What to Expect from the One Big Beautiful Bill?
Article Written By Tyler Q. Breder, CFP®
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill into law. While widely considered a “mega-bill” at nearly 1,100 pages, there are a few key provisions that are especially relevant to our clients:
1. Extension of the 2017 Tax Rates
The bill extends the individual tax rates originally enacted by the Tax Cuts and Jobs Act of 2017. While the new legislation does not specify an official end date for these tax cuts, future Congressional action could still alter marginal rates—especially given that the bill is projected to increase the national debt by at least $3.4 trillion.
Our longstanding position has been that federal income tax rates will likely need to rise at some point in the future. This legislation, however, avoids tax increases across the board for all Americans in 2026.
2. New Senior Tax Deduction
Beginning in tax year 2025, individuals age 65 and older will be eligible for an additional $6,000 tax deduction on top of the standard deduction. This amount phases out at:
- $75,000 of income for single filers
- $150,000 of income for married couples filing jointly
Importantly, each spouse may claim the $6,000 deduction, effectively providing up to a $12,000 household deduction for qualifying married couples.
However, due to the income thresholds—and especially if Roth conversions are part of your financial strategy—not all clients will benefit from this provision.
3. Increase in State and Local Tax Deduction (SALT)
Previously capped at $10,000, the State and Local Tax (SALT) deduction limit has been increased to $40,000 through the year 2029. The deduction begins to phase out at:
- $250,000 of income for single filers
- $500,000 of income for married couples filing jointly
Although the standard deduction remains relatively high under current law—reducing the number of Americans who itemize—this provision may allow some higher-income households to benefit from itemizing instead.
This change will disproportionately benefit taxpayers with higher incomes, mortgages, and substantial state, local, or real estate tax liabilities.
Summary and Planning Considerations
While the One Big Beautiful Bill touches many areas of tax and fiscal policy, these three provisions are the most likely to influence financial decisions for our clients. If you have questions about how these changes may affect your tax planning, Roth conversion strategy, or itemization potential, we encourage you to reach out to our office.