The One Big Beautiful Bill Act
The One Big Beautiful Bill Act (the OBBBA), signed into law on July 4, 2025, is an extensive law with several major provisions affecting federal taxes, deductions, spending programs, and regulatory measures. The law’s primary mechanism is tax reform: making 2017 tax cuts permanent, expanding certain deductions, boosting tax-favored business and child-related benefits, reducing taxation on specific earnings, and altering eligibility for federal benefits and tax credits. It also reshapes federal spending, especially for law enforcement and social programs, and adjusts regulatory provisions across agriculture, energy, and health care.
Tax Provisions
Permanently extends individual tax rate reductions and the higher standard deduction first introduced in the 2017 Tax Cuts and Jobs Act, which were previously set to expire after 2025. The personal exemption remains terminated.
Increases the child tax credit to $2,500 per child for tax years 2025 through 2028, then indexes it for inflation. The credit remains non-refundable. The law also requires Social Security Numbers to claim this credit. Adoption credits are fully refundable up to $5,000.
Permanently increases the qualified business income (QBI) deduction for pass-through businesses from 20% to 23%, while modifying phase-outs for higher-income taxpayers and expanding eligibility for business development companies.
Increases the estate and lifetime gift tax exemption to $15 million per individual (or $30 million per married couple), indexed for inflation and made permanent.
Raises the SALT (State and Local Tax) deduction cap to $40,000 for households with income under $500,000, effective for five years, after which it returns to $10,000.
Restores 100% bonus depreciation for business investments in qualifying property, allowing full expensing of new equipment purchases.
While it purports to eliminate federal income tax on tipped income and overtime pay through 2028, they are subject to certain caps and phase-outs for high earners. It also reduces taxes paid on Social Security benefits for all recipients starting in 2026. However, instead of directly eliminating federal taxes on Social Security, the law awards a sizable, targeted deduction to most Social Security recipients age 65 and older.
Creates new “Trump Accounts,” tax-advantaged savings vehicles for parents, similar to Coverdell or 529 plans.
Spending and Regulatory Changes
Increases funding for Immigration and Customs Enforcement (ICE) significantly through 2029.
Implements stricter work requirements for able-bodied adults without dependents receiving nutrition assistance benefits (SNAP/food stamps) and modifies related eligibility and administrative procedures.
Repeals or phases out several clean energy tax incentives and modifies others, including limiting credits related to solar, wind, and electric vehicles.
Provides new and expanded tax incentives for U.S. semiconductor manufacturing and certain rural investments.
Modifies several small business tax provisions, such as increasing the deduction for self-employed health insurance.
The One Big Beautiful Bill Act (OBBBA) makes permanent individual tax cuts from the 2017 Tax Cuts and Jobs Act, providing greater tax certainty. These provisions aim to reduce tax burdens for middle-income families, seniors, and working Americans, enhancing financial relief and encouraging economic growth.
Crossover Point Advisors and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.
Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.