Financial News | By Terald Shaw, BFA™, CLTC®, Financial Advisor
On July 4, President Donald Trump signed the One Big Beautiful Bill Act into law, introducing a wide range of tax changes that will affect many aspects of our financial lives—some immediately, others over the next several years. While details are still emerging, here’s a quick look at some of the major changes that could impact your financial plan.
Individual tax rates
The individual income tax rates from the 2017 Tax Cuts and Jobs Act are now permanent.
State and Local Tax (SALT) deduction
Deduction cap raised to $40,000 (from $10,000) for those earning under $500,000.
Applies from 2025–2029, then reverts to $10,000.
Tips and overtime deductions
Workers earning under $150,000 can deduct up to $25,000 in tips (starting 2025).
Workers earning overtime pay can deduct up to $12,500 ($25,000 joint), depending on income (starting 2025).
Phases out above $150,000 ($300,000 for couples).
Both expire after 2028.
Auto loan interest deduction
Up to $10,000/year deductible for U.S.-assembled cars bought between 2025–2028.
Phases out for individuals earning over $100,000 ($200,000 for couples).
Senior tax deduction
Temporary deduction of up to $6,000 for seniors (2025–2028).
Phases out above $75,000 in modified adjusted gross income ($150,000 for couples).
Child tax credit
Increased to $2,200 per child and indexed to inflation (2025–2028).
Lifetime estate and gift tax exemption
Raised to $15 million starting in 2026, with inflation adjustments.
Made permanent.
Alternative Minimum Tax (AMT)
New thresholds in 2026 expand AMT exposure for couples earning over $1 million.
Qualified Business Income (QBI) deduction
Phaseout range expands in 2026, allowing more pass-through business owners to qualify.
Standard deduction
Increased to $31,500 (joint) and $15,750 (single) starting in 2025.
Made permanent.
New charitable income tax deduction of up to $2,000 (joint) and $1,000 (single) starting in 2026.
Itemized deductions
Starting in 2026, high earners (top 37% bracket) will see deductions capped at a 35% benefit.
Charitable deduction floor set at 0.5% of adjusted gross income (AGI) for itemizers.
Cash gifts to public charities remain deductible up to 60% of AGI.
New $1,700 tax credit (starting 2027) for gifts to qualifying scholarship organizations.
529 Plan enhancements
Expanded to cover more K–12 and credentialing expenses.
Tuition cap raised to $20,000 starting in 2026.
Employer educational assistance
$5,250 tax-free benefit made permanent, including student loan payments.
Indexed for inflation after 2026.
“Trump Accounts” for newborns
$1,000 government deposit for children born 2025–2028.
Parents, relatives, and others can contribute up to $5,000/year.
Funds grow tax-deferred and can be used after age 18 for education, training, or home purchase, or for any purpose after age 30.
For more information, contact Terald Shaw with Thrivent Tailormade Financial Consulting.
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Terald Shaw, Financial Advisor, Thrivent | connect.thrivent.com/terald-shaw
