When sweeping legislation hits, it’s easy to get overwhelmed by the headlines. The recently passed One Big Beautiful Bill Act touches nearly every part of the financial landscape: taxes, retirement, caregiving, business ownership, and more. At Principles of Financial Planning, we’ve taken a closer look at how these changes might affect your long-term strategy. Here's a high-level overview of what to watch:
Tax Rates Stick Around
Remember those 2017 tax cuts? They were set to expire. Now, thanks to this Act, they’re permanent.
Bigger Deductions for Families & Homeowners
The cap on state and local tax (SALT) deductions shoots up from $10,000 to $40,000 (for households making under $500k) through 2029. After that, it snaps back, so this is a window you don’t want to miss. There are some rules about income limits, but for many, it’s a big deal.
Also, if you’re supporting a spouse, aging parent, or family member with special needs, the Act may offer new or increased tax credits to offset those expenses. These provisions recognize the real financial strain caregiving can create and offer meaningful relief for those doing the work behind the scenes.
Temporary Boosts for Your Taxes (2025–2028)
Now’s your chance to snag some new deductions:
- Working for tips? You can deduct up to $25,000 if you’re under certain income limits.
- Pulling in overtime? There’s up to $12,500 per person ($25,000 per couple) that you can deduct from your taxes.
- Financing a new American-made car? You can now deduct up to $10,000 in interest.
Retirement Changes
- The Act delays Required Minimum Distribution (RMD) ages again and finally removes the RMD requirement for Roth 401(k)s. If you’ve been converting assets to Roth or weighing tax diversification strategies in retirement, this gives you more breathing room and planning flexibility.
- One provision raises the income threshold at which Social Security benefits become taxable, but adds a higher rate for upper earners. This makes it even more important to coordinate your retirement income sources and withdrawals to stay in a favorable tax bracket.
Student Loan Payments Now Count Toward Retirement Matching
Got adult children with student loans? If they work for a company with a retirement plan, loan payments may now qualify for employer 401(k) matches. This small shift could help younger generations build retirement savings without sacrificing debt repayment.
Charitable Giving Made Easier
Never itemize deductions? Starting in 2026, you can still count up to $1,000 of your giving ($2,000 if you’re married).
Estate Planning Gets Easier
The new law bumps up the exemption for estate, gift, and generation-skipping transfer taxes. Translation: it’s simpler to leave more to your kids - or whoever you care about - without the IRS taking a big slice.
Wins for Business Owners
If you own or invest in small businesses, the Qualified Small Business Stock (QSBS) exclusion is even better - more money you can exclude from taxes. Plus, you can fully expense certain commercial real estate investments, making renovations or new purchases more attractive.
If you're self-employed or run a small business, the Act also offers larger tax credits for starting a retirement plan and greater flexibility in plan design. It's an opportune time to revisit whether your current setup aligns with your savings goals.
What Now?
This bill is big - but the opportunities and risks are personal. It’s not about reacting to headlines; it’s about tailoring your plan to reflect the new rules.
We can help you model how these changes could impact:
Retirement income timelines
Tax-efficient withdrawal strategies
Intra-family wealth transfers
Business retirement plans and employee benefits
Want to know how the One Big Beautiful Bill affects you? Let’s take a closer look together. CLICK HERE to make an appointment.