Skip to content

One Big Beautiful Bill Act (OBBBA) 2025 — Key Tax Changes You Need to Know Part 1

Nick Murphy, CFP®

It’s been a few months since the “One Big Beautiful Bill Act” was signed into law on July 4th, and now that the dust has settled, we are here to break down what it really means for taxpayers. From tax rate extensions to new deductions for seniors and families, this legislation makes some of the most significant updates to the tax code in years. 

We’ve broken down the key updates and what they mean for you and your financial plans. 

1.  Permanent Extension of Tax Cut and Jobs Act Rates and Standard Deductions 

One of the biggest tax law wins in the new bill is that the lower tax rates we’ve all enjoyed since 2017 aren’t going anywhere. The Tax Cuts and Jobs Act (TCJA) marginal tax rates and standard deduction amounts are now permanent, removing a major question mark that had been hanging over financial plans for years. The standard deductions for 2025 even received a boost from the amount stated at the beginning of the year. 2025 standard deduction amounts are:

  • Singles: Standard deduction $15,750
  • Married filing jointly: Standard deduction $31,500

Before this bill, these favorable lower marginal rates and higher standard deductions were scheduled to expire, potentially doubling taxes for some filers. Now, with rates and deductions locked in, you can plan with confidence. There’s no need to accelerate income or deductions out of fear that rates will jump next year, providing a clearer picture for long-term tax strategy. 

2.  Seniors and Social Security Benefits 

The OBBBA could not impact taxation of Social Security benefits directly due to the reconciliation legislative process used to pass the bill. However, the Act does offer a deduction designed to potentially reduce (or even eliminate) taxes on one’s Social Security benefit. This is achieved through a temporary enhanced personal exemption for anyone 65 and older. For those who fall within the phase out thresholds, the deduction provides an effective way of lowering the amount of your Social Security income that’s taxed - a welcome relief for many retirees. Here’s how it works:

  • Bonus deduction: up to $6,000 per person
  • Phase-outs:
    • Single: $75,000–$175,000 Adjusted Gross Income (AGI)
    • Married: $150,000–$250,000 AGI
  • Expires: 2028

This bonus is intended to help most seniors under the phase-out thresholds, lowering their taxable income and potentially easing the tax burden on Social Security benefits. An added benefit is anyone over the age of 65, regardless of if they filed for Social Security benefits, and as long as they fall under the income threshold, will receive the deduction. On the flip side, anyone who claims their Social Security benefit prior to age 65 will not be eligible for the enhanced senior deduction. 

3.  State and Local Tax (SALT) Deduction Changes 

The state and local tax deduction (SALT) applies to those who itemize their taxes and provides a federal deduction for state and local income and property taxes. Before 2018, there were no limits on the SALT deduction, but the TCJA introduced a cap on the allowable deduction of $10,000.

Now, due to the OBBBA, taxpayers in high-tax states get some relief. The SALT deduction cap has been raised from $10,000 to $40,000, meaning you can now deduct a much larger portion of your state and local taxes if you itemize.

  • Who benefits: Households earning under $500,000 AGI
  • What counts: Property taxes, state income taxes, and other local taxes
  • Inflation adjustment: The cap will adjust over time

This is especially meaningful for families in states like New York, California, New Jersey, and Illinois, where property and state taxes can add up quickly. By increasing the cap, the bill helps make sure that more of your hard-earned money stays in your pocket. 

4.  Charitable Contributions 

Previously, if you took the standard deduction, most charitable gifts didn’t provide a tax benefit, resulting in a frustrating situation for many generous families. Starting in 2026, even filers taking the standard deduction can claim a portion of their charitable giving:

  • Standard deduction filers: Can deduct up to $1,000 (single) or $2,000 (married) for charitable donations
  • Itemizers: Charitable contributions continue as usual, but starting in 2026 there is a floor of 0.5% of AGI before the deduction applies

Even if you don’t itemize, giving to causes you care about can now reduce your taxable income. It’s a small change, but for many families, it’s a meaningful way to combine generosity with smart tax planning. 

5.  Mortgage Interest Deduction 

Homeowners can breathe a little easier: the mortgage interest deduction for loans up to $750,000 is now permanent.

  • Who benefits: Homeowners with mortgages of $750,000 or less
  • What it covers: Interest on your primary residence (and second homes, within limits)

Mortgage interest, along with higher SALT deduction, may make itemizing deductions more beneficial for some taxpayers, thus lowering taxes.  

 What This Means for You  

Overall, this law provides clarity and stability for planning as the permanent TCJA rates remove a major uncertainty. The senior exemption can provide meaningful tax relief if you’re over 65, and deductions like SALT, charitable contributions, and mortgage interest remain valuable tools for managing your taxable income. A quick reminder though, nothing is truly “permanent” since rates can always change with Congressional approval.

While we’ve covered some of the most impactful, broadly applicable changes in this post, there’s more to explore, including specialized deductions, new savings vehicles, and temporary opportunities that can further affect your planning. Stay tuned for Part 2, where we’ll dive into those details. 

You can also watch our webinar on OBBBA tax changes here. 

Counterweight Private Wealth is a Registered Investment Advisor (RIA) with the Securities and Exchange Commission (SEC) with its principal offices in Raleigh, NC and Wilmington, NC. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Counterweight Private Wealth only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Counterweight Private Wealth’s current written disclosure brochure filed with the SEC which discusses among other things, its business practices, services, and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Please note, the information provided in this document is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services. All investing involves risk, including the possible loss of principal. Statements of future expectations, estimate, projections, and other forward-looking statements are based on available information and author’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Past performance of various investment strategies, sectors, vehicles and indices are not indicative of future results.

This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed to be reliable, are not necessarily all inclusive, and are not guaranteed as to its accuracy. This material is provided for educational purposes only and does not constitute investment, legal, tax, or accounting advice. Please consult with a qualified professional for this type of advice for your own unique situation.