What the Big Beautiful Bill May Mean for You

At Rand Financial Planning, we keep a close eye on legislation that could influence your tax picture and financial plans. As both a CPA and CFP®, Marge Rand brings a unique perspective to helping you navigate changes like the newly passed “big beautiful bill” (OBBBA), signed into law on July 4th after a hard-fought path through Congress.

This sweeping 940-page law extends many of the tax provisions originally introduced under the Tax Cuts and Jobs Act of 2017, adds funding for priorities such as border security and defense, and scales back spending on programs like Medicaid and the Affordable Care Act.

Below, we’ve outlined some of the key tax and spending measures—and what they might mean for your own financial landscape.

Extension of the TCJA Tax Provisions and New Deductions

The OBBBA makes many of the TCJA permanent, including tax brackets (topping out at 37%) with certain inflation adjustments.
The OBBBA made the expiring federal estate tax exemptions permanent and increased the limits to $15 million and $30 million for single/MFJ taxpayers, respectively, indexed for inflation. This would also apply to the generation-skipping transfer tax (GSTT).
The controversial SALT deduction for state and local taxes is increased from $10,000 to $40,000 until 2030 for those with an adjusted gross income (AGI) under $500,000 (see more on how this impacts high earners below).
The Act extends the TCJA standard deduction along with an increase to $15,750 for single filers, $23,625 for head of household, and $31,500 for MFJ taxpayers, inflation-adjusted after 2025.
In addition, there is a new “senior deduction” of $6,000 for those 65 and over with an AGI of less than $75,000 single/$150,000 married. Phaseouts occur above these levels.
The OBBBA raises the nonrefundable child tax credit to $2,200 per child and provides for annual inflation adjustments to the credit amount beginning in 2026.
The new Trump accounts are government-funded savings accounts for babies born between 2025 and 2028, starting with a $1,000 federal contribution and allowing families to contribute up to $5,000 per year. They provide a powerful, IRA-like wealth-building tool for higher-income families.
Higher-income taxpayers may enjoy the now-permanent higher alternative minimum tax (AMT) thresholds taking effect in 2026.
The OBBBA simplifies the overall limitation on itemized deductions. It also eliminates miscellaneous itemized deductions for all but educator expenses and creates a percentage cap on deductions for higher-income individuals.
In a nod to the president’s campaign promise to eliminate taxes on gratuities, the Act includes deductions for tips and overtime pay. For tax years 2025-2028, up to $25,000 in tips and $12,500 (single), $25,000 (married) in hourly overtime wages (not salaries) may be deducted with phase-out for higher income earners ($150,000 single, $300,000 joint).
New car loan interest may be deductible up to $10,000 from 2025-2028. Eligible vehicles must have final assembly in the USA, and this deduction phases out after $100,000 of income.
Federal financial aid and student loans underwent significant changes. Key among them: greater eligibility for low-income Pell Grants, but lower caps on undergraduate and graduate student loan limits as well as low caps on parental loans (PLUS) at just $20,000 per student per year and a $65,000 cap.
The legislation expanded the Section 199A deduction for small businesses.

The New SALT Deduction: What High Earners Need to Know

The One Big Beautiful Bill Act significantly raises the cap on the state and local tax (SALT) deduction from $10,000 to $40,000 — but only through tax year 2029, and with a critical caveat for high-income households.

For those with adjusted gross income (AGI) over $500,000, the expanded SALT deduction phases out sharply. Specifically, the deduction is reduced by 30% of the amount your AGI exceeds $500,000. This means your effective tax rate on income above that threshold can be substantially higher than your nominal marginal rate.

For example:

If you earn $600,000, the additional $100,000 of income reduces your SALT deduction by $30,000 (30% of the excess over $500,000). That means your taxable income actually increases by $130,000, pushing more income into higher tax brackets and resulting in an effective federal marginal tax rate on that slice of income of roughly 45%, before considering state taxes, payroll taxes, or other impacts.

This has meaningful planning implications. For high-earning professionals like physicians, attorneys, or business owners, there’s a clear incentive to carefully manage income recognition. Whether that means slowing Roth conversions, timing capital gains, or even reducing hours, thoughtful planning could help keep AGI under the phaseout threshold and preserve more of the expanded SALT deduction.

This is where tax planning becomes especially critical. We can model different income scenarios to help you understand the true after-tax benefit of earning (or deferring) additional income under these new rules.

Greater Savings With the New Act

Section 529 educational savings accounts may now be used for more than just K-12 tuition, including books, tutoring, test preparation, and homeschool materials; and allowable distributions are expanded from $10,000 to $20,000 per year. Distributions from these accounts are also now tax-free for special education such as speech and occupational therapies and learning software expenses.
Newborn savings accounts may now be established and seeded with $1,000 from the federal government from 2025-2028. Further contributions may be added up to $5,000 per year and may be used for educational, first home purchase, or business start-up expenses after age 18.

What Was Taken Away

Along with the projected $3.3 trillion of additional national debt, the major criticism of the Big Beautiful Bill was the reduction of federal Medicaid and the Supplemental Nutrition Assistance Program (SNAP). There were also reductions in federal spending on many other programs.

The new legislation:

Reduces federal Medicaid funding by $1 trillion through reporting requirements, limits to state tax arrangements, and restrictions on state-directed payments. Estimates vary, but the latest projections indicate up to 16 million people could lose their healthcare coverage and other benefits, including the elderly and disabled. New work requirements of 80 hours per month are required for applicable recipients and eliminate benefits for approximately 1.4 million undocumented immigrants.
According to the Congressional Budget Office (CBO), the legislation will cut about $490 million from Medicare funding, due to statutory pay-as-you-go laws from 2010.
Reduces funding for SNAP by $186 billion through 2034. In addition, the new rules tighten work requirements for benefits and require state funding by 2028. Many low-income families could lose their SNAP benefits as a result.
Affordable Care Act rules were tightened. Automatic ACA re-enrollment was eliminated and income/immigration status must be verified annually, starting in 2028. Subsidies for premiums will now expire and the enrollment window was shortened.
Clean energy funding was sharply reduced, as investment credits were eliminated for wind, solar, electric vehicle, and home-efficiency credits. Funding and credits were maintained for carbon capture and biofuels.

What Does All This Mean for Your Financial Future?

The One Big Beautiful Bill Act is a landmark piece of legislation that will touch many areas of personal finance. As experts continue to sort through its details, it’s important to have a thoughtful approach tailored to your unique circumstances.

At Rand Financial Planning, I bring both a CERTIFIED FINANCIAL PLANNER™ and CPA perspective to these conversations, blending financial planning with in-depth tax expertise. This dual background enables me to view the whole picture, allowing clients to make informed choices that support their overall financial well-being.

If you’d like to discuss how these changes might impact your plans, I welcome you to schedule a 20-minute introductory call. You can reach me directly at 908-895-2406 or marge@randfinancialplanning.com. I’d be glad to connect.

About Marge

Marjorie Rand is founder and financial advisor at Rand Financial Planning, a comprehensive, fee-only, fiduciary financial planning firm based in Flemington, New Jersey. Marge specializes in helping her clients plan for a secure retirement and navigate life’s many transitions through customized, tax-efficient retirement planning. She is passionate about empowering her clients to make the best financial decisions for their life and being by their side no matter what life throws at them. Marjorie spent many years as a CPA, specializing in estates, before founding Rand Financial Planning so she could be a go-to source for all her clients’ financial needs and help them avoid costly mistakes. She has a bachelor’s degree in accounting from Rutgers University and a Master of Science in Taxation from Fairleigh Dickinson University, along with the Retirement Income Certified Professional® (RICP®) and CERTIFIED FINANCIAL PLANNER® certifications. When she’s not working, Marge enjoys boating, horseback riding, traveling, and hiking with her husband and her dog, Rangeley. To learn more about Marjorie, connect with her on LinkedIn.