Tax and Client Strategies Advisors' Guide to Six Lucrative Opportunities
The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, brings about significant changes to the tax landscape, offering expanded tax deductions, permanent extensions of the 2017 Tax Cuts and Jobs Act (TCJA) provisions, and new benefits for children and seniors.
The OBBB increases the standard deduction to $15,750 for individuals and $31,500 for couples, simplifying filing and potentially reducing itemization. This change, along with the permanent extension of individual income tax rates and brackets from the TCJA, provides tax rate stability and long-term planning clarity.
Financial advisers are given an arsenal of tools to help clients reduce taxes, grow wealth, and stabilize their financial futures. Key among these tools are the following temporary deductions:
- No tax on qualified tip income up to $25,000 and overtime premium pay (up to $12,500 for individuals, $25,000 for joint filers) from 2025-2028.
- An additional senior citizen deduction of $6,000 for taxpayers 65+ with certain income limits to offset Social Security tax burdens.
- A temporary deduction (up to $10,000) on auto loan interest for U.S.-assembled vehicles with income phase-outs.
The OBBB also offers increased opportunities for tax savings and strategic financial planning, especially for high earners and families. Key opportunities include:
- Roth conversions may become more attractive given the permanency of tax brackets.
- Increased room for charitable and inter-family gifting to optimize tax outcomes.
- Holistic asset allocation reviews to align with changing tax laws.
Moreover, the OBBB introduces a novel savings account option, the "Trump Accounts" for children, designed to help families save for their children’s futures, which may offer tax advantages.
The SALT deduction cap temporarily rises to $40,000 for households earning under $500,000, reverting to $10,000 in 2030. This change is beneficial to residents in high-tax states.
In summary, the OBBB provides expanded tax deductions, permanency of TCJA provisions, new child and senior benefits, and increased SALT caps, creating opportunities for tax savings and strategic financial planning. Taxpayers are advised to work closely with financial advisors to navigate and optimize these provisions.
For instance, a married couple, both age 70, with a combined income of $100,000, can reduce their taxable income to $53,300 by utilizing the standard deduction, the existing age-related deduction, and the new enhanced deduction.
New-car buyers can also benefit from the OBBB, as they can deduct up to $10,000 annually in loan interest for vehicles built in the United States, with the deduction phasing out for individuals earning over $100,000 and couples over $200,000.
Financial professionals should join forces with CPAs and estate attorneys to deliver comprehensive, coordinated advice that addresses every aspect of their clients' tax planning needs. Advisers should also encourage qualifying clients to use enhanced deductions and credits before they expire in 2028.
The OBBB opens up new opportunities for financial professionals, as they can now leverage increased tax deductions, such as the one on auto loan interest for U.S.-assembled vehicles, to help clients save money and reduce taxable income. This change, in conjunction with the provisions for seniors and children, presents a unique landscape where business owners and individuals can engage in strategic financial planning, with the support of their financial advisers.
