Legislative Updates: Key Tax Changes Impacting Families Under the “One Big Beautiful Bill”

As we guide clients through strategic tax planning this year, many have raised thoughtful questions regarding the adjustments, additions, and terminations introduced in the recently enacted “One Big Beautiful Bill” (OBBB). While the legislation spans hundreds of provisions—most of which should be evaluated in consultation with your CPA or tax professional—this summary outlines several notable changes likely to impact the families we serve.

📌 Highlights from the OBBB Related to the Tax Cuts and Jobs Act (TCJA):

• SALT Deduction Cap Expanded The maximum itemized deduction for State and Local Taxes (SALT) has been increased from $10,000 to $40,000, indexed annually for inflation. However, for taxpayers with Adjusted Gross Income (AGI) exceeding $500,000, the deduction is reduced but cannot fall below the original $10,000 threshold. This expanded deduction is temporary and begins to phase down starting in 2030.
• Enhanced Child Tax Credit The Child Tax Credit has been permanently increased to $2,200 per qualifying child, with up to $1,400 designated as refundable. Both amounts are now indexed for inflation.
• Introduction of “Trump Accounts” A new category of tax-exempt savings account for children—referred to in the legislation as “Trump Accounts”—will be funded by the government with a $1,000 initial deposit for children born between 2025 and 2029. These accounts may be used for approved qualified expenses. Additional details are forthcoming.
• New Car Loan Interest Deduction Taxpayers may now deduct up to $10,000 in interest paid on loans for qualifying vehicle purchases made between 2025 and 2028. Phaseouts apply to single filers with AGI over $100,000 and joint filers over $200,000.
• Enhanced Senior Deduction Individuals aged 65 and older may claim an additional $6,000 deduction for tax years 2025 through 2028. Eligibility is subject to an income cap of $75,000 for single filers and $150,000 for joint filers.
• Standard Deduction Increase The standard deduction has been permanently raised, with married filing jointly taxpayers receiving an increase to $31,500. Indexing for inflation begins in 2025.
• Expanded Use of 529 Plan Funds OBBB authorizes the use of 529 account funds for a wider range of education expenses, including elementary, secondary, and homeschooling costs. These accounts may also now be used tax-free to pay for “qualified post-secondary credentialing expenses.”

🚫 Termination of Select Tax Credits:

Several energy- and vehicle-related credits are scheduled for expiration, including:

🔍 Final Thoughts

This overview reflects only a subset of the policy shifts contained in the legislation. Ongoing legal reviews, revisions, and administrative guidance continue to shape the practical application of these provisions. As always, we encourage you to reach out with any questions. Please note that individualized tax advice should be sought in coordination with your CPA or trusted tax professional.