On July 4, 2025, President Trump signed the “Big Beautiful Bill” into law. This comprehensive tax and spending package will immediately impact Americans with several tax code changes that become effective this year. Some of the changes are permanent while others will expire in 2029 or 2030. Be sure to read on to see which changes may apply to your situation.

1. Marginal tax rates

Perhaps the most significant outcome from this legislation relates to federal income tax rates. Recall that the Tax Cuts and Jobs Act of 2017 reduced federal marginal rates by about 3% across the board. Those tax cuts were due to expire at the end of this year, however, with the BBB now signed into law, those reduced rates are now permanent and will require another act of Congress to change them. This certainly makes tax planning easier and eliminates the need to rush and take advantage of lower rates by December 31.

2. Enhanced deductions for seniors

While exempting taxes from Social Security benefits were not included in the final version of this bill, there is good news for senior citizens, nonetheless. The extra deduction for Americans over age 65 has been increased from $2,000 to $8,000 for individuals and from $3,200 to $15,200 for married couples. Combined with a slightly higher standard deduction amount of $15,750 per person, a married couple over 65 can now shield up to $46,700 in income from federal taxes this year, even without itemizing deductions. The extra deduction for seniors will last just four years, however, expiring at the end of 2028.

3. A big boost to the SALT deduction limit

While the original TCJA nearly doubled the standard deduction, it also severely limited the ability of taxpayers to deduct their state and local (property) taxes when itemizing. The SALT cap of $10,000, in place since 2018, has now been raised to $40,000 but only through 2029, reverting back to $10,000 in 2030. The higher SALT limit also begins to phase out at incomes above $500,000.

4. New deductions on tips and overtime pay

Tipped workers can now deduct up to $25,000 in tip income on their tax returns between now and 2028. Workers may also deduct up to $12,500 in overtime pay (also through 2028). Both of these new deductions are income-limited so be sure to understand the rules before claiming either of these new deductions.

5. New tax benefits for parents

The BBB increased the child tax credit from $2,000 to $2,200 and also introduced a new kind of savings accounts for kids under 8. These new accounts will allow parents, relatives, and others to contribute up to $5,000 annually for a child’s future educational, homeownership, and entrepreneurial expenses. Additionally,for children born between January 1, 2024, and December 31, 2028, the federal government will “seed” these accounts with a $1,000 contribution. The accounts will be fully invested in a diversified basket of US stocks and grow tax-free until withdrawn, after the child reaches 18. If used for qualified (educational, first-time home buyer, or business loan) expenses, gains will be taxed at long-term capital gains rates. Otherwise, ordinary income rates will prevail.

There are several other minor modifications in the 1000+ page BBB package, including a modest increase in the estate tax exemption, an allowance for deducting up to $10,000 in interest on certain automobile loads, and a new charitable deduction allowance of $1,000 per person for non-itemizers. We recommend that you speak with your adviser or tax accountant to determine specifically how this new legislation may impact your situation.

Sources: https://www.cnbc.com/2025/07/03/trumps-big-beautiful-bill-salt-deduction.html

               https://www.kiplinger.com/taxes/gop-proposes-maga-savings-accounts

Disclosure: The opinions expressed herein are those of Elevate Wealth Advisory (“EWA”) and are subject to change without notice. EWA reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This should not be considered investment advice or an offer to sell any product.  Past performance is no guarantee of future results.  This contains forecasts, estimates, beliefs and/or similar information (“forward looking information”).  Forward looking information is subject to inherent uncertainties and qualifications and is based on numerous assumptions, in each case whether or not identified herein.  It is provided for informational purposes only and should not be considered a recommendation to buy or sell securities or a guarantee of future results.  EWA is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about EWA, including our investment strategies, fees and objectives can be found in our ADV Part 2, and/or Form CRS, which are available upon request.