The recently enacted One Big Beautiful Bill Act (OBBB) marks a sweeping update to the U.S. tax code, bringing with it notable changes that impact millions of households. In this article, we’ll drill down deeper into what for many will be the most consequential items: the permanent extension of the higher standard deduction, a new temporary “Senior Bonus” deduction for taxpayers age 65 and older, and a reshaping of the rules around charitable contributions for both itemizers and non-itemizers. Here’s a closer look at what these reforms mean—and how they may affect your bottom line.
Increase to the Standard Deduction
Under the 2017 Tax Cuts and Jobs Act (TCJA), the standard deduction was nearly doubled. That legislation was due to expire this year, in 2025. The OBBB made that heftier standard deduction permanent with a modest increase to $15,750 for single filers and $31,500 for those married filing jointly. Additionally, the OBBB allows the standard deduction to automatically adjust for inflation going forward.
Many households have come to rely on the more robust standard deduction the TCJA granted, and these people no longer face the 2026 drop-off scenario. In fact, they now can look forward to future increases that will keep pace with cost-of-living changes. Additionally, taxpayers will continue to benefit from not itemizing, as a result of the original 2017 TDJA legislation, keeping tax filing simpler for most Americans.
Big Bonus for (Some) Seniors
In addition to the permanency of the standard deduction, the OBBB gives a big beautiful bonus for filers age 65 through 68. Prior to the bill’s passage, married couples filing jointly with at least one spouse age 65 or older could stack an extra $1,600 per qualifying filer (up to $3,200 total) on top of their standard deduction. Single filers received $2,000. The OBBB adds to that $6,000 per filer ($12,000 if married and both qualify), but only for those age 65 through 68.
This “Senior Bonus” can be claimed whether taxpayers take the standard deduction or itemize. However, it is important to note that this benefit phases out if your income is too high. The phase-out begins for those married filing jointly with a modified adjusted gross income of $150,000 and ends at $250,000 (for single filers, it begins at $75,000 and ends at $175,000).
Besides creating significant planning opportunities, this additional bonus will lead to a significant reduction in taxes for seniors with qualifying income. While it’s not a “no tax on Social Security” that we’ve been seeing proliferated by news media outlets, it will lead to the vast majority of seniors not having to pay tax on their SSI benefits. Nearly 88% of seniors with incomes ≤ $75,000 will effectively reduce their taxable income enough to owe no federal tax on benefits—up from 64% previously.
Charitable Giving
The OBBB introduces a new, above-the-line charitable deduction for taxpayers who take the standard deduction of $1,000 for single filers and $2,000 for joint filers. This deduction begins in 2026. Before this change, only taxpayers who itemized their deductions could claim charitable contributions. It is important to note that this change excludes gifts to donor-advised funds, a common strategy among several of our clients. They will still have to itemize.
This new provision will encourage philanthropy among the greater than 90% of taxpayers who use the standard deduction and could increase annual charitable contributions by billions, estimated $74 billion over the next decade.
For those who itemize, OBBB introduces some new restrictions, effective 2026.
First, for those itemizing, only the portion of charitable giving exceeding 0.5% of AGI becomes deductible. For example, if AGI is $100,000, then the first $500 of giving yields no deduction.
Second, taxpayers will enjoy only a 35% ceiling on charitable deductions. So a $10,000 gift yields at most a $3,500 benefit, even if you are in the 37% tax bracket.
The OBBB retains the 60% AGI limit, meaning cash gifts to public charities are deductible up to 60% of AGI. Notable because the OBBB keeps this in place instead of reverting to the lower 50% limit that was scheduled to return upon the expiration of the TCJA.
The ramifications of this are that high-income donors may decide to accelerate gifts before 2026 to maximize benefits. High-income earners who itemize will experience a slight reduction in charitable tax incentives. However, overall giving incentives do broaden among middle-income earners.
The One Big Beautiful Bill Act brings with it a mix of permanence, generosity, and recalibration in the tax code, especially for retirees, middle-income households, and the charitably inclined. By locking in the expanded standard deduction, offering a meaningful new tax break to qualifying seniors, and reshaping the way charitable contributions are deducted, the OBBB represents a significant evolution in how Americans plan and file their taxes.
Whether you’re preparing for retirement, managing a fixed income, or considering your legacy through charitable giving, these changes underscore the importance of reviewing your tax strategy. As always, understanding how the new rules apply to your specific situation—and making informed adjustments—can lead to better outcomes for your financial future.