The “One Big Beautiful Bill Act” just became law, and if you’re wondering what it means for your taxes, you’re not alone. This isn’t your typical tax overhaul—instead, it’s a strategic mix of making existing benefits permanent while introducing some new provisions.
Let’s cut through the complexity and focus on what actually matters for your financial planning.
The Foundation: What’s Now Permanent
Think of this as your new tax reality. These provisions, originally set to expire, are now locked in for the long haul.
Your Tax Rates Are Staying Put
The tax brackets you’ve been working with since 2017? They’re permanent now. No more uncertainty about whether rates will jump back up. Plus, there’s enhanced inflation protection for higher brackets, which means less “bracket creep” as your income grows over time.
Standard Deduction Gets Bigger (And Stays That Way)
Starting in 2025, the standard deduction jumps to:
- $15,750 for single filers
- $23,625 for heads of household
- $31,500 for married couples filing jointly
This permanency is huge for planning. You can count on these numbers (plus inflation adjustments) going forward.
Mortgage Interest Rules Are Set
The $750,000 limit on mortgage interest deductions is now permanent, and they’ve added a bonus: certain mortgage insurance premiums now qualify for the deduction too.
The Game Changers: What’s Actually New
Here’s where things get interesting. These aren’t just extensions—they’re brand new benefits.
SALT Relief
The big headline grabber: the state and local tax deduction cap jumps from $10,000 to $40,000 for 2025, with annual increases through 2029.
But here’s the catch: It’s temporary, reverting to $10,000 in 2030. And the benefit begins to phase out for taxpayers with a modified adjusted gross income of $500,000 or more.
What this means: If you’re in a high-tax state like New Jersey or the District of Columbia, this could save you thousands. But don’t get too comfortable—start planning for 2030 now.
529 Plans Get More Flexible
Education savings just became more powerful:
- K-12 expenses beyond just tuition now qualify
- Professional certifications and credentials count as qualified expenses
- More flexibility means these accounts can adapt to changing educational landscapes
Charitable Giving Changes Everything
This one’s a big deal for both itemizers and non-itemizers:
Non-itemizers can now deduct up to $1,000 (single) or $2,000 (married) for charitable contributions. This could change the standard deduction vs. itemizing calculation for millions of taxpayers.
Itemizers face a new 0.5% floor on charitable deductions, which might reduce the benefit for some.
“Trump Accounts”: A New Way To Save For Kids
Think of these as special IRAs for minors:
- $5,000 annual contribution limit
- Only for kids under 18
- Distributions start when they turn 18
- Limited to mutual funds and indexed ETFs
What’s unique? State governments and charities can contribute to these accounts, potentially creating community-funded savings programs.
Car Loan Interest Deduction (2025-2028 Only)
If you “Buy American”, the interest on your personal car loan becomes deductible, saving you money on your taxes. It’s only for four years but, if you’re planning a car purchase, by buying a car manufactured in the US you may reap additional benefits.
What This Means for You Right Now
If you’re in a high-tax state: Start calculating your SALT savings, but also start planning for when the benefit expires in 2030.
If you have kids: Look into Trump accounts as a new savings vehicle, and review your 529 strategy with the expanded qualified expenses.
If you give to charity: Reassess whether you should itemize or take the standard deduction, especially with the new non-itemizer charitable deduction.
If you’re buying a car: Consider the timing and whether a US-assembled vehicle makes sense for the temporary interest deduction.
The Bottom Line
This bill provides more certainty than we’ve had in years by making key provisions permanent, while also opening up new opportunities through temporary benefits. The key is understanding which changes are permanent (plan accordingly) and which are temporary (use them while you can).
The most important takeaway? Tax planning just became both more predictable and more complex. You have new tools to work with, but also new deadlines to consider.
Ready to optimize your strategy? These changes create both opportunities and planning challenges that are best navigated with professional guidance. The sooner you understand how these provisions affect your specific situation, the more you can benefit from them. Reach out and book a free, no-obligation call with one of our advisors today.
The opinions expressed herein are those of KFA Private Wealth Group and are subject to change without notice. KFA reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The information provided is for educational and informational purposes only and should not be considered investment advice or an offer to sell any product. Past performance is no guarantee of future results. This contains forecasts, estimates, beliefs and/or similar information (“forward looking information”). Forward looking information is subject to inherent uncertainties and qualifications and is based on numerous assumptions, in each case whether or not identified herein. It is provided for informational purposes only and should not be considered a recommendation to buy or sell securities or a guarantee of future results. KFA is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about KFA, including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request.
