I was speaking to a client earlier this week about the passing of the One Big Beautiful Bill (OBBB) Act. They responded, “Is that really what it’s called?” Yes, folks. That’s what it’s called.

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If I were on the naming committee, I would have gone with a much different title for this 870-page bill. However, it appears “they” wish to keep me in my lane. Therefore, today I’m going to share what I believe are the most notable sections of the OBBB. Have I mentioned yet that this bill impacts every reader here? Pay attention, class!
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How will marginal tax rates change in 2026?

• The 10%, 12%, 22%, 24%, 35%, and 37% brackets on ordinary income from the Tax Cuts and Jobs Act (TCJA) continue and are now permanent. 
  
  • And by permanent, we simply mean there isn’t an expiration date like there was previously.
• NOTE FOR OUR CLIENTS: In your retirement projections, we have assumed that the TCJA would expire and tax rates would go up for you. That meant for our projections that we reviewed together, we assumed (starting in 2026 and beyond), you had to fork over MORE dollars for taxes each year. We now know this isn’t the case! At least until the next bill passes :)
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Here’s a table to estimate what income thresholds and tax brackets could have been if the TCJA expired (right) and what it’s currently set at for 2025. 2026 and beyond will likely see the thresholds increase with inflation, and the 7 brackets stay the same.

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What are the changes to the standard deductions from the OBBB?

• 2025 Standard Deduction Amounts:
  
  • $15,750 - Single; previously $15,000
  • $23,625 - Head of Household; previously $22,500
  • $31,500 - Married Filing Jointly; previously $30,000
  • Both spouses 65+: $34,700; previously $33,200
    
    
• NEW: Senior Bonus Deduction
  
  • Taxpayers age 65 and older may be eligible to take an additional deduction of up to $6,000 per person. (2025-2028) 
  • Phase out at MAGI of $75,000 ($150,000 for Joint Filers) and phases out completely at MAGI of $175,000 ($250,000 for Joint Filers).

IMPORTANT: The Social Security Administration had a blog post stating, “The bill ensures that nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits.”

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This created confusion (rightfully so!) of folks thinking Social Security is no longer taxed! That is incorrect. The taxation of Social Security has not changed. However, because of this additional deduction, it may prevent someone from paying taxes on their Social Security income. 
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How does the increase in the SALT deduction impact me?

This may impact a LOT of our clients. Why? Because we have quite a few of you living in high-income tax states like California, New York, New Jersey, Oregon, Minnesota, and Massachusetts. The SALT (state and local tax) deduction is for those who itemize their deductions. Previously, you could only deduct up to $10,000 per year. Now, that threshold has increased up to $40,000 (adjusted for inflation by 1% annually and fully available for taxpayers whose MAGI is less than $500k). Therefore, we believe a lot of you (and our clients) who may not have been itemizing… will start to itemize and capture this deduction!

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• Higher-income taxpayers may see a limit on these deductions, as they begin to phase out by 30% when MAGI exceeds a particular income amount based on filing status: 
  
  • Married Filing Separately (MFS): Starts at $250,000, fully phased out at $300,000
  • Others: Starts at $500,000, fully phased out at $600,000
    
    • “Fully phased out” means they can only get $10,000 SALT deduction 

‍What other new deductions are available with the passing of the OBBB?

• You may be able to take a charitable deduction even if you are NOT itemizing up to:
  
  • $1,000 Single 
  • $2,000 Married Filing Jointly
• There is no tax on tips up to:
  
  • $25,000 deduction (2025-2028) 
  • The deduction phases out by $100 per $1,000 over AGI threshold ($150,000 Single / $300,000 Married Filing Jointly) 
• There is no tax on overtime up to:
  
  • $12,500 Single / $25,000 Married Filing Jointly 
  • Above-the-line deduction for MAGI under $150,000 Single / $300,000 Married Filing Jointly 
  • The deduction phases out by $100 per $1,000 over the AGI threshold 
• There is a new car loan interest deduction up to:
  
  • $10,000 of interest on new car purchases for cars assembled in the United States.‍

What changes to tax credits go into effect with the passing of the OBBB? 

• The child tax credit increases:
  
  • Raised to $2,200 (it was at $2,000) and will have adjustments for inflation 
• The electric vehicle tax credit will expire:
  
  • Gone after September 30th, 2025.
• The residential clean energy credit will expire:
  
  • Expires for expenditures made after December 31, 2025‍

How are charitable contributions calculated if you itemize your deductions under the new OBBB?

Starting in 2026, taxpayers will be subject to a floor of 0.5% of AGI for itemized charitable deductions

• Their donations will be reduced by 0.5% of AGI to calculate the total deduction
• Example: your household AGI is $300,000. 0.5% = $1,500. If you made $4,000 in charitable contributions, the first $1,500 would not be deductible, reducing your charitable deduction to $2,500.
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What is the new limitation on total itemized deductions?

• For tax years 2026 and beyond, taxpayers in the 37% bracket will experience a limitation on their itemized deductions. For these taxpayers, itemized deductions will be reduced by 2/37ths of the lesser of:
  
  • The total itemized deductions, or
  • The amount of taxable income that surpasses where the 37% marginal bracket on ordinary income begins (all taxable income taxed above the 35% bracket).‍

What is the new “Trump Account”?

• Any child is eligible for the account, but only children born between 2025 and 2028 will get a $1,000 government contribution.
• Annual contribution limits: $5,000 by family/friends and another $2,500 by employer
• Earnings grow tax-deferred
• It must be invested in a low-cost U.S. stock index fund
• Withdrawals are taxed as long-term capital gains if used for higher education, first-time home purchase, or starting a business.
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How does the OBBB impact my Premium Tax Credit for Health Insurance?

• The premium tax credits under the ACA were NOT extended past the December 31, 2025, expiration date.
• Without further action by Congress, the subsidies will expire by the end of 2025, causing most enrollees to see their monthly premiums rise.
  
  • An example provided by the Center on Budget and Policy Priorities states that a family of four making $85,000 would have to pay an additional $313 in premiums for coverage in 2026 and face a $900 increase in their out-of-pocket maximum.

Whew. There is so much to unpack with this new bill. This blog post doesn’t even cover all of it. We will be anxiously awaiting to see what kinks are ironed out, how these rulings impact our clients' tax and financial planning situations, and what our financial planning community comes up with for strategies going forward.

We will continue to provide updates as they come out. If you are a client of ours, we are already working out how each of these items impacts you individually. 
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If you're interested in learning more about how this bill impacts you, schedule a complimentary meeting with our team.

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Sources: Tax Foundation, OBBB Act, Holistiplan - 2025 Legislative Tax Changes

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Fyooz Financial Planning is a fee-only, fiduciary financial planner based in Minneapolis, MN and Portland, OR, dedicated to helping couples achieve their financial goals. Whether you're planning for retirement, managing investments, or looking for tax-efficient strategies, our experienced team provides personalized guidance.

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Disclaimer: This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment or financial planning strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.