On July 4, 2025, the One Big Beautiful Bill Act (OBBB) was signed into law, marking one of the most comprehensive tax and spending overhauls since the 2017 Tax Cuts and Jobs Act (TCJA). Whether you’re saving for retirement, planning your estate, paying down student loans, or raising a family, chances are this bill touches some aspect of your financial life.

At Northstar Financial Planners, we’ve reviewed the key points to help you understand what this new legislation could mean for your planning strategy.

Key Highlights: Tax Cuts Made Permanent

One of the primary goals of OBBB was to cement many of the temporary provisions from the TCJA. Here’s what’s now locked in:

Individual Tax Brackets: The tax brackets from the TCJA remain unchanged, with the 10%, 12%, and 22% brackets adjusted annually for inflation.
Standard Deduction Boost: In 2025, the standard deduction increases to $31,500 for joint filers, $23,625 for heads of household, and $15,750 for singles, with inflation indexing going forward.
Child Tax Credit Increase: Starting in 2026, the credit will rise to $2,200 per eligible child. For the 2025 tax year, the maximum credit remains at $2,000, with a refundable portion of $1,700, but both amounts will be indexed for inflation beginning in 2026.
Mortgage Deduction Cap: Interest deductions remain limited to mortgage balances of up to $750,000 for joint filers and $375,000 for single filers.
State and Local Tax (SALT) Deduction Expanded—Temporarily: The SALT cap increases from $10,000 to $40,000 (phasing out above $500,000 of income), but this increase resets to $10,000 in 2030.
Lifetime Gift Tax and Estate Tax Exemption Permanently Increased: The exemption permanently increases to $15 million per person in 2026, with future inflation adjustments.
AMT Relief: The higher alternative minimum tax exemption is now permanent, with the phaseout range starting at $500,000 for single filers and $1 million for joint filers.

Provisions for Families and Individuals

The bill introduces temporary benefits aimed at a broad cross-section of Americans:

Extra Deduction for Seniors: Individuals over 65 with an income below $75,000 ($150,000 for couples) can deduct an additional $6,000 from their income between 2025 and 2028. The benefit phases out after $175,000/$250,000 in income.
Trump Savings Accounts: New accounts enable families to save up to $5,000 per year per child (born between 2025 and 2028), with a $1,000 federal seed money contribution.
Tip & Overtime Income Deductions: Tip earners can deduct up to $25,000 in tipped income, and overtime workers can deduct up to $12,500 (or $15,000 for couples) through 2028. Phaseouts apply to individuals with incomes over $150,000 and $300,000 for couples.

Key Wins for Small Business Owners

Small business owners benefit from changes that include:

Section 199A Deduction Preserved: The 20% pass-through deduction is now permanent, and the income threshold for specified service trades or businesses is $75,000 for single filers and $150,000 for joint filers.
No Cap on PTET Deductions: Despite debate, the law did not limit pass-through entity tax (PTET) deductions, preserving valuable flexibility for business owners in SALT-cap states.

New and Changing Deductions & Credits

Several other changes could influence your tax strategy in the coming years:

Charitable Giving: Starting in 2026, non-itemizers can deduct up to $2,000 for joint filers ($1,000 for singles) for charitable giving. However, itemizers will need to donate at least 0.5% of AGI to qualify.
Auto Loan Interest Deduction: From 2025 to 2028, individuals earning under $100,000 ($200,000 for joint filers) can deduct interest on up to $10,000 of a car loan for U.S.-assembled vehicles.
Electric Vehicle & Clean Energy Credits Expire: These credits will phase out by the end of 2025 or sooner, depending on the date of purchase or installation.

Other Notable Provisions

529 Plan Expansion: Funds can now be used for certain professional certifications. This change aims to provide more flexibility for families in utilizing their 529 savings for educational and professional development expenses beyond traditional college tuition.
Student Loan Overhaul: Income-based repayment plans are replaced with simplified standard or assistance-based options. Additionally, there will be new limitations on Pell Grants and loan amounts for graduate students.
Casualty Loss Deduction Tweaks: Extended to cover damages from state-declared disasters.
New Foreign Transfer Tax: A 1% tax now applies to certain foreign money transfers.
IRS Direct File Eliminated: The government’s free e-filing pilot program has been scrapped.
Higher Taxes for Certain Universities and Foundations: New thresholds and levies may affect elite institutions and large endowments.

What It All Means for You

For many taxpayers, especially retirees, families with young children, tip earners, and small business owners, the act provides valuable planning opportunities. For others, particularly those losing out on energy and vehicle credits or student loan flexibility, adjustments may be necessary.

This is an ideal time to review your tax, investment, and estate planning strategies. At Northstar, we’re here to help you understand what’s changing—and how to make the most of it—as part of your overall financial planning.

Schedule a chat with a fee-only, fiduciary financial advisor.

This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.