The OBBB brings major tax cuts to Americans.
On the Fourth of July this year, President Donald Trump signed into law a monumental piece of legislation known as the One Big Beautiful Bill Act (OBBB). It ushers in sweeping tax breaks for millions of Americans.
The new law makes permanent certain provisions of Trump’s Tax Cuts and Jobs Act (TCJA) of 2017, such as the increased standard deduction and lifetime gift and estate tax exclusion. It also introduces new provisions such as a Trump financial account for kids, as well as new uses for 529 college savings plans and health savings accounts (HSAs). But the bill is a lot to digest; it spans nearly 1,000 pages. Who has time to read through all that? To make it clearer, we’re going to take a closer look at some of the major provisions of the OBBB.
Permanent TCJA Provisions
Trump fought to maintain some key provisions of the TCJA that were set to expire in 2026. And he succeeded in that regard. So let’s see what stuck.
First, the seven tax brackets established under the TCJA will remain the same. This means the lowest earners will fall under the 10 percent bracket and the highest earners would be in the 37 percent tax bracket. Prior to the TCJA, the highest tax bracket was set at 39.6 percent.
Next, the doubled standard deduction would also remain in place. For 2025, the standard deduction will increase to $15,750 for single filers, $31,500 for joint filers, and $23,625 for heads of households. These amounts would be indexed for inflation each year after 2025.
Moreover, while the TCJA set the state and local tax (SALT) deduction cap to $10,000, the OBBB increases the SALT deduction cap to $40,000 for joint filers and $20,000 for separate filers. Beginning in 2026, the cap will increase by 1 percent each year, before it reverts back to $10,000 in 2030.
However, the SALT cap would begin to phase out for those with incomes above $500,000 if filing jointly or $250,000 if married and filing separately. But the phase-out levels would also increase by 1 percent each year from 2026 through 2029. And in 2030, the $10,000 SALT cap would apply to single and joint filers regardless of income and be made permanent.
By Javier Simon
