US Tax Laws Just Changed: Here’s How You’re Impacted!

The new “One Big Beautiful Tax Bill” has been signed into law.

Here’s what you need to know about the finalized tax changes and how they could impact you and your family.

What Do I Need to Know??

This article is an update to my article from May, when the bill had passed the House of Representatives but was not yet in its final form.

This tax bill is now the law. President Donald Trump signed this into law on July 4, 2025.

Let’s talk about what this finalized tax bill introduces and its implications on American families. It’s worth noting that it will take some time for us to digest the bill in its entirety.

Here’s a summary of the key talking points:

The Big Tax Changes:

➡️ Permanent Tax Cuts:

▪️The bill makes many provisions from the 2017 Tax Cuts and Jobs Act permanent, including lower individual tax brackets and a higher standard deduction.

▪️Beginning in 2026, the federal tax bracket rates will remain at the TCJA levels:

10%, 12%, 22%, 24%, 32%, 35% & 37%

▪️Additionally, the child tax credit has been increased to $2,500 per child.

➡️ Overtime and Tips:

▪️The legislation introduces a temporary tax deduction for overtime and tip income, allowing workers to deduct up to $12,500 of overtime income ($25,000 for joint filers) from their federal taxable income annually through 2028.

▪️However, this does not exempt such income from payroll and state/local taxes.

➡️ SALT Deduction Cap:

▪️The State and Local Tax (SALT) deduction cap has been raised to $40,000 for individuals earning under $500,000.

▪️This change primarily benefits high-income earners in high-tax states (like Oregon and California, here on the West Coast).

➡️ Senior Tax Deductions:

Through 2028, seniors aged 65 and older:

Single filers:

▪️Eligible for a tax deduction of $6,000 if MAGI (modified adjusted gross income) is under $75,000.

Joint filers:

▪️Eligible for a tax deduction of $12,000 if MAGI is under $150,000.

➡️ Trump Accounts:

▪️The bill establishes "Trump Accounts," which provide a $1,000 deposit at birth.

▪️These accounts allow parents to contribute up to $5,000 per year for education, job training, or a home down payment.

➡️ No Extension of “Enhanced” Affordable Care Act (ACA) Premium Tax Credits:

▪️From 2021-2025, premium tax credits were more accessible for Americans. Prior, if your income was greater than 4x the federal poverty level, you were not eligible for tax credits.

▪️Starting in 2021, a “gradual phasing out” was used instead of a “hard cliff”, making these credits more accessible to those with higher income.

▪️Beginning in 2026, this tax bill reverts us to the “hard cliff” of 4x the federal poverty level.

➡️ Charitable Deductions:

▪️Under the new law, itemized charitable deductions are only deductible to the extent that they exceed 0.5% of your Adjusted Gross Income (AGI).

▪️This change may limit the impact of charitable contributions on your tax bill for those who itemize their deductions.

▪️Example:

Your AGI is $100,000, and you make charitable contributions of $2,000.

You are eligible for a $1,500 deduction.

The math: Eligible deduction = $2,000 - $500 (0.5% *$100,000) = $1,500

What Should You Do About This?

As a Certified Financial Planner® professional, I help my clients navigate these complex legislative changes to ensure that we are making informed financial decisions.

Here’s what you should revisit:

➡️ Tax Strategy:

▪️Review your current tax strategy to determine if Roth conversions or other tax-efficient moves are advantageous under the new law.

➡️ Retirement:

▪️If you rely on tips or part-time work in retirement, the new overtime and tip deductions may provide some relief, though they are temporary.

▪️If you are evaluating Roth conversion in retirement, the addition of the new deduction for seniors over the age of 65 changes the math and effectiveness of Roth conversions for some people. Measure twice and cut once here.

➡️ Healthcare Coverage:

▪️If you are receiving ACA credits, review your projected 2026 income and evaluate whether or not your eligibility for premium tax credits will change.

▪️Be aware of potential changes to Medicaid and SNAP that could affect your healthcare coverage or eligibility.

➡️ Estate Planning:

▪️The federal estate and gift tax exemption will increase to $15 million per person beginning in 2026.

▪️Consider the implications of this increased exemption and the new "Trump Accounts" for your children's future education or homeownership goals.

Ask Questions to Your Professionals!

With any piece of legislation, the details are what truly matter. Now that this bill has been finalized, it’s important to understand how its provisions could affect your broader financial picture.

As always, if you'd like to discuss how this affects your situation, feel free to reach out me or your professional advisors (financial advisor, CPA, estate attorney, medicare broker, etc).

Have any questions about what you’ve read? Let’s talk about them!


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