The “One Big Beautiful Bill Act” Tax Updates

On July 4th, 2025, President Trump signed the “One Big Beautiful Bill Act” into law, a significant package of tax and spending reforms narrowly approved by Congress. In keeping with our mission to deliver clarity, structure, strategy, and support across all areas of your financial life, we want to provide you with an update on the recently passed tax bill and key provisions that may affect your plan.

1. Expansion of 529 Education-Savings Plans

The new legislation expands the use of 529 Savings Plans to cover qualified K-12 expenses such as standardized test fees, tutoring, and books, as well as costs associated with career-related licenses and certifications. It also raises the annual withdrawal limit for K-12 tuition from $10,000 to $20,000. These changes allow these tax-advantaged savings accounts to be more flexible for both education and career-related costs.

2. Increase in the Estate and Gift Tax Exemption

The bill permanently increases the federal estate, gift, and generation skipping transfer (GST) tax exemption to $15 million per person ($30 million per married couple) beginning in 2026. This change allows individuals to transfer up to $15 million free of federal, estate, or GST taxes during their lifetime. This is an increase from the current lifetime exemption of $13.99 million and avoids the scheduled drop to $7 million in 2026 under the “Tax Cuts and Jobs Act”.

3. Higher SALT Deduction Cap

The State and Local Tax (SALT) deduction allows taxpayers who itemize to deduct certain state and local taxes from their federal taxable income. Under prior law, this deduction was capped at $10,000 per year. The new legislation raises the annual SALT deduction limit to $40,000 for individuals earning less than $500,000 a year, with the cap gradually phasing down for those with higher incomes. Both the deduction limit and the income threshold will increase by 1% annually through 2029. Unless further legislative action is taken, the cap is scheduled to revert to $10,000 in 2030.

4. New Tax Deductions for Seniors

With the passage of the bill, individuals aged 65 and older may now deduct up to $6,000 from their taxable income annually until 2029, in addition to the existing senior standard deduction. This additional deduction gradually phases out for those with annual incomes over $75,000. While the provision does not eliminate taxes on social security benefits entirely, it represents a meaningful tax break for many retirees.

Though these four provisions are some of the most pertinent, the 870-page bill includes a wide range of additional changes that may affect you and your family. Notably, it makes permanent the individual tax rates established under the 2017 “Tax Cuts and Jobs Act”, and extends several tax provisions that were set to expire at the end of this year. The legislation enhances Health Savings Accounts (HSAs), adds new deductions for tips, overtime, and car loan interest, and increases the Child Tax Credit from $2,000 to $2,200 per child. It also introduces a “Baby Bonus” program, providing $1,000 to children born between 2025 and 2028 to invest tax-deferred.

Other key changes include new restrictions and lifetime borrowing caps for Parent PLUS and graduate student loans, the introduction of two new required student loan repayment plans, and the rapid phaseout of current federal tax incentives for electric vehicles, energy-efficient home upgrades, and residential clean energy.

We understand that major legislative changes can raise important questions about your financial strategy. As always, we are here to help you navigate the impact of these updates and ensure your long-term plan remains aligned with your goals and values.

If you’d like to discuss any of these provisions in more detail, please don’t hesitate to reach out.