The “One Big Beautiful Bill” has been signed into law, and while the headlines focus on big-picture economics, several key changes will directly affect your personal financial plan. Here are five you need to know about:
- Permanent Lower Tax Rates: The 2017 tax rates and brackets are here to stay, preventing a scheduled tax hike in 2026. This provides stability for long-term income and retirement planning.
- A Big Bonus for Seniors: If you are 65 or older, you will receive a new bonus deduction of $6,000 per person ($12,000 for a married couple) on top of the standard deduction. This is a significant tax break, but be aware: it’s temporary and set to expire after 2028.
- Temporary Relief for Workers: The law creates new, temporary deductions for tip income (up to $25,000) and overtime pay (up to $12,500). Like the senior bonus, these are only scheduled to last through 2028, so they shouldn’t be factored into plans beyond that date.
- A Higher SALT Cap: For those who itemize, the cap on deducting state and local taxes (SALT) is temporarily raised from $10,000 to $40,000. This is a major benefit for residents of higher-tax states, but it also expires, reverting to $10,000 in 2030.
- Estate Planning Certainty: The federal estate and gift tax exemption has been permanently increased to $15 million per person ($30 million for a couple). This removes the “use it or lose it” pressure that existed before and provides a stable foundation for your long-term legacy planning.
Let’s connect to review how these changes impact your specific situation and ensure your financial plan is optimized for the new rules.
