One Big Beautiful Bill
The One Big Beautiful Bill was signed into law July 4, 2025. This Budget and Reconciliation Act comes with many changes for everyday Americans. We believe that knowledge is power. Check out our videos and the linked articles below to see a breakdown of aspects of the "BBB" and how it will impact you and those you love.
Tax Changes and the "BBB"
-Starting in 2025 standard deductions will go up regardless of filing status. Here is a breakdown:
- $15,750 for single filers
- $23, 625 for head of household filers
- $31,500 for those married filing jointly
-Tax payers who are 65 and older receive an additional standard deduction worth $2,000 for single filers or $3,200 for a married filing jointly if both spouses are 65 or older.
-Tax payers age 65 or older will also receive a temporary personal exemption of $6,000 per individual. This temporary exemption is set to expire after 2028 and begins this year. There is an income phase-out for being able to claim this bonus deduction that begins at $75,000 for individual filers and $150,000 for those who are married filing jointly.
-Child tax credits will also go up beginning this year to $2,200 per child under the age of 17 with $1,700 of this credit being fully refundable.
-You will now be able to claim a higher "Above the line" deduction for Charitable contributions. Individual filers will now be able to claim $1000 and couples filing jointly will be eligible to claim $2000 in charitable giving without having to itemize their returns.
-Lastly, we wanted to highlight the increase to the exemption for Estate tax, Gift tax, and the Generation-Skipping Transfer tax. These amounts will increase from $5 million per individual to $15 million. Married couples will be able to exclude $30 million from these taxes. For more information on changes to taxation for Americans click on the article below.
Permanent Exemptions and New Deductions: What the 2025 Tax Law Means for Estate and Tax Planning
The BBB and Taxes on Overtime and Tips
For the tax year 2025-2028 tax payers earning tips and or overtime may be eligible for some temporary above the line deductions.
-To be eligible to claim a deduction on your overtime or tips you must have a "work eligible" Social Security number and if you are married you must file jointly.
-The deduction for qualified tips is $25,000 per year and $12,500 for qualified overtime pay per year.
- Income phase out to claim these deductions begins at $150,000 for single filers and $300,000 for those married filing jointly.
The BBB and HSA's and FSA's
-HSA's are Health Savings accounts that allow individuals who have qualifying High Deductible Health Plan to set aside pre tax dollars to cover qualified health expenses.
- The BBB now allows High Deductible Health Plans to offer first dollar Telehealth services without disqualifying individuals from contributing to HSA's. This provision was introduced in the Pandemic but the BBB has made it permanent.
- Now individuals who use Direct Primary Care Services will be able to use HSA dollars to pay for these services so long as the associated membership fees are within certain limits.
-The BBB also increased contribution limits for FSA or Flexible Spending Accounts
-Flexible Spending Accounts allow individuals to set aside pre tax dollars for dependent care. It's important to note that there is a limit to what can rollover from one year to the next in an FSA and in excess of that limit would be forfeited if not used.
For more details on these changes and more please see the article below.
Unpacking the One Big Beautiful Bill's Employee Benefit Provisions
BBB and 529's
Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
-529's are a College savings vehicle that provides Federal tax savings on Qualified Educational expenses. State sponsored 529's offer additional tax savings.
-Secure Act 2.0 (passed Dec. 2022) allowed for money remaining in a 529 that has been established for at least 15 years to be rolled over to a ROTH IRA for the beneficiary.
-Previous changes allow for K-12 use of 529 plan dollars but the BBB has added some expanded uses.
-Distributions from 529's after July 4, 2025 will now be eligble to be used for the following:
- Skilled trades and vocational programs
- Professional license and certification fees
- Required Continuing Education to maintain a license or certification
- Books, supplies, and equipment that are required for a qualified program
- Programs must be listed in one of two Government directories in order to qualify (See links below)
-States will get to decide whether or not to adopt in these expansions for State tax advantages
What Is a 529 Plan? Rules, Pros and Cons
Trump’s Budget Bill Lets 529 Plans Cover Credentials and Continuing Education