By Nino Pavan, J.D., CFP®
The massive One Big Beautiful Bill Act was officially signed into law by President Trump on July 4, 2025, after narrow approval by Congress. Coming in at over 940 pages, the legislation extends many of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA). It also makes broad changes to tax policies, federal spending, and certain programs.
Though many Americans stand to gain from permanent tax cuts and additional deductions, others may be affected by healthcare cuts and limits on social assistance. Here’s a brief look at the “Big Beautiful Bill” and how it may impact your family budget.
TCJA Extensions and New Tax Breaks
For many, the main takeaway of the Big Beautiful Bill is the locking in of lower tax brackets through the codification of the TCJA. The top rate remains at 37%. The standard deduction for single filers is now $15,750, and the deduction for married couples filing jointly increases to $31,500 after 2025 adjustments for inflation.
Beginning in 2026, the Child Tax Credit goes up to $2,200. Filers 65 years or older with adjusted gross incomes (AGIs) of $75,000 (single) or $150,000 (joint) have a new “senior deduction” of $6,000. In one of the president’s most publicized pledges, tips, gratuities, and overtime pay become partially deductible from 2025 to 2028.
High-income earners might note a cap on deductions and simpler itemized deduction limits. If you’re in the market for a new car, you might be able to deduct interest on your loan if you buy a vehicle manufactured in the U.S. and your annual income is less than $150,000.
SALT Deductions and California Tax Relief
A major element of the Big Beautiful Bill involves the expansion of the deduction cap on state and local taxes (SALT). From now until 2030, taxpayers earning less than $500,000 in AGI can deduct up to $40,000 in combined state income and property taxes. That’s four times the previous limit.
This change may bring welcome tax relief to many Southern California residents, particularly in high-tax areas like Los Angeles, Orange, and San Bernardino Counties. For clients who have relocated to lower-tax states in retirement, it’s important to reevaluate how this change may impact your overall tax planning strategy and deductions moving forward.
Benefits to Education, Estates, and Businesses
The Big Beautiful Bill expanded provisions of the 529 educational savings plan. Tax-free distributions can now go up to $20,000 a year. Additionally, 529 accounts now cover expenses for tutoring, homeschool materials, and special education needs. The federal government also authorized newborn savings accounts to be seeded with $1,000 until 2028.
Estate tax exemptions were also made permanent. They were raised to $15 million for single taxpayers and $30 million for married joint filers after adjusting for inflation. A broader Section 199A deduction stands to benefit small business owners.
Cuts to Healthcare and Social Programs
The more controversial elements of the Big Beautiful Bill involve federal spending cuts to several health benefits and assistance programs. Medicaid was slashed by $1 trillion, with tighter restrictions on reporting, work requirements, and undocumented patients. Pay-as-you-go laws also triggered automatic cuts to Medicare funding by $490 million.
What’s more, the SNAP food assistance program saw its funding cut by $186 trillion. Beneficiaries of the SNAP program now face tighter work requirements. Additionally, subsidies for the Affordable Care Act (ACA) are being phased out. Prospective enrollees now face annual eligibility reviews and shorter enrollment windows.
Planning Around the Big Beautiful Bill
The One Big Beautiful Bill Act could dramatically alter the fortunes of many Americans. Financial Designs is here to advise you on the parts of the bill that might affect you and your loved ones the most. Contact us to learn more. To schedule a no-obligation consultation, call (909) 626- 1642 or email fdc@fdcadvisors.com today!
About Nino
Nino Pavan is President and a CERTIFIED FINANCIAL PLANNER® professional at Financial Designs, a retirement planning firm in Claremont, California, with the mission of enabling individuals and families to financially prepare for and confidently enjoy their retirement years through goal-centered planning. With more than 30 years in the financial services industry, Nino is thankful for the opportunity to serve his clients by making the retirement process a stress-free one; he worries about their money so they don’t have to!
Nino holds a law degree from the University of Southern California, a Bachelor of Science in Telecommunications Management from DeVry Institute of Technology and has been a contributing advisor to Kiplinger. In addition to being a CERTIFIED FINANCIAL PLANNER® professional and Investment Advisor Representative, Nino has passed the Series 7, 24, and 63 securities exams and holds life and disability insurance licenses. He also conducts retirement and estate planning workshops for employees of major California companies. Outside of the office, Nino enjoys sports (regular and fantasy), traveling (specifically tropical destinations), walking, pickleball, church activities, and spending time with his wife Sherry and their two children, Derek and Sara. To learn more about Nino, connect with him on LinkedIn.
