,000 to $40,000, with a phase-out starting at AGI of $500,000 ($250,000 for married individuals filing separately) starting in 2025. In 2030, the $40,000 limit is scheduled to revert to $10,000.

Senior Tax Deduction (2025-2028)

Individuals aged 65 and older can claim a $6,000 deduction if their modified adjusted gross income (MAGI) is up to $75,000 for a single filer, or $150,000 for those married and filing joint tax returns. For incomes above those thresholds, the deduction will be fully phased out at $175,000 for single filers and $250,000 for joint filers.

This is in addition to the existing additional standard deduction for seniors 65+ or blind ($2,000 single; $3,200 married filers).

Married couples (65+) filing jointly may claim up to $12,000 if their combined income doesn’t exceed $150,000.

Deductions for Seniors Age 65+ Under OBBA

Kitces.com, As of 07/15/2025

Auto Loan Interest Deduction (2025-2028)

Individuals are now able to deduct up to $10,000 of loan interest for new vehicles purchased for personal use after December 31, 2024, whose final assembly took place in the U.S. Phaseouts begin at $200,000 modified adjusted income for married filers or $200,000 for single filers.³

Note: This excludes many popular car brands produced overseas like Toyota, Honda, Audi and BMW, though assembly can vary based on make and model. Additionally, ATVs, trailers and campers are ineligible for this discount. Leased vehicles are ineligible as well.

Taxes on Overtime and Tips (2025-2028)

Workers will be able to deduct up to $25,000 in tips and $12,500 in overtime pay ($25,000 for joint filers) for taxable years starting January 1, 2025, subject to modified adjusted gross income limits.

This income is still subject to state, local, and payroll tax.

Other Impacts

Businesses

Permanent Expensing of R&D: The bill will allow for immediate expensing of domestic R&D costs starting in 2025 for qualifying businesses. Foreign R&D costs must still be amortized over 15 years. Eligible small businesses can amend 2022-2024 returns to apply to the new rules which includes an ability to write off over 1- or 2-years Section 174 expenditures that previously required capitalization and amortization.

100% Bonus Depreciation Reinstated and Made Permanent: Qualifying businesses can immediately deduct 100% of the cost of eligible tangible small property in the year it is placed in service. This includes machinery, equipment, computers, appliances, and certain improvements to nonresidential real property.

Health Savings Accounts (HSAs)

Expanded Eligibility: Individuals enrolled in Bronze and Catastrophic ACA plans will now be eligible to contribute to HSAs, starting after December 31, 2025.

These plans will be treated as High-Deductible Health Plans (HDHPs) for HSA purposes.

529 Plans

The legislation increases the annual limit on K-12 expenses from $10,000 to $20,000.

OBBB also expands the list of eligible expenses for K-12 and post-secondary education.

Non-tuition qualified expenses for K-12 will now include costs for books, online learning materials and tutoring fees.
Qualified post-secondary educational expenses will expand to:
- Tuition, fees, books, supplies and equipment for credentialed programs.
- Testing fees to earn a post-secondary credential.
- Fees for continuing education requirements.

Trump Accounts

A new children’s saving program has been created, called the Trump Account, that gives $1,000 to a child with a Social Security number whose children are born between 2025 and 2028².

After the Treasury deposits the $1,000, relatives, employers and nonprofits are allowed to make contributions, generally up to an annual $5,000 limit until the child turns 17.

This account is treated most similarly to a tax-deferred account (ex: IRA), although there will be a mix of both pre-tax and after-tax contributions, depending on the source.

Tradeoffs

Federal Spending

Includes 3.24T in new federal spending, adding to deficits through 2034.

Debt projected to reach 124% of GDP by 2034 (vs. 117% under prior law).

Green Energy Policies

Terminates numerous tax incentives from the 2022 Inflation Reduction Act for clean energy, electric vehicles, and energy efficiency programs.

Tax credits for new and used electric vehicles, installation of home EV charging equipment, and insulation or energy-efficient heating and cooling systems will soon end.²

Other clean energy incentives like the 30% tax credit for residential rooftop solar will also end.

Student Loan Policy Changes

Caps graduate, medical/law school and PLUS loan amounts.

Reduces the number of repayment plans available for loans taken after July 1, 2026.

Medicaid Cuts and Eligibility Changes

Reduces funding to Medicaid by nearly $1 trillion, the largest cut in the program’s 60-year history.⁴

Creates more aggressive work requirements.

Affordable Care Act (ACA)

Makes changes to enrollment, eligible immigrant groups and application processes.

Supplemental Nutrition Assistance Program (SNAP)

Makes changes to state funding and work requirements.

How We Are Integrating OBBBA into Client Planning

As your financial planning and investment advisory team, we’re actively aligning your wealth strategy with the tax law changes introduced in the One Big Beautiful Bill Act (OBBBA). This sweeping legislation impacts several core areas of financial planning, and we will be coordinating closely with your CPA and estate attorney to help ensure your plan is both tax-efficient and forward-looking.

We view OBBBA not as a one-time event, but a fluid planning environment that requires ongoing review and coordinated action. As always, our role is to serve as the hub of your financial life—bringing together investment, tax, legal, and estate planning to help you make smart, confident decisions.

Teresa Talton, CFP^®, MBA

Wealth Advisor and Partner

Teresa is an advisor in our Chapel Hill office, where she serves clients in a wealth management and financial planning capacity. Her mission is to empower clients with personalized, objective advice.

Sources:

1. Ea, K. D. C., & Dickler, J. (2025, July 7). Tax changes under Trump’s “Big Beautiful Bill” — in one chart. CNBC.

2. Tanner, J. (2025, July 8). The Hill. The Hill. https://thehill.com/homenews/nexstar_media_wire/5388103-have-children-how-the-big-beautiful-bill-could-affect-you/

3. Yekikian, N. (2025, July 7). EV tax credit: All the cars that lose the $7,500 benefit in September. Edmunds. https://www.edmunds.com/car-news/every-new-car-set-to-lose-federal-ev-tax-credit-september.html

4. 7 Burga, S. (2025, June 30). More than 70 million Americans are on Medicaid. Here’s what to know about the program. TIME. https://time.com/7298772/medicaid-big-beautiful-bill-health-insurance/