Explained: The Big Beautiful Bill and Tax Changes that Matter
BY: ETHAN LOHR, CFP® — November, 2025
By now, you’ve probably seen more than one summary of the One Big Beautiful Bill Act. And yes, it’s big. But here’s the real reason — it’s not just a bill or an act… it’s a Bill Act. Double the nouns, double the fun.
Rather than giving you a mind-numbing, continuing-education-style rundown of every provision, I’m zeroing in on the areas most relevant to our audience — the changes that could actually impact your taxes, your planning, and maybe your coffee budget.
And for a little bonus, don’t miss the last section on how not to make a car purchase based on these tax changes. Enjoy!
✔️Permanent Extension of TCJA Brackets & Standard Deduction
When you hear that the lower tax rates and nearly doubled standard deduction from the 2017 Tax Cuts and Jobs Act (TCJA) are now “permanent,” it’s easy to think locked in forever.
In reality, “permanent” in tax law just means the law no longer has a built-in sunset date — it will remain in place until another Congress changes it. That change could happen any time with a simple majority vote in both chambers and the president’s signature.
✔️Child Tax Credit Increase
The One Big Beautiful Bill raises the Child Tax Credit (CTC) from $2,000 to $2,200 per qualifying child starting in 2025. While a $200 bump may not sound dramatic on its own, two important changes make it more impactful:
Indexed to inflation – For the first time, the credit amount will rise automatically each year based on inflation. This prevents the credit from losing value over time and should mean small annual increases without the need for Congress to act.
Higher refundable portion – More of the credit will be refundable, meaning you can receive it even if your tax liability is zero. This especially benefits lower- and moderate-income households, who might not otherwise get the full value.
Who qualifies?
Children must be under age 17 at the end of the tax year.
They must be a dependent, a U.S. citizen or resident, and meet residency and relationship tests.
Income phaseouts still apply: the credit begins to shrink for single filers above $200,000 and married couples above $400,000 (thresholds not changed by this bill).
✔️Enhanced Deduction for Retirees
From 2025 through 2028, taxpayers aged 65 and older can claim an extra deduction of up to $6,000 if filing single, or $12,000 if married filing jointly.
The goal is to help reduce the portion of Social Security benefits that are taxable — particularly for retirees with moderate incomes who might otherwise have 50%–85% of their benefits subject to federal income tax.
What makes this unique
This deduction doesn’t fit neatly into the standard tax categories of:
Above-the-line deductions (which reduce your adjusted gross income before calculating itemized or standard deductions), or
Below-the-line deductions (like itemized deductions, which you claim instead of the standard deduction).
Instead, this enhanced retiree deduction is a standalone adjustment that sits outside those frameworks. It applies in addition to either the standard deduction or your itemized deductions — you don’t have to choose.
Why it matters
Because it’s on top of whatever deduction method you use, this is essentially “pure” taxable income reduction for eligible retirees. For someone in the 22% bracket, the full $12,000 deduction could lower their tax bill by about $2,640 over the four-year life of the provision.
✔️Higher SALT Cap for Itemizers
Starting in 2025, the cap on state and local tax (SALT) deductions jumps from $10,000 to $20,000 for single filers and $40,000 for married couples filing jointly.
What’s included under the SALT cap
State and local income taxes (or sales taxes, if you choose to deduct those instead)
Real estate property taxes on your home, second home, or other real estate
Certain personal property taxes (e.g., taxes based on assessed values of cars, boats, RVs, etc.)
What makes this relevant for you
Many households in our community give charitably at a level that already pushes them into itemizing deductions instead of taking the standard deduction. For those households, the SALT deduction is one more way to lower taxable income — and this higher ceiling allows a much larger portion of property and state taxes to be included alongside charitable gifts and mortgage interest.
✔️Trump Accounts for Kids
The One Big Beautiful Bill Act introduces Trump Accounts — tax-advantaged savings accounts for children.
$1,000 automatic deposit for children born Jan. 1, 2025 – Dec. 31, 2028 once they get a Social Security number.
Families, friends, and employers can contribute up to $5,000 per year ($2,500 max from an employer).
Funds must go into a low-cost U.S. stock index fund or ETF.
Accounts can’t be opened or funded until July 4, 2026. Yes, Trump loves independence day!
Locked until age 18, then convert to a traditional IRA for the child.
Planning note
The free $1,000 is an easy win, but ongoing contributions should be considered alongside other options like 529 plans or custodial accounts, since the money is tied up long-term.
👎Tax Credits, EVs and a Bad Decision
The One Big Beautiful Bill Act sunsets most federal EV tax credits after September 30, 2025. That’s why EV dealers are already running ads urging buyers to “act now” before the $7,500 credit disappears.
On top of that, OBBBA added a temporary auto loan interest deduction — up to $10,000 annually for loans on U.S.-assembled vehicles — which applies from 2025 through 2028.
In theory, you could rush out, grab a Cybertruck, claim the credit, and deduct the interest on your loan.
I wouldn’t — especially when the vehicle in question could saddle you with a high-interest loan and a value that’s been falling off a cliff over the past year. That’s a recipe for some nasty buyer’s remorse. Don't let a couple of shiny tax perks push you into a decision you'll regret.
And the same goes beyond EVs. Whether it’s deciding how many babies to have, how much home to buy, or how to best save for the future, these tax changes may offer a new angle to consider — but that’s all they should be: considerations, not the deciding factor. The best financial decisions still come from your long-term goals, your budget, and a clearly-defined plan!
- Ethan M Lohr, CFP®
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