Thoughts on the Big Beautiful Bill
This week, congress and President Trump approved and signed into law Bill Number H.R 1, otherwise known as the Big Beautiful Bill (BBB).
The news surrounding this bill has been widespread, focusing on benefits and drawbacks, financially and otherwise, related to the details within. Noise aside, there are many aspects of this bill that will affect all Americans. At the very least, American citizens should understand the parts of the bill that affect them directly (most notably, taxes). Taxpayers should also be aware of details that are more targeted in nature. These specifics should be weighed carefully along with the taxpayer’s situation to make best use (or avoid) their intended benefit.
As I see it, here are the most applicable parts of BBB as they apply to personal financial situations. I’ve included some details and thoughts on each, but please reach out with any questions or to find out how you may potentially benefit.
Extension of TCJA tax brackets
The most relevant aspect of the BBB is the permanent extension of the Tax Cuts and Jobs Act (TCJA) tax brackets. Originally passed in 2017, the TCJA adjusted the percentages and limits for marginal tax brackets, effectively lowering tax burdens for nearly all Americans. These lower taxes were initially set to expire after 2025. However, the BBB makes these changes permanent. The main considerations:
Lower tax rates
As mentioned, the lower tax rates remain in place. For Everman clients, this has been the assumption we have already been modeling.
Higher Standard Deductions
The BBB also cemented the extremely high standard deductions afforded by the TCJA. Married filing jointly can deduct $31,500 in 2025 without itemizing.
Qualified Business Deduction
A 20% deduction for pass through entities is now permanent. Income thresholds apply to businesses who operate in certain special services.
Social Security Deduction
The BBB provides a deduction for those receiving Social Security. A $6,000 deduction is now available regardless if the taxpayer itemizes or not.
The taxpayer must be at least age 65.
Benefit begins to phase out at MAGI over $75,000.
This deduction is set to expire in 2028
This benefit further complicates the tricky nature of Social Security taxation. For those currently withdrawing retirement funds from both tax-deferred and tax-free retirement accounts, this deduction may allow for weighted withdrawals from tax-deferred accounts and preservation of tax-free income in the future.
It is important to note that this deduction is currently set to expire in 2028. For those already receiving Social Security or those approaching age 65, this benefit should be considered. For the rest of us, we’ll watch for a possible extension in 2028.
Expanded SALT Deduction
The deduction for State and Local Tax (SALT) has increased from $10,000 to $40,000.
For taxpayers who itemize, all state and local taxes (to potentially include sales tax) is deductible. However, until 2025, this deduction was capped at $10,000. For taxpayers in higher local tax situations, this meant paying federal income tax on dollars used to pay state and local taxes over $10,000.
This benefit is currently set to expire in 2030.
The deduction begins to phase out at AGI of $500,000 (married and single)
Editorial note: This increase is long overdue and (in my opinion) does not go far enough. Regardless of income and wealth, paying federal taxes on dollars used to pay state and local taxes (which are already overlapping federal taxes!) does not make sense. This increase is progress in the right direction for taxpayers residing in high tax areas who itemize.
Estate and Gift Tax
The BBB raises the lifetime exclusion for gift tax to $15,000,000 per person. This amount is now permanent and will begin increasing in 2027 to match inflation.
Prior to the TCJA of 2017, taxpayers with large estates were forced to seek complicated trust or gifting strategies to avoid a potential 40% tax on their estate. The TCJA significantly raised these thresholds, allowing for expedited use of lifetime exemptions. However, these permanent higher limits now allow for more extended legacy strategies over a taxpayer’s lifetime.
Editorial note: Again, this increase does not go far enough. While taxation on dollars used to pay state and local tax is ethically complicated, gift and estate tax is even more morally objectionable. Any amount of wealth has already been subject to taxation presumably. Any additional taxes, regardless of the high threshold, amounts to double taxation.
Tip and Overtime Pay
For earners who receive compensation from overtime and tips, up to $25,000 of this income can be deducted from income tax.
Limit is $12,500 for single earners, $25,000 for married.
Deduction expires in 2028.
Deduction amount begins to phase out at MAGI of $150,000 (single) and $300,000 (married).
Auto Loans
Taxpayers who finance a new auto purchase may be eligible to deduct up to $10,000 of interest. Details:
Final assembly of the automobile must be in the United States.
Deduction is available for all taxpayers regardless if they itemize deductions or not.
Deduction is temporary (expires in 2028).
Deduction begins phasing out for MAGI over $100,000 (single) and $200,000 (married).
This benefit should be considered when purchasing a car over the next few years. The deduction is temporary, so careful consideration should be made regarding the life of the loan and related interest rates. Of course, the benefit itself should be considered along with other facts and considerations, including what type of car to purchase, new vs used, the overall price, and whether to finance.
Trump Account for Children
In an effort to set American children off on the right financial foot, the BBB created Trump accounts for children. These accounts are intended to provide money for children to use for retirement, education, or first time home purchases. All American children born in 2025-2028 are also eligible for a tax-free $1,000 seed deposit from the government.
Parents can contribute up to $5,000 per year (after tax).
Funds must be invested in a low-cost index fund tracking US investments.
Investments grow tax free.
Withdrawals are taxed a beneficial long term capital gains rates if they are made for qualifying reasons
Achieve age 59.5.
Higher education, first time homebuyer, birth of a child.
Disability or death.
The benefits and drawbacks of this account should be weighed heavily when considering contributions above the $1,000 government seed contribution. Other investment vehicles, including 529, UTMA/UGMA, or Roth IRAs may be more beneficial to your child’s situation and intended use of the funds. Reach out today to learn more.
Sources:
H.R.1 - 119th Congress (2025-2026): One Big Beautiful Bill Act. Congress.gov, Library of Congress. Accessed July 6, 2025. https://www.congress.gov/bill/119th-congress/house-bill/1/summary/00Garrett Watson, Huaqun Li, Erica York, Alex Muresianu, Alan Cole, Peter Van Ness, Alex Durante. "One Big Beautiful Bill Act Tax Policies: Details and Analysis." Tax Foundation, July 3, 2025. Accessed July 6, 2025. https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/The One Big Beautiful Bill: Legislation for Historic Prosperity and Deficit Reduction. The Council of Economic Advisers, June 2025. Accessed July 6, 2025. https://www.whitehouse.gov/wp-content/uploads/2025/03/The-One-Big-Beautiful-Bill-Legislation-for-Historic-Prosperity-and-Deficit-Reduction-1.pdfDisclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial, investment, legal, or other professional advice. While we strive to ensure the accuracy and completeness of the content, we make no guarantees regarding its reliability or suitability for any particular purpose. Readers should consult with a qualified financial advisor before making any investment decisions. As a fiduciary Registered Investment Advisor (RIA), we are committed to acting in your best interests. However, past performance is not indicative of future results, and all investments carry risks, including the potential loss of principal.
