What the “One Big Beautiful Bill Act” Means for Your Retirement Plan

Written By David Oransky

On July 4, 2025 the One Big Beautiful Bill Act (OBBBA) was passed into law. Below is a quick-reference guide to the provisions we believe are most likely to affect our clients.

Individual Income-Tax Changes

  • Tax brackets stay put - The lower rates from the Tax Cuts & Jobs Act (TCJA; tax bill from Trump’s first term) are now permanent. The top rate remains at 37%. Without the OBBBA, these tax rates would have “sunset” at the end of 2025.

  • Bigger standard deduction - The higher standard deductions from the TCJA are now permanent and were even raised slightly. The new base amounts for 2025 are as follows and will be indexed for inflation in future years.

    • $31,500 (married filing jointly)

    • $15,750 (single)

    • Those over 65 receive an additional $1,600 per qualifying spouse if filing jointly ($3,200 total if both spouses qualify) or $2,000 if filing single.

  • Senior bonus deduction - Taxpayers age 65+ can claim an extra $6,000 ($12,000 per couple) from 2025-2028 if adjusted gross income (AGI) is below $75,000 single or $150,000 joint; the benefit begins to phase out above those levels.

  • SALT cap relief - The $10,000 cap on state & local taxes (SALT) rises to $40,000 for 2025-2029 (indexed 1% per year), then snaps back to $10,000 in 2030. Phase-out begins at $500,000 AGI, but the deduction never drops below $10,000.

  • Alternative Minimum Tax (AMT) - Higher exemptions are made permanent, but the phase-out rate doubles from 25% to 50%, meaning upper-income filers lose the benefit more quickly.

  • Charitable giving tweaks (starting in 2026)

    • Non-itemizers: new above-the-line deduction—$1,000 single / $2,000 joint (cash gifts only).

    • Itemizers: deduction allowed only for amounts above 0.5 % of AGI.

  • Car-loan interest deduction - Up to $10,000 of interest paid on a new, U.S-assembled vehicle purchased after Jan 1, 2025 is deductible. The deduction begins to phase out for individuals with modified adjusted gross income (MAGI) exceeding $100,000/$200,000 (single/joint). This is a temporary provision for 2025-2028.

  • No-Tax-on-Tips & No-Tax-on-Overtime - These temporary deductions (2025-2028) let workers exclude up to $25,000 of cash tips and $12,500 (single) / $25,000 (joint) of overtime pay; both benefits begin to phase out at $150,000/$300,000 MAGI (single / joint).

  • Dependent Care FSA expansion (starting 2026) – The pre-tax contribution cap jumps from $5,000 to $7,500 per household ($3,750 if married filing separately).

  • Child Tax Credit bump – The credit increases to $2,200 per qualifying child under age 17, with annual inflation indexing beginning in 2026. Phase-out thresholds remain $200,000/$400,000 MAGI (single/joint).

Estate & Gift Planning

  • Unified exemption “permanently” jumps to $15 million per person (indexed). The reversion to ~$5 million after 2025 that many feared is off the table. 

  • Portability still applies - Married couples can combine exemptions, now up to $30 million (indexed).

  • Annual exclusion ($18,000 in 2025) is unchanged and still indexed.

Retirement & Education Provisions

  • Trump Accounts - New custodial IRA-style accounts for minors (under 18). Contributions up to $5,000/yr allowed once Treasury finalizes rules (expected in 2026). Children born between 2025-2028 are eligible to receive a one-time $1,000 deposit from the Treasury Department to seed the account. We’re still awaiting final regulations for details on the available investment options and how distributions will be taxed.

  • 529 plans expanded - Qualified expenses now cover more K-12 costs, home-schooling, and professional credentials. 

  • Qualified charitable distributions (QCDs) from IRAs remain a highly efficient way to give for taxpayers over the age of 70.5, especially with the new 0.5 % floor on itemized deductions.

Planning for Business Owners

  • QBI (199A) stays - The 20 % deduction for pass-through income is permanent, with higher phase-out ranges and a new minimum $400 benefit, beginning in 2026. 

  • Pass-through SALT workaround survives - OBBBA kept state PTET elections intact (still useful for service partnerships and S-corps).

  • QSBS upgrade - 100 % gain exclusion now requires 5-year hold; 75 % after 4 years; 50 % after 3 years. Company asset limit raised to $75 million.

Investment Outlook

  • Higher Deficits - Independent estimates project that the OBBBA will further increase the cumulative deficit. Earlier talk of meaningful deficit reduction (e.g. DOGE) has faded.

  • Growth Hopes - The administration argues that the bill will boost economic growth enough to offset the nominal increase in debt. If those growth assumptions materialize, debt-to-GDP could level off rather than rise, but could also mask underlying currency debasement.

  • Monetization Risk - Should future deficits be financed via renewed Fed bond-buying (QE) or the Treasury’s ongoing pivot toward very short-term bills, some analysts warn of dollar debasement and negative real yields.

  • Scarce Assets > Bonds - In our view, an extended “run-it-hot” policy mix (larger nominal deficits, low or negative real yields, and potential currency dilution) could favor scarce assets, especially gold and Bitcoin, while posing a headwind to long-duration nominal bonds.

Information is based on current interpretations of the OBBBA and may change with IRS guidance. This content is for educational purposes and not individualized tax or investment advice.

David Oransky
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