After much wrangling, the massive “big beautiful bill” legislation (OBBBA) was finally approved by narrow margins in both the Senate and the House and signed into law by the president on July 4th. At 940 pages long, the Act extends many of the provisions of the Tax Cut and Jobs Act of 2017 (TCJA) that were set to expire this year and increases funding for GOP priorities, such as border security, defense spending, and energy production.
At the same time, significant cuts were made to Medicaid (and indirectly to Medicare), the Affordable Care Act, and social service programs that are expected to affect the health insurance of about 16 million people by 2034. Reports have quoted the Congressional Budget Office’s estimates of $3.3 trillion added to the nation’s debt over the next 10 years from this legislation.
The tax and spending provisions are extensive. Here is a breakdown of many of them and how they may affect your own finances.
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 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.
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.
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.
The Child Tax Credit is now permanent and was increased from $1,750 (2025) to $2,200 in 2026).
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 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 legislation expanded the Section 199A deduction for small businesses.
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 eliminates 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 one of the most sweeping legislative changes in recent history; and it could impact your taxes, retirement plans, and healthcare costs in more ways than one. While the fine print will take time to fully interpret, now’s the time to start planning around what we do know.
At Prosperity Financial Solutions, we believe your future should be in good hands. That’s why we’ve built our practice on a commitment to excellence, offering a high level of personal service backed by decades of experience in the financial industry. We specialize in helping retirees and pre-retirees understand how legislative changes like the Big Beautiful Bill Act can impact their retirement income, tax planning, and investment strategy.
When you work with us, you benefit from comprehensive, personalized guidance tailored to your financial needs and goals. If you’re wondering how this new law fits into your broader financial plan, let’s talk.
Call (561) 207-6213, email ramsden@brookstoneadvisor.com, or book a 30-minute complimentary call online today. Let’s make sure your plan still fits the future you’ve worked so hard to build.
About David
David Wilcox is president and cofounder of Prosperity Financial Solutions, a financial services firm, based in Palm Beach Gardens, FL, specializing in retirement planning, estate planning, and investments. Since 1987, David has been assisting pre-retirees, retirees, and investors with comprehensive retirement planning, helping them preserve their wealth, increase their retirement income, and avoid common financial mistakes. Prioritizing financial education, he employs strategies to instill confidence and comfort in his clients as they make decisions and move toward their ideal financial future. He also highly values building relationships with clients and strives to make them feel like part of his family.
David holds an associate’s degree from Broward College, a bachelor’s degree from Florida State University, as well as the Life Underwriter Training Council Fellow (LUTCF®) and Long-Term Care (CLTC®) certifications. A firm believer in professional education and participation, he is a member of the Global Financial Association, a member of NAIFA (National Association of Insurance and Financial Advisors), and is a Certified National Long-Term Care instructor. Teaching and mentoring other financial advisors, David presents dozens of seminars and workshops on long-term care and investment planning throughout the country. Outside of the office, family man David enjoys golfing, fitness, and spending time with his kids on the boat, going for long walks, and traveling to new places. He wants to provide a positive example for his children and show them that it’s never too late to follow your dreams. To learn more about David, connect with him on LinkedIn.
Investment advisory services offered through Brookstone Capital Management, LLC (BCM). a registered investment advisor. BCM and Prosperity Financial Solutions are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.