July 2025

What the One Big Beautiful Bill Act Could Mean for You

After months of arguing, amendments, drama, and intrigue, Congress recently passed, and President Trump signed into law, the One Big Beautiful Bill Act, which builds on the 2017 Tax Cuts and Jobs Act (TCJA) and introduces several new provisions impacting individuals, families, retirees, and business owners.

Although there are many critical aspects of the legislation that will affect the finances of most Americans, the fundamental component is that it makes the 2017 individual tax cuts permanent, avoiding the significant tax increases a majority of households would have experienced in 2026 with the expiration of the TCJA. It also increases the standard deduction to $15,750 for single filers and $31,500 for married couples filing jointly. The child tax credit will increase to $2,200 per child beginning in 2025 (with up to $1,700 refundable, meaning you don’t have to pay taxes to receive the credit), and both the estate and gift tax exemptions will rise significantly to $15 million per individual and $30 million per couple, adjusted for inflation, with no sunset provisions. For small business owners, the 20% pass-through income deduction under Section 199A—originally set to expire after 2025—has now been made permanent, another aspect of the law that prevents large tax increases for business owners.

For new parents, there’s a program called “Trump Accounts” which provides a $1,000 government-funded deposit for every child born between 2025 and 2028. These accounts allow additional contributions each year from parents (up to $5,000) and employers (up to $2,500 tax free for the employee), grow tax-deferred in a U.S. equity index, and can be used later for qualified purposes (subject to long-term capital gains).

The bill also includes targeted relief for service workers and those purchasing U.S.-assembled vehicles. Tip income and overtime pay can now be partially deducted from taxable income for certain workers, and up to $10,000 in interest on new auto loans may be deducted between 2025 and 2028 (subject to income limits and other restrictions).

Homeowners in high-tax states will benefit from an increase to the SALT (State and Local Tax) deduction cap, which jumps from $10,000 to $40,000 starting in 2025, and then gradually increases through 2029 before reverting to the current $10,000 cap. Like other provisions in the bill, the ability to apply the deduction phases out based on an income cap (for SALT, this is $500,000).

Seniors collecting Social Security will see up to $6,000 of that income exempt from taxation, with the deduction phasing out for higher earners. According to the Social Security Administration, the majority of Social Security recipients will no longer pay federal taxes on their benefits.

Moving forward, student borrowers will face some changes as well. The bill introduces new limits on federal loans for graduate and professional degrees and eliminates certain deferment options. However, Pell Grants will expand to include short-term job training programs, which may benefit students pursuing nontraditional paths. This student loan provision, alongside measures such as work requirements, reductions to Medicaid and SNAP (food assistance), and the elimination of tax incentives for clean energy (including credits for purchasing battery-powered vehicles), aims to offset the trillions of dollars allocated to tax reductions.

The legislation encompasses nearly 1000 pages and like everything else in Washington, D.C. these days, the devil is in the details. While it is in our nature to have concerns about the bill’s impact on the debt and deficit, we expect that there are excellent opportunities for Peak clients to realize higher tax savings while at the same time taking advantage of some of the ancillary changes.

As the rules and regulations are clarified, we stand ready to help you determine the steps you should consider to maximize the financial benefit to you. In short, there’s lots of planning to do! Please feel free to reach out to us to collaborate on how the legislation may impact your specific circumstances – we’re at your service.


Disclosures:
This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website at  www.adviserinfo.sec.gov. Past performance is not a guarantee of future results.

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