Trump’s Tax Bill – The “One Big Beautiful Bill” Important Tax Updates
Trump’s Tax Bill, or better know as the “One Big Beautiful Bill,” was recently enacted and it brings significant changes that could impact your financial and tax planning, especially if you’re in or nearing retirement. With almost 900 pages in this legislation, including a large collection of tax breaks, spending cuts, and more; this article highlights some of the key tax provisions to help you understand how these changes impact you, and could potentially present opportunities for optimizing your financial strategy. Before making any financial moves, we highly recommend you discuss your options with your financial advisor.
Marginal Tax Brackets, Clarity for the Future
Effective July 4, 2025, the marginal tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% were made permanent with Trump’s tax bill. Well, as permanent as tax codes get, until Congress decides otherwise. For retirees and pre-retirees, this means clearer long-term planning opportunities. Understanding the difference between marginal rates (the tax rate on your next dollar earned) and effective rates (the average tax rate on your entire income) will remain crucial. [1]
Standard Deduction, Increased and Extended
The standard deduction was not only made permanent but also increased. Starting in 2025, single filers have a deduction of $15,750, and married couples filing jointly (MFJ) have $31,500. These amounts will adjust annually with inflation, ensuring they keep pace with rising costs.[2]
Increased Child Tax Credit
The current $2,000 child tax credit is increased to $2,200 permanently, in 2026, inflation adjusted thereafter.[3]
Extra Deduction for Seniors, Temporary Boost
If you are age 65 or older, there’s an additional deduction of $6,000 available from 2025 through 2028. However, there are income limits to be aware of. Your additional deduction reduces by 6% for income over $75,000 for single filers and $150,000 for couples filing jointly. Although not a complete elimination of taxes on Social Security benefits, this measure does provide valuable temporary relief, enhancing your tax planning options during these years. [4]
Want a free financial consultation to see how Trump’s Tax Bill affects you? Give our office a call (615) 716-2061.
Car Loan Interest Deduction, Conditions Apply
Trump’s tax bill also introduces a deduction for car loan interest, capped at $10,000. There are caveats:
- The deduction begins phasing-out for incomes above $100,000 – $150,000 (single) and $200,000 – $250,000 (married, filing jointly), reducing the deduction by $200 for every $1,000 or (20%) above these thresholds for tax years 2025 through 2028 (deduction limited to $10,000). Those earning more than $150,000 – $250,000, cannot claim the tax break. [5]
- Vehicles must have final assembly completed in the United States, and the loan must meet the bill’s other requirements.[6]
Charitable Giving, Opportunities Expanded
If you are charitably inclined, Trump’s tax bill sets a new 0.5% floor of Adjusted Gross Income (AGI) for charitable deductions, providing better clarity and opportunity for planning your giving strategically. Additionally, even if you don’t itemize, there’s an above-the-line deduction of $1,000 per individual or $2,000 for couples filing jointly, which helps lower your taxable income.[7] Both the 0.5% floor and the non-itemizer above-the-line deduction take effect for 2026 tax returns, which are filed during 2027. [22] Talk to your financial advisor or tax professional to better understand the limits, caps, and thresholds.
As you read through the tax changes in Trump’s tax bill, be sure to subscribe to our RetirementTalk YouTube channel for continued updates and further explanation.
Estate and Gift Tax Exemption Increase
Starting in 2026, the estate and lifetime gift tax exemption permanently increases from $13.99 million to $15 million for single filers and $30 million for joint filers, adjusted annually for inflation thereafter. This change provides additional room for estate planning, ensuring more of your assets go to your heirs tax-efficiently.[8]
Bonus Depreciation, Advantage for Property Owners
Property owners, take note: Bonus depreciation returns to 100% for assets purchased or placed into service from January 19, 2025, and placed in service after January 19, 2025, but before 2030. This allows significant upfront deductions, beneficial for those with rental properties or other qualifying assets.[9]
EV Credits and Energy Efficiency, Time is Limited
New and used Electric Vehicle (EV) credits are set to expire after September 30, 2025.[10] Similarly, energy-efficient home improvement and residential energy credits end on December 31, 2025.[11] If these credits are part of your planning, act promptly.
Tax Relief for Tips and Overtime, Temporary Incentives
Trump’s tax bill introduces temporary tax-free provisions from 2025 to 2028:
- Up to $25,000 in tips is tax-free, phasing out by $100 for every $1,000 over $150,000 single / $300,000 MFJ. The exemption also applies only to federal income tax. Tipped workers would still be subject to state and local income and payroll taxes. [12]
- Overtime earnings up to $12,500 are similarly tax-free, with the same phase-out limits. The deduction is capped at $12,500 for single filers and $25,000 for married couples filing jointly. The break begins to phase out for single filers making $150,000 or more ($300,000 for joint filers) and is unavailable to those making more than $275,000, or $550,000 for couples. [13]
- These incentives can help manage taxable income effectively, especially beneficial if you continue working part-time during retirement.
SALT Cap Adjustment, Temporary Relief
The State and Local Tax (SALT) deduction cap is substantially increased to $40,000 in the 2025 tax year, continuing to rise by 1% annually through 2029, then reverting to $10,000 in the 2030 tax year. This offers temporary but meaningful relief for taxpayers in high-tax states, benefiting those whose planning strategies involve maximizing these deductions. Income limits for this benefit reach up to $500,000 for both single filers and married couples filing jointly.[14] For incomes above $500,000, the deduction phases down, reducing to $10,000 for the highest earners. Taxpayers in the top 37% bracket would see their SALT deduction limited to a 32% benefit rate, reducing its value, according to the Wall Street Journal. [23]
Trump’s Tax Bill: Major Tax Policy Changes Chart Under Trump’s Tax Bill
The below chart notes some of the changes, in the One Big Beautiful Bill, but not all. To see the full legislation, visit: Congress.gov.
**Chart Data Source: Congress.gov, July 1, 2025, “H.R.1 – One Big Beautiful Bill Act”, https://www.congress.gov/bill/119th-congress/house-bill/1
HSA Changes, Expanded Access and Flexibility
If you have an HDHP and contribute to an HSA, you can now make use of direct primary care memberships to get your care, use funds to pay the monthly fee, and maintain your eligibility to contribute to an HSA. [17] Talk to a healthcare specialist about your options.
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- ACA Bronze & Catastrophic Plans Now HSA-Eligible and qualify as high-deductible health plans, letting you open and contribute to an HSA while enrolled in one of these lower-premium plans. If you’re young, healthy, or temporarily uninsured between jobs or healthcare plans, this could open the door to triple tax benefits with an HSA. [16]
- Direct Primary Care Now Covered and DPC memberships are now a reimbursable expense. [19]
- In the new law, individuals can maintain HSA eligibility if they have a direct primary care (DPC) membership of up to $150 per month. HSA funds can also pay for DPC services. HSA distributions for DPC services can not exceed $150 per month for individuals or $300 per month for family arrangements. These amounts would be adjusted annually for inflation. [17]
Maximizing Opportunities with Proactive Planning
While this overview highlights some significant changes Trump’s tax bill introduced, it doesn’t capture every detail of the One Big Beautiful Bill. Still, it covers the essentials likely to affect most retirees and pre-retirees. With Trump’s tax bill changes, tax planning opportunities have expanded, at least temporarily. Given the evolving fiscal landscape, taking advantage of these provisions while they last could be critical.
Your financial planning team at Beacon Capital Management will be actively incorporating these considerations into your regular reviews, providing personalized financial guidance tailored to your specific circumstances. Financial planning is about maximizing opportunities as they arise, this bill offers several worth discussing.
Feel free to share this information with friends and family who might benefit from proactive financial guidance. Many retirees and pre-retirees could significantly benefit from timely and informed strategies that leverage these tax provisions effectively.
We hope you find this information helpful and empowering as you plan for your financial future. As always, we’re here for you and your loved ones.
Give our office a call (615) 716-2061 or Schedule a Free Consultation Below.
Helpful Links, Articles, and Resources
Article: Required Minimum Distributions: 12 Common RMD Questions and Answers
Article: Bringing Stability to Your Retirement
Free Download: TAX-EFFICIENT STRATEGIES IN TODAY’S ECONOMY- Your free guide to navigating the complexities of taxation in retirement.
Trump’s Tax Bill Sources and References
[1] Tax Foundation, July 3, 2025, “ ‘One Big Beautiful Bill Act’ Tax Policies: Details and Analysis”, https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/
[2] Fortune, July 4, 2025, “Trump Signs ‘One Big Beautiful Bill’ into law: What that means for your money”, https://fortune.com/2025/07/04/trump-signs-one-big-beautiful-bill-into-law-what-that-means-for-your-money/
[3] Charles Schwab, July 3, 2025, “Congress Approves Massive Tax and Spending Bill”, https://www.schwab.com/learn/story/tax-bill-moves-on-to-senate-whats-next
[4] CNBC, July 4, 2025, “ What Trump’s ‘one big beautiful’ tax-and-spending package means for your money”, https://www.cnbc.com/guide/what-trumps-one-big-beautiful-bill-means-for-your-money/#trumps-2017-tax-cut-extensions
[5] Tax Foundation, July 3, 2025, “ ‘One Big Beautiful Bill Act’ Tax Policies: Details and Analysis”, https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/
[6] Kiplinger, July 5, 2025, “New GOP Car Loan Tax Deduction: Which Vehicles and Buyers Qualify”, https://www.kiplinger.com/taxes/new-gop-car-loan-tax-deduction
[7] Council on Foundations, July 1, 2025, “One, Big, Beautiful Bill: Impact on Philanthropy”, https://cof.org/page/one-big-beautiful-bill-impact-philanthropy
[8] Tax Foundation, July 3, 2025, “ ‘One Big Beautiful Bill Act’ Tax Policies: Details and Analysis”, https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/
[9] WIPFLI, June 5, 2025, “Is Congress about to bring back 100% bonus depreciation?”, https://www.wipfli.com/insights/articles/cre-tax-is-congress-bringing-back-100-bonus-depreciation
[10] CNS News, July 3, 2025, “ ‘Big, beautiful bill’ ends tax breaks for electric vehicles. Here’s what to know.” https://www.cbsnews.com/news/big-beautiful-bill-electric-vehicle-tax-credit/
[11] Kiplinger, May 27, 2025, “Save More with Tax Credits for Energy-Efficient Home Improvements While You Still Can”, https://www.kiplinger.com/taxes/605069/inflation-reduction-act-tax-credits-energy-efficient-home-improvements
[12] CNBC, July 3, 2025, “These 4 tax breaks in Trump’s ‘big beautiful’ bill are only temporary”, https://www.cnbc.com/2025/07/03/temporary-tax-breaks-in-trumps-big-beautiful-bill.html
[13] CNBC, July 3, 2025, “These 4 tax breaks in Trump’s ‘big beautiful’ bill are only temporary”, https://www.cnbc.com/2025/07/03/temporary-tax-breaks-in-trumps-big-beautiful-bill.html
[14] CNBC, July 1, 2025, “Senate Republican tax bill passes ‘SALT’ deduction cap of $40,000. Here’s who benefits”, https://www.cnbc.com/2025/07/01/senate-republican-bill-salt-tax.html
[15] Brookings, June 5, 2025, “The hidden cost of expanding HSAs in One, Big, Beautiful Bill”, https://www.brookings.edu/articles/the-hidden-costs-of-expanding-hsas-in-one-big-beautiful-bill/
[16] Brookings, June 5, 2025, “The hidden cost of expanding HSAs in One, Big, Beautiful Bill”, https://www.brookings.edu/articles/the-hidden-costs-of-expanding-hsas-in-one-big-beautiful-bill/
[17] Kiplinger, July 10, 2025, “Most Changes to HSAs in the One Big Beautiful Bill Did Not Make the Final Cut”, https://www.kiplinger.com/retirement/medicare/proposed-changes-to-hsas-in-the-one-big-beautiful-bill-add-up-for-retirement-savers
[19] Brookings, June 5, 2025, “The hidden cost of expanding HSAs in One, Big, Beautiful Bill”, https://www.brookings.edu/articles/the-hidden-costs-of-expanding-hsas-in-one-big-beautiful-bill/
[22] Fidelity Charitable, July 5, 2025, “One Big Beautiful Bill (OBBB): Impact on charitable giving”, https://www.fidelitycharitable.org/articles/obbb-tax-reform.html
[23] WSJ, May 22, 2025, “How a New $40,000 SALT Cap Would Affect Your Tax Bill”, https://www.wsj.com/personal-finance/taxes/republican-tax-bill-salt-deduction-cap-f69b1580
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