How Will the Big Beautiful Bill Impact You? Here’s What We Know

In July, Congress passed and President Donald Trump signed the 2025 Reconciliation Legislation (H.R. 1), better known by the president’s pet name for it — the One Big Beautiful Bill. The primary focus of the bill was to make 2017 tax cuts, created by the Tax Cut and Jobs Act (TCJA), permanent.

But the bill also does a lot more, including creating some short- and long-term tax rules, most of which will start with the 2027 tax season (though a few will impact 2026).

Undoubtedly you’ve seen that this legislation was passed, but how will it impact you and your family? We reviewed the bill and compiled this list of three ways you could be affected.

1. Increased Tax Deduction for Those 65 and Older

Since most of our clients are those saving for retirement or already in retirement, we know you are concerned about how seniors may experience these changes. One of the most significant changes is that those over 65 will now be eligible for a bigger deduction.

The bill allows them to reduce their taxable income by an additional $6,000, meaning they get more than the standard or itemized deduction. There are a few caveats for this, of course:

·        You need a Social Security number valid for work

·        Those using the “married filing separately” status can’t use this additional deduction

·        If your modified adjusted gross income (MAGI) is more than $75,000 (single) or $150,000 (married/joint), then the deduction decreases

In addition to benefiting the yearly tax bill for those over 65, this also presents an excellent opportunity to convert a Roth IRA, since qualified withdrawals are tax free.

2. SALT Deduction Cap Bill Increase

The state and local tax (SALT) deduction gives you money off your federal return based on the state and local taxes you pay on income and property. The Big Beautiful Bill raises the cap on those deductions. Here are the changes you’ll see:

·        For MAGI below $500,000 (or $250,000 for married filing separately), the cap will rise to $40,000.

·        For those whose MAGI is above $500,000, the cap will be reduced by 30% till it falls to $10,000.

·        The threshold for the cap and income will rise 1% each year.

3. Expansion of 529 Plan Rules

Many planning for retirement have children in college or nearing college age. The Big Beautiful Bill gives more leeway for what qualifies as an eligible 529 expense. Those with 529 plans will now be able to take tax-exempt distributions for:

·        Paying for K-12: Though you could previously use $10,000 for this, the cap will rise to $20,000.

·        Paying for additional K-12 expenses: You can now use 529s to cover non-tuition expenses like tutoring and books.

·        Paying for post-secondary educational costs: You can use your 529 funds for testing fees if pursuing a post-secondary credential or to pay for continuing education credits.

The passage of the Big Beautiful Bill has sparked immediate changes and others you will see down the line. If you have questions about how this may impact you, reach out to Jay today to get clarification.