What’s in the One Big Beautiful Bill?
- Doug Oosterhart, CFP®
- Jul 29
- 4 min read
On July 4, President Trump signed his “One Big Beautiful Bill[1]” into law. You're likely wondering how this bill might affect you, so I thought it would be helpful to share the parts of the bill that are likely to impact most of us. As usual, I will steer clear of political rhetoric as much as possible since none of that matters from where we sit today, given that this is now the law of the land. Let’s go through the highlights.
Extension of the Tax Cuts and Jobs Act Individual & Corporate Rates
During President Trump’s first term, he signed the Tax Cuts and Jobs Act (TCJA) into law, which lowered taxes on individuals and corporations across most income tax brackets. This new bill makes those lower tax rates permanent[1a+2], providing some certainty and stability for households and corporations when it comes to future tax planning.
The increased standard deduction amounts[1b] have also been made permanent, increasing to $15,750 for single filers and to $31,500 for married filing jointly (MFJ) for the 2025 tax year. These amounts will be adjusted for inflation in future years.
State and Local Tax (SALT) Deduction Increased
One form of welcome tax relief, especially in higher tax states, is that this new law dramatically increases the state and local income tax deduction[1c] from $10,000 to $40,000. This deduction amount will increase annually by 1% through 2029, at which point, it will revert back to $10,000 in 2030, unless otherwise extended.
The full SALT deduction is available for those with modified adjusted gross incomes (MAGI) up to $500,000 in 2025 and begins to slowly phase out above that amount.
No Tax on Social Security?
While the bill does not eliminate taxes on Social Security benefits (despite some misleading phrasing from SSA), there is a provision in the bill that adds a new tax deduction for seniors[1d] during the 2025-2028 tax years. More specifically, the bill allows for individuals (or married couples) age 65 and older to deduct an additional $6,000 ($12,000 if MFJ) if their MAGI is less than $75,000 ($150,000 if MFJ), with the deduction slowly phasing out at incomes above those limits.
Child Tax Credit Increased
The child tax credit[1e] has now been permanently increased to $2,200 in 2025 and will be indexed to inflation for future years. This credit remains partially refundable, and the refundable portion is indexed to inflation as well.
Estate and Lifetime Gift Tax Exemption Amounts Increased
Under the 2017 TCJA legislation, the estate and lifetime gift tax exemption amount[1f+3] increased to approximately $14 million (M) per person ($28M per couple) in 2025 and was scheduled to reset to about $7M per person in 2026. Under this new legislation, the estate tax exemption amount is now permanently increased to $15M per person ($30M per couple) starting in 2026 and will continue to be adjusted for inflation moving forward.
Qualified Business Income Deduction is Now Permanent (for Business Owners)
The Qualified Business Income deduction[1g], originally introduced in the TCJA, has now been made permanent with the deduction rate remaining at 20%. This deduction is subject to income thresholds and other restrictions.
Personal Car Loan Interest is Now (Sometimes) Deductible
For the years 2025 through 2028, car loan interest—applicable exclusively to new vehicles with final assembly completed in the United States[4], plus other restrictions—is now deductible[1h+5] up to $10,000 per year, and you do not need to itemize to qualify for this deduction. This deduction phases out for those with MAGI above $100,000 for single filers and $200,000 for MFJ. This interest deduction appears to apply equally across all vehicle types, including electric vehicles.
The Electric Vehicle (EV) Tax Credit Is Being Eliminated
One tax credit being eliminated as part of this bill is the clean vehicle credit[1i+5], commonly known as the electric vehicle tax credit. Under previous legislation, the potential tax credit was for up to $7,500 for new EVs and $4,000 for used EVs. Those credits will be eliminated for purchases made after September 30, 2025, unless extended by future legislation. That being the case, if you’ve been considering the purchase of an EV, the window to capture this credit is closing.
To be sure, many other changes are included in this massive bill. I've attempted to cover only the items that will impact most clients, but if you’re interested in seeing what else is in the bill, The Tax Advisor, published by the AICPA, offers a more comprehensive look at most of the changes.
[1] Congress.gov
[1a] Extension of TCJA (page 216)
[1b] Standard Deduction Amounts (page 217)
[1c] SALT Deduction (page 244)
[1d] Senior Deduction (page 218)
[1e] Child Tax Credit (page 221)
[1f] Estate and Gift Tax Exemption (page 227)
[1g] Qualified Business Income (page 224)
[1h] Car Loan Interest (page 263)
[1i] Electric Vehicle Tax Credit (page 462)
[2] Throughout this note, “permanent” simply means that these changes do not expire. They are, however, subject to change via future legislation.