Tax Strategies

The Big Beautiful Bill: What It Means for You

by

The “Big Beautiful Bill,” officially known as the One Big Beautiful Bill Act, is a sweeping tax and spending package signed into law on July 4, 2025. Championed by President Donald Trump, this legislation merges permanent tax cuts and new tax breaks for working Americans.

It’s also a comprehensive overhaul of the U.S. tax system and government spending priorities and permanently extends many provisions from the 2017 Tax Cuts and Jobs Act (TCJA). Additionally, the Big Beautiful Bill introduces new deductions and credits and makes notable changes to programs like Social Security, among others.

Here’s what you need to know about how it could impact your finances, family, and future.

Highlights

  • Reduced or Eliminated Taxes on Social Security: An above-the-line deduction of $6000 single/$12,000 married. Note: this does not change Social Security taxation. As such, tax planning is crucial to stay below the phase-out range to take full advantage of these deductions.
  • Permanently Lowered Tax Brackets: The bill locks in the lowered tax brackets from the 2017 TCJA, most notably preserving the higher standard deduction for individuals and families.
  • Estate and Gift Tax Exemption: The exemption is increased to $15 million per person, indexed for inflation, offering substantial estate planning benefits for high-net-worth individuals.
  • Standard Deduction Boosted: The 2025 standard deduction is increased by $750 (to $15,750) for single filers and $1,500 (to $31,500) for married couples filing jointly (MFJ). These amounts will be adjusted annually for inflation.
  • Tips and Overtime Exempted: Workers can claim up to $25,000 as an above-the-line deduction for tips and overtime pay, providing significant relief for service and hourly workers.
  • Car Loan Interest Deduction: If you purchase a new car with final assembly in the United States, you can deduct up to $10,000 in interest paid on the loan through tax year 2028.
  • Charitable Contributions: Introduces an above-the-line charitable deduction of $1000 single/$2000 married. This is beneficial for those taking the standard deduction, which is a substantial number of taxpayers.

Time-Sensitive Tax Credits

  • EV Tax Credits: The $7,500 federal tax credit for electric vehicles (EVs) expires on September 30, 2025. If you’re planning to buy an EV, you must take delivery before this date to claim the credit.
  • Home Energy Tax Credits: Credits for home energy improvements and clean energy installations expire on December 31, 2025. Act quickly if you want to take advantage of these incentives.

Positive Changes for Retirees

  • Social Security Tax Relief: From 2025 through 2028, most Social Security beneficiaries will see their federal taxes on benefits effectively eliminated. This is achieved via a new above-the-line deduction of $6,000 for individuals and $12,000 for married couples filing jointly. However, this benefit phases out for higher-income seniors.
  • SALT Deduction Expansion: The cap on state and local tax (SALT) deductions is raised to $40,000 and extended through 2029, providing relief to taxpayers in high-tax states.
  • Elimination of Expanded ACA Tax Credits: On the downside, the bill allows the expanded Affordable Care Act (ACA) tax credits to expire at the end of 2025, which primarily affects retirees under age 65 who purchase health insurance through the exchange.

What Parents Need to Know

  • Child Tax Credit Increased: The child tax credit is raised to $2,200 per child beginning this year and will be inflation-adjusted starting next year. This offers immediate relief to families with children.
  • Expanded HSA Eligibility and Contributions: The law broadens eligibility for Health Savings Accounts (HSAs) and increases contribution limits, with the specifics depending on income level.
  • Broader expense categories for 529s
  • Trump Accounts: see our post for a detailed breakdown of these accounts. It’ll take time for banks and investment custodians to set up these accounts.

Small Business

  • Qualified Business Income Deduction (QBI): Section 199a made permanent.
  • R&D Tax Credits: This is a talk to your CPA provision. As always documentation is important.

 

The Big Beautiful Bill delivers substantial tax relief for many Americans, especially retirees, families, and workers.

Tax planning remains a crucial aspect of pre and post-retirement income distribution planning.

Understanding how these changes will affect you can be daunting. That’s why we’re here to help. If you have questions about how this new bill will affect you now or in the future, please reach out.

 

Phil Walker, CFP®, JD

 

Eric McClain, CFP®

  • Birmingham, AL
  • CLICK HERE to make an appointment

All opinions expressed in this blog post reflect the judgment of Approach Retirement Advisors, LLC (“Approach”) as of the date of publication and are subject to change. The information in this blog post is believed to be factual and up to date; however, we do not guarantee its accuracy. This blog post should not be regarded as a complete analysis of the subjects discussed. This presentation is for educational purposes only and does not constitute personalized investment advice. A professional advisor should be consulted before implementing any of the strategies presented. This blog post should not be construed as an offer to buy or sell or as a solicitation of any offer to buy or sell any securities mentioned herein. Clients and members of Approach may own any securities mentioned herein. Investments are subject to market risks and potential loss of principal invested, and all investment strategies have the potential for profit or loss. Past performance is no guarantee of future results. Different types of investments involve varying degrees of risk. There can be no assurance that any specific investment will be suitable or profitable for a particular investor’s portfolio. There are no assurances that any portfolio will match or outperform any particular benchmark.

Share this post: