One Big Beautiful Bill Act

At Crescent Advisory Partners, we’re committed to keeping our clients informed about the financial developments that matter most. With the recent passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, several significant updates have been made to the federal tax code that affect individuals, couples, and families. This is a large and complex piece of legislation, and while this summary only skims the surface, we’ve highlighted ten provisions we believe are especially relevant to many of our clients. This is the first in a series of updates we’ll be sharing as we continue to research and review the OBBBA’s broader implications. Stay tuned for more posts in the coming weeks as we break down additional components of this important new law.

Permanent Lower Tax Bracket

The One Big Beautiful Bill Act locks in the TCJA-era Marginal Tax Rates, preventing them from expiring at the end of 2025. These are now permanent:

*These brackets are indexed for inflation, ensuring they adjust annually to reflect cost-of living changes

Expanded Child Tax Credit

The maximum credit per child is now $2,200 and to be indexed for inflation starting in 2026

This increase is not permanent and reverts back to $2,000 in 2029 unless extended

The refundable portion of the credit stays at $1,700, and the income phaseout threshold remains the same as well

Social Security Taxation

What it does:

• This bill creates a new tax deduction – often referred to as the “Senior Bonus” for Americans aged 65 or older
• It is not limited to Social Security Income – it reduces overall taxable income, which can indirectly reduce or eliminate taxes on Social Security Benefits
• This deduction is temporary, applying to tax years 2025 through 2028

What it does not do:

• It does not repeal the taxation of Social Security Benefits
• It does not apply to beneficiaries under age 65, including those on disability or survivor benefits
• It does not help low income seniors who already pay no tax – they see no additional benefit
• It does not change the underlying formula that taxes up to 85% of Social Security Benefits for higher-income earners.

Car Loan Interest Deduction

• The measure temporarily lets car buyers write off up to $10,000 a year in interest paid on qualifying auto loans
• To qualify, the car must be new and assembled in the United States – excludes foreign manufacturers like Honda, Hyundai, Nissan, and Toyota
• The tax break will start with purchases made in 2025 and run through 2028
• It is an above the line deduction, meaning you won’t have to itemize to claim the deduction
• The deduction will be limited to $10,000 per year and the phase out range will begin at $100,000 if filing single and $200,000 if filing jointly and no deduction above $150,001+ and $250,001+, respectively

No Tax on Tips and Overtime

The One Big Beautiful Bill Act creates an above-the-line federal tax deduction for tips and overtime pay, effective for tax years 2025 through 2028.

• This bill only applies to cash tips. However, for IRS tax purposes, physical cash tips, credit card tips AND tips made through electronic payment methods like apps are traditionally treated the same. Non-cash tips are still considered taxable by the IRS but are not covered under this bill
• Payroll taxes will still apply to both income types
• State income tax still applies unless the state adopts similar provisions

Estate Tax Exemption Increased

• Permanently raised to $15M for single filers and $30M for MFJ
• The exemption will continue to index for inflation in years after 2026, but will now use calendar year 2025 as the new base year for future inflation adjustments

Above the Line Charitable Deduction

New Limit on Charitable Deduction for Non-Itemizers

• A new charitable income tax deduction is created for non-itemizing taxpayers. Allowing deductions of up to of up to $1,000 for single filers and $2,000 for MFJ

New Limit on Charitable Deduction for Itemizers

• The deduction for individual charitable contributions is now limited to contributions in excess of 0.5 percent of an individual’s taxable income. This essentially creates a new “floor” for the charitable deduction

Standard Deduction Boost

• The bill makes the TCJA’s increased standard deduction amounts permanent.
• The standard deduction increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for MFJ for tax year 2025
• The standard deduction will be adjusted for indexed for inflation starting in 2026

State and Local Tax (SALT) Deduction

The One Big Beautiful Bill Act made a major- and temporary – change to the State and Local Tax (SALT) deduction that itemizers can take advantage of

The deduction includes state and local income taxes, property taxes, or sales taxes – but not all three. Taxpayers must choose between income or sales tax.

The cap is per return, not per person. MFJ get the same $40,000 cap as single filers

The deduction phases down by 30% of the amount by which a taxpayer’s MAGI exceeds $500,000, but it never drops below $10,000

Trump Accounts

Each child born between 2025 and 2028 are automatically issued a Trump Account with a $1,000 deposit. Parents can also contribute $5,000 post-tax annually, and employers may add $2,500 tax-free, with all limits indexed for inflation starting in 2027

Funds must be invested in broad market stock index funds, and grow tax-free until withdrawn – similar to IRAs or 529s

Tax Treatment of Distributions:

• Qualified Withdrawals (e.g. for college, home purchase, or starting a business) are taxed at long-term capital gains rates
• Non-qualified withdrawals are taxed as ordinary income

Account holders may begin partial withdrawals at age 18 for qualified purposes, gain full access at age 25 for those same purposes, and receive unrestricted access at age 30 for any use

Given the breadth and complexity of these recent tax changes, staying informed and working closely with trusted financial and tax professionals is more important than ever. Taking a proactive approach can help ensure your financial strategies remain aligned with your long-term goals and the evolving tax landscape. If you have questions or would like to discuss how these developments may affect your personal financial plan, please don’t hesitate to reach out—we’re here to help.

For those interested in exploring further, we’ve included a selection of resources below that offer additional insight into key provisions of the One Big Beautiful Bill Act and its potential impact on federal tax policy:

https://www.journalofaccountancy.com/news/2025/jun/tax-changes-in-senate-budget-reconciliation-bill/

https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/

https://www.aarp.org/government-elections/budget-bill-older-americans.html

https://time.com/7292905/trump-accounts-newborns-1000-dollars/

*Please note that the information provided is for general educational purposes only and should not be considered individualized tax, legal, or financial advice.

*Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

*The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Crescent Advisory Partners and not necessarily those of Raymond James.