What Is the One Big Beautiful Bill Act (OBBBA)?
Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) introduced sweeping tax reforms that impact individuals, retirees, and high earners. Some changes are permanent, while others are temporary through 2028, making year-end tax planning more important than ever.
At Trust Point, we are watching these developments closely to help our clients simplify and secure their financial futures.
Key Tax Changes Under OBBBA
Here are the most notable updates included in the law:
- Lower tax brackets remain permanent (avoiding the scheduled 2026 increase).
- Higher standard deduction remains permanent and inflation adjusted.
- Temporary $6,000 senior deduction (2025–2028), subject to income thresholds and those aged 65+.
- SALT deduction cap increased from $10,000 to $40,000 (until 2029) for all taxpayers, but can especially benefit those in high-tax states (subject to phase-outs). In 2030, the deduction cap will return to $10,000.
- Charitable giving incentives maintained, including Qualified Charitable Distributions (QCDs) from IRAs.
Who Benefits Most From OBBBA?
Retirees and Seniors (65+)
- Larger standard deduction and the new $6,000 temporary deduction may significantly reduce taxable income.
- Opportunity to donate up to $108,000 through QCDs in 2025 directly from IRAs to qualified charities .
- These provisions create strong opportunities for charitable planning and income management.
High Earners
- Benefit from permanent lower tax brackets.
- May gain more flexibility from the higher SALT deduction cap, depending on income.
- Can explore advanced strategies like Roth conversions, gifting appreciated assets, and income timing to maximize savings.
Year-End Tax Planning Strategies for 2025
To take advantage of OBBBA before December 31, consider these strategies with your financial advisor:
- Standard Deduction vs. Itemizing: Compare your deductions carefully. For many, the expanded standard deduction is now more beneficial.
- Roth Conversions: With lower brackets preserved, now may be an ideal time to convert traditional retirement accounts to Roth, locking in tax-free growth.
- Maximize Retirement Contributions: Take full advantage of 401(k), IRA, or other retirement savings accounts while limits are unchanged.
- Charitable Giving: Use QCDs, donor-advised funds, or appreciated securities to reduce taxable income and support the causes you care about.
- Income and Expense Timing: Shift income or deductions between 2025 and 2026 to stay under critical income thresholds and maximize available credits.
What to Watch Out For
- Phase-outs: Many deductions and SALT relief benefits phase out at higher incomes.
- Temporary Provisions: Some OBBBA benefits expire after 2028—plan with both short- and long-term goals in mind.
- Ripple Effects: Roth conversions, QCDs, or accelerating income may affect Medicare premiums, Social Security taxation, or other benefits.
The Bottom Line: Why OBBBA Matters for You
The One Big Beautiful Bill Act (OBBBA) creates real opportunities for year-end tax savings, especially for retirees and high earners. But because many provisions depend on income thresholds, timing, and coordination with other planning tools, a one-size-fits-all approach won’t work.
At Trust Point, we help clients navigate these complexities with personalized guidance. If you’re ready to see how OBBBA impacts your year-end planning, let’s talk.
