On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law—you’ve probably heard the news from every website, social media platform, or talking head.
The changes from the OBBBA have caused significant stir, and even a bit of worry among retirees, tipped workers, and hard-working families.
So let’s break through the noise. Whether you’re nearing retirement or already enjoying life after work, these sweeping tax changes could impact your financial picture. At True Blue Financial, we’re here to simplify what this legislation means for you and how we can help you navigate it with clarity and confidence.
Let’s break down the tax changes in the One Big Beautiful Bill and what they mean for you.
A Quick Recap: Why This Bill Matters
The OBBBA was designed to extend and expand key provisions of the 2017 Tax Cuts and Jobs Act (TCJA), many of which were set to expire at the end of 2025. But it didn’t just extend those rules. It introduced entirely new opportunities and considerations for individuals, families, and business owners.
Most importantly for our clients, this bill creates a more predictable tax environment, ideal for those entering or already in retirement. Here’s how.
1. Stability in Individual Tax Rates
The TCJA lowered personal income tax brackets, but those cuts were originally temporary. The OBBBA makes them permanent. This includes:
- No change to long-term capital gains or qualified dividend rates.
- Inflation-adjusted brackets starting in 2025.
What This Means for You:
If you’re a high-income earner or planning a phased retirement, this offers much-needed tax planning stability. You can better time Roth conversions, Social Security withdrawals, and income distributions without worrying about shifting brackets.
2. Bigger Standard Deduction—Now and Forever
The standard deduction has been made permanent and slightly increased, starting in 2025:
- $15,750 for single filers.
- $31,500 for married couples filing jointly.
Why It Matters:
Simplifying your taxes just got easier. Most retirees take the standard deduction, so locking in this larger amount means less taxable income and potentially lower taxes throughout retirement.
3. SALT Deduction Cap Expansion—A Boost for Taxpayers in High-Tax States
Previously capped at $10,000, the state and local tax (SALT) deduction cap is now raised to $40,000 through 2029, though it begins to phase out for households earning over $500,000.
Planning Tip:
If you live in a higher-tax state or are transitioning from work to retirement income, this could provide a valuable short-term window for tax savings—especially if you time charitable contributions and deductions accordingly.
4. Temporary Deductions: Tips, Overtime, and Auto Loans
The OBBBA introduces a few surprising deductions—designed to boost working-class taxpayers:
- Up to $25,000 in tips and $12,500 in overtime income excluded from taxable income (2025–2028).
- Car loan interest deduction (up to $10,000/year for U.S.-assembled vehicles).
- $6,000 senior deduction for those over 65 with income under $75,000 ($150,000 for couples).
Should You Act?
Many of these deductions may not apply to you if you’re close to retirement. However, if you or your spouse are still working or plan to downsize vehicles, there are strategic windows to take advantage of these temporary provisions.
5. Charitable Giving: A New Landscape
Charitable contributions get a shakeup with the OBBBA:
- Non-itemizers can now deduct up to $1,000 ($2,000 for couples).
- For itemizers, deductions now must exceed 0.5% of income to qualify.
Why This Matters:
Giving is a key part of many of our clients’ legacy and values. These new rules mean it’s more important than ever to coordinate giving with tax strategy. For example, giving appreciated stock or bundling gifts may yield better results than traditional annual donations.
6. New Opportunities for Children’s Futures
One of the most novel introductions is the creation of unique savings accounts for children under 18. These savings vehicles can be used for:
- Education
- First-time home purchases
- Starting a business
Accounts can be funded with up to $5,000/year, and earnings are taxed at long-term capital gains rates when used for qualified purposes. There’s even a pilot program that automatically gives $1,000 to every U.S. baby born between 2025–2028.
What You Should Do:
If you’re a grandparent, this could be an excellent estate planning or gifting strategy to support your legacy and loved ones.
7. Estate and Gift Tax Changes: A Gift to High-Net-Worth Families
The lifetime estate and gift tax exemption was set to drop back to around $7 million in 2026. Instead, the OBBBA raises it to $15 million per person ($30 million per couple) permanently.
Also preserved:
- Step-up in basis at death (an increase in the value of an asset upon the asset-owner’s death.)
- Annual inflation adjustments.
Your Action Step:
If you’ve done previous estate planning with the expectation of lower exemptions, now’s the time to review and update trusts, wills, and gifting strategies with your advisor and estate attorney.
8. Business Owners: A New Golden Age of Deductions
If you’re still running a business or consulting, several new perks were included:
- Section 199A (20% QBI deduction) is now permanent.
- Expanded capital gains exclusions for small business stock.
- Bonus depreciation increased to 100%.
- Expanded Section 179 expensing ($2.5M cap)
Strategy Tip:
This is a perfect time to evaluate your business structure, compensation strategy, and how your business fits into your retirement transition or succession plan.
9. How True Blue Financial Can Help
Understanding the tax changes in the Big Beautiful Bill is just the first step. At True Blue Financial, our job is to translate this legislation into strategies that serve you—strategies grounded in trust, clarity, and care.
Here’s how we’re helping clients take action:
- Roth conversion timing: Leverage the stability of tax brackets and low-income years for long-term gains.
- Charitable giving strategies: Optimize donations under new rules using appreciated assets or donor-advised funds.
- Estate planning reviews: Align your legacy goals with the new exemption thresholds.
- Investment repositioning: Explore QOZs, small business stock opportunities, and tax-managed portfolios.
- Tax-sensitive withdrawal strategies: Structure income in retirement to minimize your long-term tax burden.
A Final Reminder: “Permanent” Isn’t Permanent
We referred to these changing tax laws from the OBBBA as “permanent” several times in this blog. While the legislation put certain tax acts into law, no legislation can ever be considered truly permanent. Tax laws will continue to change, and some may even be repealed under future administrations. “Permanent” means permanent for now, and an opportunity for you to adapt your tax strategy and make important changes to your plan.
Navigating the Future with Confidence
The One Big Beautiful Bill brings with it both opportunity and complexity. As with any major legislation, its full impact will play out over time—but one thing is clear: those who plan proactively will benefit most.
At True Blue Financial, we believe that stability in retirement isn’t just about markets—it’s about relationships, clarity, and forward-thinking strategies. That’s why we walk with you every step of the way, helping you make sense of the noise and make the most of every opportunity.
If you’re wondering what this new bill means for your retirement, legacy, or investments, let’s talk. Together, we’ll chart a course that keeps your future front and center.
