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One Big Beautiful Bill Act (OBBBA) 2025 — Key Tax Changes You Need to Know Part 2

Steven Swierkowski, CFP®, RICP®

In Part 1, we covered the core updates: permanent TCJA rates, senior exemptions, SALT, charitable contributions, and mortgage interest. Now let’s look at the more specialized provisions and temporary opportunities this law creates - the areas where careful planning can make a big difference.

1.  Tip and Overtime Deductions (Temporary, 2025–2028)  

For the first time, certain income from tips and overtime may qualify for above-the-line deductions, meaning they reduce your taxable income before the standard or itemized deductions apply.

  • Tip income: Deduct up to $25,000 if you earn tips in a customary tipping industry (like restaurants or valets)
  • Overtime pay: Deduct up to $12,000 (single) or $25,000 (married filing jointly). Note, overtime is the amount above and beyond your normal salary. For example, if your normal wage is $20/hour, and you receive $30/hour overtime pay, only the $10 difference is considered ‘overtime pay’ and potentially not taxable.
  • Phase-outs:
    • Single: $150,000–$400,000 AGI
    • Married: $300,000–$500,000 AGI

Because the bill is still new, the IRS will provide further guidance on exactly which industries and overtime types qualify. These deductions are temporary, expiring in 2028, so they may be worth tracking if you’re eligible. 

2.  New Savings Vehicles: Trump Accounts  

One of the flashier additions in the bill is a brand-new savings tool for children born between 2025 and 2028, referred to in the bill as, “Trump accounts.”

These accounts function like a hybrid between a 529 and a custodial account, but with their own rules (most of which the IRS still needs to pin down).

Here’s what we do know:

  • $1,000 seed deposit from the government for each eligible child (the government will make this initial seed deposit on or about July 2026)
  • Parents/other contributors can make up to $5,000 in annual contributions
  • Tax-free growth until money is withdrawn at age 18+
  • Qualified uses While the intent is to allow these accounts to grow until needed in retirement, there may be other eligible uses of the funds. More to follow on this.
  • Non-qualified withdrawals: Taxed plus a 10% penalty

 If you’re a new parent or know a new parent, you might want to keep this one on your radar. 

3.  529 Plan Enhancements  

If you’re saving for education, this is one of the cleaner, more straightforward updates in the bill. 529 plans now cover a wider range of expenses.

What’s new:

  • K–12 education limit doubles to $20,000 per year
  • Eligible expenses include:
    • Standardized test fees
    • Professional certification costs
    • Other approved education-related expenses 

 More flexibility means families can use 529 savings more strategically - not just for college, but for the entire education journey. 

4.  Energy Credits  

Many energy-related incentives were scaled back or eliminated:

  • EV tax credits: Repealed for vehicles purchased after Sept. 30, 2025
  • Home energy improvements: Certain clean energy credits, such as the solar credit, or energy-efficient home improvements (windows, HVAC, etc.) expire after December 31, 2025 

 If you are planning to upgrade your home’s efficiency, this is one of those “act sooner rather than later” moments before remaining credits disappear. 

5.  Estate and Gift Tax  

For those planning for the next generation:

  • Lifetime estate exemption: Raises to $15M per person in 2026 ($30M per couple)

This removes a huge question mark that has been looming over estate planning for years. Families and business owners can finally plan with confidence instead of bracing for a sunset and potential tax spike.   

 What This Means for You  

The OBBBA gives you both stability and new opportunities. While the first post focused on the broad changes affecting most taxpayers, these specialized deductions, new savings accounts, and temporary incentives provide a chance to fine-tune your strategy, especially if you have children, plan to make charitable contributions, or re-evaluate saving for education or utilizing energy-related investments.

At Counterweight Private Wealth, we’re monitoring the evolving rules closely so you can make informed decisions that fit your unique financial picture. The key is knowing what’s permanent, what’s temporary, and how all these moving parts work together to reduce taxes and maximize your wealth over time.  

*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.

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