The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, makes many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent, introduces several new temporary deductions, and brings meaningful changes for families, retirees, and individuals with disabilities. Here is a plain-language summary of the most relevant provisions.

What Was Made Permanent

  • Individual income tax rates: The seven TCJA rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent, avoiding the 2026 sunset that would have reverted rates upward.
  • Standard deduction: The higher TCJA standard deduction levels are permanent, with the 2025 amounts slightly increased.
  • Child Tax Credit: Now permanently set at $2,200 per child (was $2,000 under TCJA), indexed for inflation going forward.
  • Estate & Gift Tax Exemption: Raised to $15 million per individual ($30 million for married couples), indexed for inflation from 2026. This benefits families with significant estate plans, including those with Special Needs Trusts.

New Temporary Deductions (2025–2028)

  • Senior deduction: Individuals 65 and older may claim an additional $6,000 deduction, phasing out above $75,000 MAGI ($150,000 joint).
  • Tip income deduction: Workers in customarily tipped occupations may deduct up to $25,000 of qualifying tips.
  • Overtime pay deduction: Up to $12,500 ($25,000 joint) of overtime premium pay is deductible, phasing out above $150,000 MAGI ($300,000 joint).
  • Auto loan interest deduction: Up to $10,000 of interest on new vehicle loans is deductible, phasing out above $100,000 MAGI ($200,000 joint).

SALT Deduction Cap Raised

The cap on state and local tax (SALT) deductions increases from $10,000 to $40,000 for taxpayers with income under $500,000, through 2029.

ABLE Account Enhancements

The OBBBA also made the ABLE-to-Work provision and 529-to-ABLE rollovers permanent, raised the annual ABLE contribution limit to $19,000, and made ABLE contributions eligible for the Saver’s Credit. See our separate article on ABLE account changes for full details.

These changes affect planning across multiple dimensions — retirement account strategy, Roth conversion windows, estate planning, and benefits coordination. The higher estate exemption is particularly significant for families with third-party Special Needs Trusts, as it reduces the likelihood of estate tax exposure while preserving planning flexibility.