What the "One Big Beautiful” Bill Means for Your Wallet

Big changes are coming to the tax code. A sweeping new bill has locked in lower tax rates for the long haul, while adding fresh incentives for families, seniors, and small business owners. But it’s not all good news: a few popular credits are on the chopping block, and budget cuts will impact key programs. Here’s a breakdown of what’s in, what’s out, and what it could mean for you.

Tax Cuts Extended

The headline from the new bill is the permanent extension of the 2017 Tax Cuts and Jobs Act. Originally set to expire at the end of 2025, these lower tax rates are now here to stay. For investors and planners, this brings welcomed certainty to the US tax code for the foreseeable future.

Several key provisions were also increased:

Standard Deduction: Now $31,500 for married couples filing jointly, and $15,750 for single filers.
Estate & Gift Tax Exemption: Doubled to $30 million for married couples and $15 million for individuals, indexed to inflation.
Child Tax Credit: Raised from $2,000 to $2,200 per child, and will be indexed to inflation starting in 2026.

State and Local Tax (SALT) Deduction

This was one of the most debated elements of the bill. For those who itemize, the SALT deduction will temporarily increase from $10,000 to $40,000 annually, with a 1% bump each year through 2029. In 2030, it reverts back to the $10,000 limit. While income phaseouts apply above $500,000, this is a major win for many taxpayers in high-tax states like California, New York, and New Jersey.

Bonus for Seniors

Taxpayers over age 65 could benefit from a new $6,000 deduction for individuals earning up to $75,000 in modified adjusted gross income ($150,000 for married couples). The deduction phases out above these limits, but provides meaningful relief for retirees paying tax on Social Security benefits. This provision is in place through 2028.

Baby Bonus

For babies born in 2025 through 2028, the government will deposit $1,000 into a new savings account. Parents can contribute up to $5,000 per year, with employers allowed to pitch in up to $2,500. While rollout will take time, initial adoption of these accounts is expected to be modest.

Tip Income, Overtime Pay, and Auto Loan Relief

Tip Income: Workers earning $25,000 or less in qualified tips may now deduct a portion from their taxes.
Overtime Pay: Up to $12,500 of overtime wages may be tax-deductible.
Auto Loans: Households earning $200,000 or less (married filing jointly) can deduct up to $10,000 on new auto loans if the vehicle is assembled in the US.

Note: All three provisions have income phaseouts and are set to expire after 2028

Support for Business Owners

If you’re a sole proprietor, in a partnership, or run an S-Corp, good news: the Qualified Business Income (QBI) deduction has been made permanent. This allows eligible business owners to deduct up to 20% of their QBI.

What Was Cut?

Medicaid: Roughly $1 trillion in cuts expected. Tighter eligibility and reduced coverage are likely.
SNAP (Food Assistance): Federal support is being scaled back; states are expected to absorb the difference.
Student Loans: New annual and lifetime limits are being imposed on federal student loan borrowing.
EV and Green Energy Credits: Credits for electric vehicles and solar panels are ending. Expect a last-minute rush before they expire in September and December, respectively.

Authored by Stephen Blahovec and Michael Rausch of North River Wealth Advisors. We are an independent, fee-only financial planning and investment management firm located in Pittsburgh, PA servicing clients locally and across the country. To learn more, contact us here.

This content is developed by North River Wealth Advisors from sources believed to be providing accurate information. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.