I Was Gonna Make a Webinar About the OBBBB Bill, But Then I Fell Asleep
Table of Contents:
Part 1: Biggest Updates for Your 2025 Tax Return - Changes to standard deduction, 55+ deduction, and SALT deduction increases
Part 2: Temporary Perks That Feel Like a Coupon That Expires Too Soon - Charitable giving for non-itemizers, no taxes on tips, no taxes on overtime, auto loan interest deductions, and the phaseout of green energy incentives
Part 3: Parents, Planners, and Professional Students — This One’s for You - a slightly bigger child tax credit and expanded uses for 529 education plans
Part 4: One more for the parents: “Trump Accounts” (a.k.a. The Baby IRA With Baggage) - Rules for before your kiddo turns 18, conversion options after age 18, the $1000 baby bonus, and a few outstanding questions
Part 5: If You’re Still Reading This, Congratulations — You Now Have a Master's Degree in Tax Law (or, at least, you get gold stars from us) - Income tax bracket changes, capital gains updates, mortgage interest deduction info, itemized deduction changes, a roundup of topics we don’t even have time to get into, and broader thoughts on what’s missing from the plan
Wrapping It Up: The Only Thing Longer Than This Blog Is the Bill Itself - a short summary and general permission to pour yourself a cold one
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Look, I wanted to make a webinar. I really did. But the OBBBB bill (which, yes, sounds like someone dozing off mid-sentence) is just... mind-numbingly boring. And yet, somehow, it’s also a financial dumpster fire? A fiscally irresponsible, dry-as-toast, acronym-laden mess that manages to cut important programs while doing almost nothing for regular folks like you and me—unless you count making your tax planning more complicated.
In this blog post, I’m not going to make you suffer through every last detail of which programs got gutted (though spoiler alert: if it helps marginalized folks, it probably got slashed). Instead, we’re going to zoom in on the changes that are the most relevant for your wallet, your tax return, and how you plan your financial life going forward. Because while Congress might be asleep at the wheel, you don’t have to be.
Let’s break down the highlights (or, sometimes, lowlights) of this bill so you know what you’re dealing with.
Part 1: Biggest Updates for Your 2025 Tax Return
While OBBBB didn’t have the decency to be interesting, it did permanently codify a bunch of temporary tax changes from the 2017 Tax Cuts and Jobs Act (TCJA), as well as add a few new tidbits that kick in for your 2025 return.
💸 The Standard Deduction Just Got a Permanent Glow-Up
Congress did that thing where they throw you a bone so they can say “See? We helped!” The standard deduction amounts, which got increased back in 2017 on a temporary basis (previously meant to revert after December 2025), are getting a permanent increase. Here’s where the standard deduction amounts landed for 2025:
Single: $15,750
Head of Household: $23,625
Married Filing Jointly: $31,500
This bigger deduction means fewer people will itemize, some middle income families will see a more permanent tax break, and the government gets to say they “simplified” the tax code.
👵🏼 Bonus Deduction for the 55+ Club (2025–2028)
If you’re 55 or older and just so tired of the government’s nonsense, here’s a little something for your trouble: a brand-new $6,000 deduction per person. That’s $12,000 for couples if both of you are 55+.
Before you ask:
Yes, it’s in addition to the usual age 65+/blind deduction.
No, it’s not an above-the-line deduction, so it won’t reduce your AGI. That means it won’t help lower how much of your Social Security is taxed or what you pay for Medicare.
Yes, it phases out if you make over a certain amount of money each year:
Single / Head of Household: phases out between $75,000–$175,000 of AGI
Married Filing Jointly: phases out between $150,000–$250,000 of AGI
It’s like a little thank-you note from Congress that says, “We acknowledge you’re aging, but not enough to make this easier on you.” Enjoy it, while it lasts; this provision is set to expire in 2028.
🧂 SALT Deduction Cap: Loosening the Lid (2025–2029)
The much-hated SALT cap is getting a bit of relief as well. For the uninitiated: the SALT deduction lets you deduct what you pay in State And Local Taxes (there’s the acronym right there–SALT) from your federal taxable income. However, since 2018, it’s been capped at a measly $10,000, no matter how high your actual tax bill was. You didn’t hear it from me, but word on the street is that the low SALT deduction explicitly targeted folks in high cost of living areas, particularly those with higher state taxes… “blue states”, in most cases.
Here’s how the change plays out:
The new cap is $40,000 for Single, Head of Household, and Married Filing Jointly households; $20,000 for Married Filing Separately
There’s an annual inflation boost: The cap increases by 1% each year from 2026 through 2029
But wait! There’s a phasedown trap: If your AGI is $500k–$600k (S/HOH/MFJ) or $250k–$300k (MFS), your SALT deduction starts shrinking back to that dreaded $10k (or $5k) cap.
Pass-through entities such as businesses are still allowed to work around the SALT cap entirely, so if you have a small business, be sure to check with your CPA to determine what’s changed for you!
🧠 Planning Ahead So You Don’t Accidentally Pay for a Billionaire’s Tax Cut
As for how the biggest changes impact your financial plan, here are a few items we’ll caution folks to be aware of:
Roth Conversions Just Got Trickier. If you’re doing Roth conversions, pay close attention to your AGI—especially if you’re near that $500k cliff. Remember: crossing that line could mean losing access to the expanded SALT deduction and other benefits. Because nothing says “fun tax season” like finding out you blew a deduction because you converted $5k too much in December.
Lower AGI, Less Pain With so many deductions phasing out based on AGI, it’s time to get strategic. Can you defer income? Max out pre-tax retirement contributions? Write off that business expense you've been ignoring? Great—do it. Lower AGI = more deductions = fewer tears in April. (Note: we’re not big advocates of deliberately making less money to save on taxes. But if you’re making a cool half a mil and not maxing out as much 401k and IRA magic as you can, it might be time to make some changes.)
Don’t Sleep on Itemizing. Thanks to the SALT cap increase and expanded deductions, itemizing might actually make sense again for some folks. So if you’ve gotten lazy about tracking expenses (hi, same), this is your friendly nudge to start keeping receipts for stuff like medical expenses, charitable donations, and property taxes + state income taxes (SALT, baby!). Start now, and maybe even retroactively go back to the beginning of 2025 and start documenting. Yes, it’s a hassle. But it’s at least a hassle that might save you some money.
Part 2: Temporary Perks That Feel Like a Coupon That Expires Too Soon
Okay, now that we’ve gotten through the main structural tax changes, let’s talk about the limited-time-only goodies Congress threw in to sweeten the deal. These are the flashy little deductions that sound generous, but (and there’s always a but) they come with caveats, phaseouts, fine print, and—of course—an expiration date.
These perks are all available for tax years 2025 through 2028, unless Congress decides to renew them, forgets about them (jk), or trades them for something worse in a future budget deal (ope, more serious). So enjoy them while you can!
❤️ Charitable Giving for Non-Itemizers!
After years of getting the short end of the stick, non-itemizers (a.k.a. most of us) finally get to deduct a little bit of charitable giving again. Here’s the basics:
$1,000 deduction for Single/Head of Household
$2,000 deduction for Married Filing Jointly
It’s a below-the-line deduction, so it won’t lower your AGI, but it will reduce taxable income.
It’s not subject to the usual 0.5% floor for itemized charitable deductions.
BUT (you knew it was coming):
Donations must be cash only (no clothes, no canned goods, no thrift store donations, etc).
Must go to a qualified 501c3 charity (public or private), but not to a supporting organization or donor-advised fund.
Basically: Give generously, but read the fine print and save your receipts if this writeoff is important to you.
💵 No Tax on Tip Income (Seriously. Kind of.)
If you work in a tipped profession, congrats—you’ve been noticed! For the years 2025–2028, you can deduct up to $25,000 in tip income. Yes, really.
Here’s how it works:
It’s a below-the-line deduction, so again, doesn’t lower AGI.
Only applies to jobs where tipping is “traditionally and customarily” expected—the IRS will define this more clearly, but think servers, bartenders, valets—not CEOs who happen to get Venmo’d after a golf game.
Tips must be voluntary, not required, and not part of a specified service business (think lawyers, consultants, and your friendly neighborhood financial planners).
Important note: if your AGI is over $150k (Single/HOH) or $300k (MFJ), your deduction gets reduced by $100 for every $1,000 over the limit. (Potentially unpopular hot take: GOOD. We want our service workers to get some good tax benefits here, but if you’re making $300k a year, thank you in advance for helping fund our government programs!)
⏰ Overtime Deduction (For the Hustlers)
If you’re putting in those extra hours, good news: there’s a new deduction for overtime pay that’s above your regular rate. (So the extra $10/hour when you’re working past your usual 9-to-5? That’s the part that counts.)
Max deduction:
$12,500 for Single/HOH
$25,000 for MFJ
Also phased out once you cross that $150k / $300k AGI line.
It’s a below-the-line deduction (are you sensing a pattern yet?).
Importantly:
You still pay payroll taxes on this income (Social Security, Medicare, etc.)
It’s still included in AGI, so it could affect other income-based thresholds (like Medicare premiums, retirement contribution limits, etc.)
And states? They might still tax it. The fun never ends.
🚗 Auto Loan Interest Deduction (Yes, This Is Real)
And in a surprising twist, Congress brought back something we haven’t seen since... the ‘80s (it was phased out in 1986 to be exact)? Introducing the Auto Loan Interest Deduction, for real humans who have to finance a vehicle.
Deduct up to $10,000 in interest on qualified auto loans (makes sense, tbh–we already do this with mortgage interest).
Applies to new or refinanced loans taken out after Dec. 31, 2024 on cars, trucks, SUVs, and even motorcycles.
BUT: the vehicle must be assembled in the U.S.—because politics.
Leases don’t count (sorry, monthly-payment-maximizers).
Deduction phases out between:
$100k–$149k AGI for S/HOH
$200k–$249k AGI for MFJ
Now, please don’t take this as carte blanche to buy a car you can’t afford just for the tax benefits–but it’s nice to see some relief for lower- and middle-income folks who have to make this kind of big purchase in today’s spicy interest-rate environment.
📝 In Summary: Use It or Lose It
All of these perks expire after 2028 (unless extended), and none of them are guaranteed to return. So if you can take advantage of them, do it while you can—and maybe make a spreadsheet to keep track, because this stuff is weirdly specific.
🌎 Pumped About Those New Deductions? Say Goodbye to the Clean Energy Incentives in Return…
Because nothing says “future-focused” like rolling back climate incentives, OBBBB includes a few quiet-but-significant cutbacks to clean energy tax credits. If you were planning to go green, better move fast—or prepare to pay full price for saving the planet.
Here’s what’s getting the axe (or the stopwatch):
Electric Vehicle Credit: Up to $7,500 for new EVs and $4,000 for used—but your vehicle must be acquired by September 30, 2025. After that? Back to full sticker shock.
EV Charging Equipment Credit: Up to $1,000, but your gear must be installed and in service by June 30, 2026.
Home Energy Efficiency Credit: Up to $2,000 for things like HVAC upgrades, insulation, and energy-smart windows—but everything must be placed in service by December 31, 2025.
Residential Clean Energy Credit (solar panels, geothermal, wind, etc.): Still up to 30%—but it only counts if your system is paid for by December 31, 2025. (Because nothing motivates sustainability like a financial deadline.)
So if you were planning to save the planet and get a tax break in the process, you've got roughly one fiscal year to make it happen.
Part 3: Parents, Planners, and Professional Students — This One’s for You
If you’re raising kids, paying tuition, or trying to stay employable without selling a kidney, the OBBBB bill does have a few changes worth bookmarking. For once, 529 plans are actually getting more flexible — and yes, that’s about as wild as this bill gets.
Here’s what’s new:
👶 A Slightly Bigger Child Tax Credit (But Don’t Get Too Excited)
In 2025, the Child Tax Credit is getting a modest bump—from $2,000 to $2,200 per kid. And starting in 2026, it’ll be indexed to inflation, which is basically Congress *finally* admitting that kids keep getting more expensive.
But before you start planning that extra box of diapers:
The refundable portion (the part you can actually get back as a refund) stays capped at $1,700 in 2025. So... yay?
The income phaseouts are a little more generous:
$200k–$243k for Single and Head of Household
$400k–$443k for Married Filing Jointly
BUT those phaseouts are not indexed to inflation—so enjoy them while they last, I guess.
TL;DR: A bit more help for parents, but not exactly a game-changer. Unless your kid starts paying rent, in which case, congrats.
🎒 529 Plans Just Got a Little More Useful
Traditionally, 529 accounts are a great way to save for qualified education expenses, especially if your kid was headed to college or private school. Now there are a few extra opportunities to use these accounts, especially if you’re homeschooling, tutoring, or navigating special education costs.
Starting now (yes, already in effect), you can use 529 funds for a wider range of K–12 expenses, not just tuition:
Curriculum, books, and instructional materials
Tutoring costs, even if outside the home
Standardized testing fees
Postsecondary coursework while still in high school
And for kiddos with disabilities and learning differences: speech, occupational, physical, behavioral therapy — all now count as “qualified education expenses”!
🚨 Important note: There’s currently a $10,000 annual aggregate limit for any K-12 educational expenses, which will increase to $20,000 in 2026. Until then, don’t go overboard.
The new rules apply to any 529 distributions made after the bill’s passage, even if the expenses themselves were already incurred. (So maybe don’t toss those receipts just yet.)
🎓 Planning to Upskill or Re-Skill? Your 529 Might Help With That, Too
In a rare moment of acknowledging that education takes so many beautiful forms, Congress expanded 529 use for career credentials and continuing education — whether you're jumping careers, maintaining a license, or finally taking the plunge on that CFP you’ve been eyeing.
Qualified expenses now include:
Tuition, books, and fees for credential programs
Exam costs and test prep
Continuing education for maintaining a certification
Eligible programs include those that are:
Industry-recognized,
Accredited, or
Officially blessed by the U.S. government (broad, we know)
It’s not revolutionary, but it is refreshingly practical — which makes it one of the few parts of this bill that feels like it was written by someone who has met a real person.
Part 4: One more for the parents: “Trump Accounts” (a.k.a. The Baby IRA With Baggage)
(First of all, yes, they're really called that, ugh.)
As part of the OBBBB rollout, we got a brand new kind of tax-advantaged account — creatively named the Trump Account — aimed at building long-term savings for kids. On the surface, it’s an interesting idea. But the rules? Let’s just say they’re extra.
Here’s what we know so far:
🍼 Before the Year the Beneficiary Turns 18:
You (or someone else) can contribute up to $5,000/year per beneficiary, including $2,500/year in employer contributions (Government and charitable organizations can contribute above that limit — these amounts are excluded from income)
Contributions from individuals are not tax-deductible
No withdrawals are allowed before the year the beneficiary turns 18 — not even for emergencies or education.
Investments are limited to the boring (IMO–in a good way) stuff: U.S. equity index funds that do not use leverage and have fees lower than 0.1%. (So basically, your kid gets a micro-IRA that can only invest in low-cost index funds).
🎓 After Age 18: Surprise, It’s an IRA (With Strings)
Once the beneficiary turns 18, Trump Accounts morph into something resembling a traditional IRA, with a few quirks:
Early withdrawal penalties apply before age 59½
Contributions you made directly are treated as after-tax contributions
Other contributions (like from an employer or the gov’t) and investment growth are pre-tax — and get taxed later as you make withdrawals
Required Minimum Distributions (RMDs) and the 10-year rule will likely apply
These don’t get aggregated with other IRAs for figuring out taxation — which means even more complexity come withdrawal time.
💰 $1,000 Baby Bonus (But You Have to Ask for It)
The federal government is also offering a $1,000 starter contribution to every U.S. citizen born between 2025 and 2028 — but it’s not automatic:
You’ll need to opt in and apply
A Social Security number is required
More guidance is coming on how to claim this — and we’re all waiting to see what hoops folks will need to jump through to get the money (cue ominous foreshadowing music)
🤔 Still Unclear: Some Big Questions
Because nothing says “great policy design” like “TBD” in the footnotes, here’s what we still don’t know:
Can you convert a Trump Account to a Roth IRA someday?
How exactly do you make the election to get the $1,000 credit?
If you're self-employed, can you be your own employer and contribute to your kid’s Trump Account like a boss (literally)?
I suppose we’ll all find out together.
Part 5: If You’re Still Reading This, Congratulations — You Now Have a Master's Degree in Tax Law (or, at least, you get gold stars from us)
We know. This is the longest blog post in history. But what do you expect when Congress drops nearly 1,000 pages of legislation and calls it a “budget”? We’re doing our best to spare you the worst parts — you’re welcome.
So, if you’ve made it this far: bless your patient, detail-oriented heart. And buckle up, because this section covers the tax changes that kick in starting in 2026 — the year when some of OBBBB’s bigger structural moves go live.
📉 Income Tax Brackets: TCJA Lives On (But a Little Nicer?)
Good news for fans of slightly lower taxes — the Trump-era TCJA individual income tax brackets are now permanent. That includes:
The familiar 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets
In 2026, the 10% and 12% brackets get an extra inflation bump, which might make your effective tax rate go down slightly
Will you notice? Probably not. But hey, it’s something. ✨
📈 Capital Gains: Pay Attention or Pay More
There were no changes to the capital gains tax brackets… but that actually matters more than you think.
Why? Because in past years, the income thresholds for ordinary income and long-term capital gains were pretty close. That made tax planning simpler — if you were in the 12% ordinary income bracket, you were likely safe to harvest gains in the 0% capital gains bracket.
But not anymore. Now there’s a wider gap between those thresholds, which means:
It’s possible to pay 15% on capital gains while still being in the 12% ordinary income bracket.
Yes, you read that right. You could now owe more tax for capital gains than for ordinary income… which means if you harvest gains and you’re in a lower tax bracket, double-check which side of the capital gains threshold you fall on, or risk accidentally paying the IRS more than necessary.
🏠 Mortgage & Housing-Related Deductions
Homeowners: here’s what’s changing for you in 2026:
The $750,000 mortgage interest deduction cap is now permanent
Home equity loan interest is only deductible if used for building or improving the home
Mortgage insurance premiums are deductible again — just for 2026 (weird, but we’ll take it)
👶 Child & Dependent Care: A Slight Win for Families
Starting in 2026:
The Child and Dependent Care Tax Credit jumps from 35% to 50% of eligible expenses
… but the credit now starts phasing down at $15,000 of AGI (instead of $43,000+ like before)
The Dependent Care FSA contribution limit rises to $7,500 (or $3,750 for married filing separately)
🌪️ Casualty Losses
You’ll be able to claim personal casualty losses again — but only if it’s tied to a declared disaster. So if your grill explodes on the 4th of July? That’s still on you.
📉 Itemized Deductions: Some Come Back, Some Die Forever
Miscellaneous itemized deductions are permanently repealed (RIP investment management deductions), but: if you can justify those costs as a business expense, they’re still fully deductible. As a reminder, this means that you CANNOT deduct:
Unreimbursed employee travel, mileage, or lodging
Union dues
Professional society dues or licensing fees
Job search expenses (in your current profession)
Tax prep software, e-filing fees, and the cost of legal/tax advice for preparing your taxes
Legal fees related to producing taxable income or managing income-generating property
Educator expenses will now be available as an additional itemized deduction (thank you, teachers!!)
🧾 Other Changes We don’t even have time to get into, holy heck.
Starting in 2026, your charitable contributions must exceed 0.5% of AGI before they’re even considered deductible, and there are some other tricky rules in place–so if donations are a big part of your *tax saving strategy*, be sure to do some more thorough research before writing that mega check or starting your donor-advised account
Starting in 2026, you’ll get a minimum $400 deduction for active qualified business income for those who materially participate in running a small business, and the 20% QBI deduction is made permanent starting in 2026–but with some changes to the phaseout ranges and treatment of specialized service businesses.
There have been other changes to the Alternative Minimum Tax (AMT) system, but we don’t have time to get into that–and if you pay AMT, PLEASE get a CPA to help anyway!
The Estate and gift Tax exemption was increased to $15M per person in 2026, which means that a married couple can now pass on a total of $30M without any Federal taxes happening.
There are other new rules and regulations for Qualified Opportunity Funds (QOFS), Qualified Small Business Stock, and Scholarships-granting organizations.
High earners (in the 37% bracket) face a reduction of total itemized deductions.
For our friends with disabilities, there have been other changes made to the ABLE accounts program, including the ability to roll over unused 529 funds into an ABLE account.
🎓 Other TCJA Provisions That Survived the Axe
Some TCJA-era goodies are sticking around a little longer, and honestly? We’re not mad about these:
Student Loan Forgiveness (Death or Disability): Still excluded from income, so there’s no tax bomb if a loan is discharged due to death or permanent disability. A rare example of tax policy meeting basic human decency.
Employer-Paid Student Loan Assistance: Your employer can still cover up to $5,250/year of your student loan payments tax-free. If your company offers this, take the money and run (to your loan servicer).
100% Bonus Depreciation: Businesses can fully expense certain assets placed in service after January 19, 2025. Yes, it’s oddly specific — because Congress. But it’s great news if you like big write-offs and spreadsheets.
🏛️ What Didn’t Make It In (But Should Have)
Let’s start with the obvious: this was a golden opportunity to fix some glaring, long-standing issues in our tax code. But instead of seizing the moment, Congress said, “What if we just kinda... didn't?”
Here’s a short list of what they conveniently ignored:
No expansion of the Earned Income Tax Credit (because apparently helping working families is too expensive).
No increase to the refundable portion of the Child Tax Credit (even though kids don’t get cheaper, and last I checked, children still exist).
No reforms to how wealth is taxed—capital gains, carried interest, trust loopholes? All safe and sound. Sleep well, hedge funds.
No moves to close the corporate tax loopholes that let giant companies pay less tax than your local coffee shop.
And despite calls for a “billionaire minimum tax”? Nothing. Zilch. Bezos and Musk continue to pay less tax, as a percentage, than your Uber driver.
🪄 Tax Planning for the 1%: Still Alive and Thriving
Meanwhile, if you’re rich enough to have a family office and a team of CPAs, OBBBB gave you nothing to worry about. In fact, it may have just handed you more opportunities to legally somersault through the tax code.
A few fun facts:
The pass-through workaround for SALT? Still alive and well. If you own an LLC or S-Corp, congrats—you can still deduct more state taxes than the cap allows.
No new surtaxes on ultra-high income. They flirted with it in draft stages, but ultimately backed away like a senator from a TikTok account.
Estate tax thresholds? Increased. So go ahead and pass on those millions, tax-free (as long as you do it strategically).
🧍🏽♀️ So… Who Is This Bill Really For?
It’s dressed up to look like a middle-class win—expanded deductions! Bigger child tax credit! SALT cap relief!
But dig a little deeper, and it’s clear: this bill was carefully engineered to give just enough crumbs to regular people to get a good headline, while leaving the banquet table untouched for the wealthy and well-connected.
If you earn just enough to be “comfortable” but not enough to hire a tax strategist, this bill may actually make your life more complicated—not less.
🏁 Wrapping It Up: The Only Thing Longer Than This Blog Is the Bill Itself
We’ve made it. If you’re still reading, congratulations — you’ve officially outlasted most members of Congress when it comes to understanding what’s in this thing.
The OBBBB bill is massive, messy, and not what most of us would’ve chosen if fiscal responsibility and equitable tax policy were actually priorities. But like it or not, it’s here — and it’s reshaping the tax landscape in ways that will ripple through your finances for years to come.
We’ll be watching for updates, technical guidance, and (fingers crossed) some cleanup legislation. But for now, your best move is to stay informed, stay organized, and maybe start tracking your medical expenses and charitable donations a little earlier this year.
Because when Congress makes tax policy this complicated? Planning is protest.