New Tax Provisions in the One Big Beautiful Bill Act
Key Points – New Tax Provisions in the One Big Beautiful Bill Act
- Tax Bracket Management and Planning Considerations
- Current Tax Rates Permanently Extended
- Which Tax Cuts and Jobs Act Provisions Were Temporarily Extended?
- Working with a Team of Professionals — Including Tax Professionals — to Understand How You May Be Impacted
- 5-Minute Read
What Is the One Big Beautiful Bill Act?
From the Tax Cuts and Jobs Act to the SECURE Act (and SECURE 2.0), our team has been dedicated to educating people about how they may be impacted by legislative changes. The One Big Beautiful Bill Act is the latest legislation to garner our team’s full attention, especially due to its new tax provisions.1
The plethora of provisions within the bill range from tax regulations, health care planning, estate planning, and much more. In this article, we’re going to focus primarily on the new tax provisions and how the One Big Beautiful Bill Act will impact tax planning strategy (and in turn, your comprehensive financial plan).
Current Tax Rates Permanently Extended
Before the One Big Beautiful Bill Act was passed, our tax team was constantly weighing the potential implications of the Tax Cuts and Jobs Act sunsetting after 2025. President Trump signed the TCJA into law during his first term in office. By signing the One Big Beautiful Bill Act into law, today’s historically low tax rates were permanently extended.
According to Tax Foundation, the One Big Beautiful Bill Act prevented a potential tax increase for 62% of taxpayers going into effect after December 31, 2025.2 The current tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.3 If the TCJA would have sunset, tax rates would have reverted to 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.4 Now that we have more clarity about future tax rates, it’s important to start planning and revisit your multi-year tax plan (or create one if you don’t have one).
How will the One Big Beautiful Bill Act’s tax provisions factor into what tax planning strategies you should consider? Should you consider Roth conversions or other strategies to accelerate income? Make sure that you’re working with a tax professional that understands the power of tax planning and isn’t just focused on tax preparation. As our tax team continues to study the new tax provisions of the One Big Beautiful Bill Act, be on the lookout for more educational content.
Other New Tax Provisions in the One Big Beautiful Bill Act
From standard deduction levels to the SALT cap, there were several other new tax provisions from the One Big Beautiful Bill Act as well. Look at Figure 1 below for a quick overview.
FIGURE 1 – Key Individual Tax Changes from the One Big Beautiful Bill Act – CNBC5
Changes to the Standard Deduction
Keep in mind that the TCJA nearly doubled the standard deduction when it became law, as it increased from $12,700 in 2017 to $24,000 in 2018 for joint filers ($6,350 in 2017 and $12,000 in 2018 for single filers).6 Just like with income tax brackets, the standard deduction levels are indexed for inflation.
Prior to the One Big Beautiful Bill Act being signed into law, the standard deduction levels for 2025 were $15,000 for single filers and $30,000 for joint filers. The 2025 standard deduction levels increased to $15,750 for single filers and $31,500 for joint filers as part of the One Big Beautiful Bill Act.
Additionally, tax filers who are 65 and older will get a temporary “above-the-line” deduction between 2025-2028.7 This is a $6,000 tax temporary tax break for single filers and $12,000 for joint filers. However, there is a phase-out that goes into effect for single filers who make at least $75,000 and joint filers who make at least $150,000.
SALT Cap Retroactively Increases … Temporarily
About a month before the One Big Beautiful Bill Act was signed into law, our Director of Tax Corey Hulstein, CPA, discussed the future of the SALT deduction cap on a recent episode of Tax Tips in 10. Under the TCJA, there was a $10,000 state and local tax (SALT) cap. The One Big Beautiful Bill Act retroactively increased the SALT cap to $40,000 for 2025.8 It’s set to increase to $40,400 in 2026 and increase by 1% per year through 2029. However, it’s slated to revert to $10,000 in 2030.
An income phase-out limit applies to the SALT cap as well. For 2025, individuals who have Modified Adjusted Gross Income that exceeds $500,000 would begin to see a decreased SALT deduction limit. If you’re a high-income taxpayer and/or live in a high-income tax state, it’s important to understand that the timing of your deductions so you can potentially lessen the impact of the SALT cap.
Estate and Gift Tax Exemption
The standard deduction levels weren’t the only item that nearly doubled as a part of the TCJA. The federal estate tax exemption increased from $5,490,000 in 2017 to $11,180,000 in 2018. Inflation adjustments have increased the estate tax exemption to $13,990,000 in 2025. The One Big Beautiful Bill Act permanently increased it to $15 million starting in 2026. Keep in mind that couples making joint gifts can double that amount.
Mortgage Interest Deduction
It will continue to be $375,000 for single filers and $750,000 for joint filers. Certain mortgage insurance premiums might qualify for a deduction.
Personal Exemption Repeal
The personal exemption elimination becomes permanent. As a reminder, this exemption was temporarily eliminated as part of the TCJA.9 This exemption was eliminated as an offset to the increase to the standard deduction. With the permanent extension of the standard deduction, this provision was also permanently eliminated.
Child Tax Credit
The Child Tax Credit increases to $2,200 for the 2025 tax year. It had doubled when the TCJA became law and will be indexed for inflation.
Alternative Minimum Tax (AMT) Exemption
The AMT exemption becomes permanent along with the TCJA income phaseout limits from 2018. Those phaseouts start at $500,000 for single filers and $1 million for joint filers and will be indexed for inflation.
Not All the New Tax Provisions Are Permanent
Notice how we mentioned with the SALT Cap increasing that it was a temporary provision. Well, it wasn’t the only new temporary tax provisions from the One Big Beautiful Bill Act. Others included no taxes on tips or overtime and deductible car loan interest — both of which are in effect through 2028 and have income phaseouts.10
No taxes on tipped income will temporarily be capped up to $25,000. For overtime income, the cap is $12,500 for single filers and $25,000 for joint filers. The income phaseout limits for this temporary provision start at $150,000 for single filers and $300,000 for joint filers.11
The new tax provision on car loan interest deduction temporarily allows for a maximum deduction of $10,000 of auto loan interest. This provision only applies for vehicles purchased and assembled in the U.S. To qualify for the deduction, single filers must have $100,000 or less of MAGI while joint filers must have less than $200,000.12
Let Us Know If You Have Questions About These New Tax Provisions
Has your CPA talked to you yet about these new tax provisions? Or are they just concerned about preparing your tax return each year? While our CPAs and other tax professionals do prepare tax returns for our clients, they’re hyper-focused year-round on doing proactive tax planning and understanding how tax law changes can impact that.
At Modern Wealth, we want to make sure that you have a multi-year tax strategy as a part of your comprehensive financial plan. Our tax professionals are ready to build you a forward-looking tax plan that considers these tax law changes to help optimize your tax savings over your lifetime.
In additional to tax planning, Modern Wealth’s Advantage Offerings include investment management, estate planning, insurance planning, and financial planning. Our financial planners and tax professionals work in tandem with our investment management, insurance, and estate planning specialists to deliver our clients the Modern Wealth Advantage. Start a conversation with our team below to address any questions you may have about the One Big Beautiful Bill Act and learn what it’s like to have the Modern Wealth Advantage.
Stay Tuned for More Content on the One Big Beautiful Bill Act
While the new tax provisions were a key component of the One Big Beautiful Bill Act, there are many other aspects of the bill that could impact you as well. Be on the lookout for more content on the One Big Beautiful Bill Act in the near future.
Resources Mentioned in This Article
- The One Big Beautiful Bill Act: What You Need to Know
- What If the Tax Cuts and Jobs Act Isn’t Extended?
- Reviewing RMD Rules as IRS Issues Final SECURE Act Regulations
- Understanding the SECURE Act 2.0 with Ed Slott, CPA
- What If We Go Back to Old Tax Rates?
- 2025 Tax Brackets: IRS Makes Inflation Adjustments
- 2025 Tax Brackets and Contribution Limits
- What You Need to Know About Tax Deductions
- 3 Reasons Roth Conversions Could Work for You
- 5 Reasons to Have a Forward-Looking Tax Plan
- Income Planning for Retirement
- The Future of the SALT Deduction Cap
- Estate Tax vs. Inheritance Tax
- Tax Strategies for High-Income Earners
- 5 Types of Financial Plans
- 2025 Taxes: What to Watch
- A Sample Financial Plan
Downloads
Other Sources
[1] https://www.whitehouse.gov/articles/2025/07/president-trumps-one-big-beautiful-bill-is-now-the-law/
[2] https://taxfoundation.org/research/all/federal/big-beautiful-bill-house-gop-tax-plan/
[3] https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
[4] https://taxfoundation.org/data/all/federal/2017-tax-brackets/
[5] https://www.cnbc.com/2025/07/03/trump-big-beautiful-bill-tax-changes.html
[6] https://www.taxnotes.com/research/federal/reference-tables/standard-deduction/1x7yp
[8, 10, 11, 12] https://www.fidelity.com/learning-center/personal-finance/one-big-beautiful-bill
[9] https://taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes
Investment advisory services offered through Modern Wealth Management, Inc., a Registered Investment Adviser.
The views expressed represent the opinion of Modern Wealth Management a Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.