On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing with it a mix of permanent and temporary tax changes that may impact how Americans file taxes in the coming years.
We wanted to provide a brief summary to help keep you informed and confident moving forward in 2025.
1. Some Changes Take Effect Immediately, Others Later
Certain provisions will apply to 2025 taxes (filed in 2026), while the majority begin in 2026 and beyond.
This means proactive planning now could help you take advantage of new rules or avoid surprises down the road.
2. Key 2017 Rules Are Now Permanent
The OBBBA makes many provisions from the Tax Cuts and Jobs Act (TCJA) permanent, including:
- A larger Standard Deduction
- The elimination of personal and dependent exemptions
- Current income tax brackets
These are familiar rules, which may make tax planning a bit more predictable in the near term.
3. Temporary Relief for Certain Income Sources
Some taxpayers will benefit from short-term tax breaks, including:
- Lower taxes on tips and overtime pay
- Potential adjustments that could help certain retirees with part-time income
While these changes may only last a few years, they can create short-term planning opportunities for cash flow and income timing.
4. What This Means for Retirees and Investors
- Portfolio Planning: Changes to tax brackets and deductions may impact withdrawal strategies from retirement accounts.
- Roth vs. Traditional Conversions: Shifts in tax treatment could make Roth conversions more or less appealing depending on your income level.
- Estate and Gifting Strategies: Any adjustments in exemptions or deductions could affect how you transfer wealth to heirs.
The new tax law may feel overwhelming, but proactive planning can turn change into opportunity. If you’re wondering how these rules might affect your retirement plan or investment strategy, we’re here to help you navigate the updates with confidence.
