After months of intense debate, the sweeping “Big Beautiful Bill” (OBBBA) has officially become law. Passed by slim margins in both the House and Senate, and signed by the president on July 4th, the 940-page legislation is one of the most comprehensive in recent history. It extends key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and boosts funding for several GOP priorities, including border security, defense, and energy initiatives.
However, the bill also includes deep cuts to Medicaid, the Affordable Care Act, and social programs; changes projected to impact the health coverage of roughly 16 million Americans by 2034. According to the Congressional Budget Office, the legislation could add $3.3 trillion to the national debt over the next decade.
With such wide-ranging tax and spending changes, it’s important to understand how the Big Beautiful Bill could impact your personal finances. Here’s a closer look at what’s inside and what it may mean for you.
Extension of the TCJA Tax Provisions and New Deductions
- The OBBBA makes many of the TCJA permanent, including tax brackets (topping out at 37%) with certain inflation adjustments.
- The Act extends the TCJA standard deduction along with an increase to $15,750 for single filers, $23,625 for head of household, and $31,500 for MFJ taxpayers, inflation-adjusted after 2025.
- The controversial SALT deduction cap for state and local taxes is increased from $10,000 to $40,000 through 2030 for taxpayers with an AGI under $500,000. This is especially significant for Maryland residents - nearly 20% itemize and claim the SALT deduction, the third-highest rate in the U.S. Maryland’s relatively high property and income taxes meant many previously hit the $10K cap, so the higher $40K limit is likely to offer meaningful tax relief for many households in the state.
- In addition, there is a new “senior deduction” of $6,000 for those 65 and over with an AGI of less than $75,000 single/$150,000 married. Phaseouts occur above these.
- The Child Tax Credit is now permanent and was increased from $1,750 (2025) to $2,200 in 2026).
- Higher-income taxpayers may enjoy the now-permanent higher alternative minimum tax (AMT) thresholds taking effect in 2026.
- The OBBBA simplifies the overall limitation on itemized deductions. It also eliminates miscellaneous itemized deductions for all but educator expenses and creates a percentage cap on deductions for higher-income individuals.
- In a nod to the president’s campaign promise to eliminate taxes on gratuities, the Act includes deductions for tips and overtime pay. For tax years 2025-2028, up to $25,000 in tips and $12,500 (single), $25,000 (married) in hourly overtime wages (not salaries) may be deducted with phase-out for higher income earners ($150,000 single, $300,000 joint).
- New car loan interest may be deductible up to $10,000 from 2025-2028. Eligible vehicles must have final assembly in the USA, and this deduction phases out after $100,000 of income.
- Federal financial aid and student loans underwent significant changes. Key among them: greater eligibility for low-income Pell Grants, but lower caps on undergraduate and graduate student loan limits as well as low caps on parental loans (PLUS) at just $20,000 per student per year and a $65,000 cap.
- The OBBBA made the expiring federal estate tax exemptions permanent and increased the limits to $15 million and $30 million for single/MFJ taxpayers, respectively, indexed for inflation. This would also apply to the generation-skipping transfer tax (GSTT).
- The legislation expanded the Section 199A deduction for small businesses.
Greater Savings With the New Act
- Section 529 educational savings accounts may now be used for more than just K-12 tuition, including books, tutoring, test preparation, and homeschool materials; and allowable distributions are expanded from $10,000 to $20,000 per year. Distributions from these accounts are also now tax-free for special education such as speech and occupational therapies and learning software expenses.
- Newborn savings accounts may now be established and seeded with $1,000 from the federal government from 2025-2028. Further contributions may be added up to $5,000 per year and may be used for educational, first home purchase, or business start-up expenses after age 18.
What Was Taken Away
Along with the projected $3.3 trillion of additional national debt, the major criticism of the Big Beautiful Bill was the reduction of federal Medicaid and the Supplemental Nutrition Assistance Program (SNAP). There were also reductions in federal spending on many other programs.
The new legislation:
- Reduces federal Medicaid funding by $1 trillion through reporting requirements, limits to state tax arrangements, and restrictions on state-directed payments. Estimates vary, but the latest projections indicate up to 16 million people could lose their healthcare coverage and other benefits, including the elderly and disabled. New work requirements of 80 hours per month are required for applicable recipients and eliminates benefits for approximately 1.4 million undocumented immigrants.
- According to the Congressional Budget Office (CBO), the legislation will cut about $490 million from Medicare funding, due to statutory pay-as-you-go laws from 2010.
- Reduces funding for SNAP by $186 billion through 2034. In addition, the new rules tighten work requirements for benefits and require state funding by 2028. Many low-income families could lose their SNAP benefits as a result.
- Affordable Care Act rules were tightened. Automatic ACA re-enrollment was eliminated and income/immigration status must be verified annually, starting in 2028. Subsidies for premiums will now expire and the enrollment window was shortened.
- Clean energy funding was sharply reduced, as investment credits were eliminated for wind, solar, electric vehicle, and home-efficiency credits. Funding and credits were maintained for carbon capture and biofuels.
What Does the Big Beautiful Bill Mean for Your Financial Future?
The recently passed One Big Beautiful Bill Act is a landmark piece of legislation with far-reaching implications for nearly everyone’s financial future. While it’s now officially law, it will take time for financial accountants, attorneys, and advisors alike to fully interpret how these changes will affect individual tax and financial situations.
For many individuals and families, understanding and implementing the updates will require experienced guidance and tax strategy. That’s where we come in.
At Premier Planning Group, we’re ready to help you navigate these changes with clarity and confidence. Reach out to our team to align your financial strategy with the new rules and support your long-term goals.
Call our office at (443) 837-2520 or email my executive assistant, Talia Grover, at taliagrover@premierplanninggroup.com to set up a complimentary consultation.
About Brion
Brion Harris is the CEO, founder, and managing partner of Premier Planning Group, an independent financial firm specializing in working with pre-retirees and retirees, helping them create customized wealth preservation and retirement distribution strategies. With over 20 years of experience, Brion has developed deep knowledge and skill in helping his clients simplify their finances and find confidence in their financial future. Brion and the Premier Planning team are known for their unparalleled client service and their dedication building long-lasting relationships with their clients. As a result, Brion has been the recipient of the #1 Advisor Leadership Award* at Summit Brokerage Services for eight years running and has a reputation as one of the top retirement advisors in the business.
Brion is a proud 20-year resident of the Annapolis community, where he resides with his wife, Elizabeth, their three children, Addison, Jay, and Scarlett, and their two dogs, Pepper and Coco. When he’s not working, you can find him boating, skiing, traveling, and enjoying good food and music with his family. If you want to learn more about Brion, connect with him on LinkedIn.
*The #1 Advisor and Leadership Award is based on production data while at Summit Brokerage Services, Inc. Brion Harris received the award in 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021. This award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client.