On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, representing one of the most significant overhauls of federal tax legislation in recent history. Spanning 887 pages, the OBBBA introduces a broad array of tax reforms and policy enhancements, impacting both individuals and businesses. Dozens of new, revised, and extended provisions are included - many of which will shape household and business finances for years to come.
Below are some key highlights of the OBBBA and what they mean for you. We’ll explore some of these in more detail in future articles, so you can make the most of new opportunities and provisions created by this landmark law.
Key Highlights and What They Mean for You
1. Expanded Education Savings and Flexibility
- 529 Plan Enhancements: Funds can now be used tax-free for an expanded range of educational expenses, including career training and credentialing programs. The annual limit for K-12 withdrawals rises from $10,000 to $20,000.
- "Trump Accounts": A new tax-deferred investment vehicle for children, with up to $5,000 in annual contributions (indexed for inflation). Eligible children born between January 1, 2025, and December 31, 2028, may receive a $1,000 federal contribution, with automatic account setup by the IRS if parents do not open one.
2. Enhanced Tax Benefits for Families and Retirees
- Increased Standard Deduction: The OBBBA permanently extends the higher standard deductions established by the previous tax law.
- Child Tax Credit: Permanently increased to $2,200 per qualifying child under the age of 17. This deduction will increased for inflation starting in 2026, providing meaningful additional support for families.
- Senior Deduction: Individuals 65+ are eligible for an additional standard deduction of up to $6,000 (2025–2028), phased out at higher incomes.
3. Increased SALT Deduction Cap
- The state and local tax (SALT) deduction cap temporarily increases from $10,000 to $40,000 through 2029, benefiting taxpayers in high-tax states before returning to $10,000 in 2030.
4. Provisions for Employers and Business Owners
- Section 179 Expensing: The expensing limit increases to $2.5 million in 2026, allowing businesses to fully deduct more of their investments upfront.
- Enhanced Childcare Credits & Dependent Care FSAs: Employer-provided dependent care FSAs rise to $7,500, and the childcare tax credit cap increases dramatically, incentivizing workplace supports for families.
- 1099 Reporting Threshold: The requirement to issue 1099 forms increases from $600 to $2,000, reducing administrative burden for small businesses.
- Paid Family and Medical Leave: Expanded credits and broader eligibility make these benefits more accessible for employers and employees alike.
5. Health Savings Account (HSA) Flexibility
- Broadened Eligibility: All ACA “Bronze” and “Catastrophic” plans now qualify for HSA contributions, expanding access.
- Direct Primary Care & Telehealth: Direct primary care fee arrangements (up to $150/month) are allowed for HSA-eligible individuals, and permanent pre-deductible coverage for telehealth becomes available to employees.
6. Estate and Gift Planning Updates
- Higher Exemptions: The gift and estate tax exemption increases to $15 million in 2026 (indexed to inflation thereafter).
- Adjusted AMT Thresholds: Trusts and estates see higher, inflation-indexed AMT exemption thresholds, lessening the risk of unintended tax exposure.
7. Select New Deductions and Business Provisions
- No Tax on Overtime: Eligible workers can deduct up to $12,500 ($25,000 for joint filers) of qualified overtime pay required by federal law from 2025–2028, subject to income limits.
- No Tax on Tips: Employees and self-employed individuals can deduct up to $25,000 of qualified, reported tips for 2025–2028, subject to income thresholds.
- Expanded Qualified Small Business Stock (QSBS) rules: Higher caps, shorter holding requirements, and enhanced exclusions will benefit investors in growth companies.
Strategic Opportunities and Next Steps
The OBBBA brings greater clarity and certainty to the tax code—helping families, retirees, business owners, and investors plan more strategically for the future. Whether you’re looking to optimize your tax strategy, expand education funding, or redesign employee benefits, these reforms may open up new avenues for growth and efficiency.
Stay tuned: Provista Wealth Advisors will release in-depth articles diving into many of these topics, along with proactive planning strategies to help you take full advantage of all the OBBBA has to offer.
If you have questions about how these rules apply to your situation, or want help developing a tax-efficient plan, please reach out to our team. We are committed to helping you develop a strategy tailored to your goals.