As summer winds down, important changes from Washington are still making their way into the conversation.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. It probably didn’t come up at your neighborhood gathering, but now that the celebrations are behind us you may be wondering how this 940-page bill could impact your finances.
The legislation is full of policies and provisions, far more than we could cover here. However, the three listed below are important tax law changes that are worth discussing with your financial advisor.
The One Big Beautiful Bill: 3 Noteworthy Items That Could Impact Your Finances
SALT Tax Cap Increase
The SALT tax cap, an income tax deduction for state and local taxes, was limited to $10,000/year under Trump’s 2017 tax law. So if, for example, you paid property tax of $7,000 and state income taxes of $15,000, you’d be limited to a deduction of $10,000.
Now that cap has been increased to $40,000.
Under the $10,000 cap, a lot of people lost out on the opportunity to itemize deductions because the standard deduction was almost always larger (and therefore more beneficial).
Thanks to the new cap, there will be more of an opportunity now for people to itemize deductions. Charitable contributions and home mortgage interest will become more important, potentially adding up to more than the standard deduction.
Policy Changes Made Permanent
The OBBBA also made some of the tax cuts and reforms that were introduced in 2017 (under the Tax Cuts and Jobs Act) permanent. Initially, they were set to expire at the end of 2025. This includes the qualified business income tax deduction and the home mortgage interest deduction limitation.
Another important permanent change: The federal estate tax exemption has been increased.
Before OBBBA, the estate tax exemption was expected to drop back to around $5 million. Now, it has been set at $15 million for individuals and $30 million for married couples. For some families, this significantly reduces the likelihood of needing to plan around (or pay) estate taxes.
No Tax On Tips
One of the most talked-about aspects of the new law is “no tax on tips.” Note that the OBBBA does not exclude tips from income, but it introduces a deduction of $25,000 for an individual taxpayer of tip income, which offsets some of those wages. Service workers still have to pay their share of Social Security and Medicare, and their tips must be reported on a W-2 in order to receive this deduction.
A lot of people never reported tips to begin with, but this new provision could encourage employers to proactively put tips into people’s W-2s. I think it’s a win-win. There’ll be more tip income reported from employers, but it’s also beneficial to service workers who are receiving tips—they will certainly have more money in their pockets to spend.
How Your Financial Advisor Can Help Navigate Changes
The number one thing to avoid doing after learning any new finance-related information is to panic—and a close number two would be to avoid making sudden changes to your portfolio. That’s precisely why we call it financial planning. Putting the pieces in place to create the best long-term benefit is the name of the game.
Your financial planner should assess your personal situation to determine if or how you will be impacted by changes like these. To take advantage of opportunities (or avoid negative consequences), there may be actions you can take now, or plans you can put in place that will help you in the long term.
For example, the OBBBA also introduced a new $6,000 deduction for seniors that will benefit them if they’re within certain income limitations; beyond those limitations the deduction phases out. If you’re a senior who is close to this phase-out level, your advisor should take care to avoid creating new taxes through capital gains or distributions that would phase you out of this deduction.
Searching for some guidance in relation to tax or financial planning? Please don’t hesitate to reach out to us at Curio Wealth—we’re always happy to help!
