Meet Lisa.
She’s in her mid-50s, successful in her career, and juggling a lot—family, work, and the quiet pressure of making smart financial decisions with limited time. She and her husband earn a solid income and have built a net worth of around $3 million, including a home and various investment and retirement accounts.
But here’s the truth: Lisa doesn’t feel organized. She doesn’t see herself as “wealthy” compared to others around her, and while she’s confident and capable in her professional life, managing her personal finances feels overwhelming. She’s not a micromanager—and she doesn’t want to become one now.
What Lisa really wants is a team she can trust. People who will listen, help her make sense of the moving parts, and guide her through the decisions that matter most.
The recently passed One Big Beautiful Bill Act, also known as the OBBBA bill, is exactly the kind of big-picture change Lisa wants to stay ahead of but doesn’t have time to fully unpack on her own. The rest of this blog will break down what this new law means for someone in her shoes, and how thoughtful, timely planning can help her simplify, protect what she’s built, and move forward with greater clarity and confidence.
Temporary Spike in State and Local Tax (SALT) Deduction Cap
Beginning this year, the SALT deduction cap is increased from $10,000 to $40,000 for taxpayers with income under $500,000, with the $40,000 cap increasing 1% annually from 2026-2029 before reverting to $10,000 in 2030. The increase phases out for incomes over $500,000.
Planning Insight: Lisa may be able to itemize again and lower taxable income by deducting the full $40,000 of her property, state, and local taxes. Before OBBBA, the SALT deduction was capped at $10,000, which means claiming the $30,000 standard deduction in 2025 would have been better. If her household income exceeds $500,000 during the 2025-2029 years, she can consider shifting income and deductions to ensure she falls under the new $500,000 phaseout.
Personal Tax Rates Extended Indefinitely
The lower tax brackets of the 2017 Tax Cuts and Jobs Act (TCJA) for individuals have been permanently extended and will stay at 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
Planning Insight: Lisa’s federal tax rate won’t jump in 2026 like she thought it might. No bracket increases mean more long-term planning power. Roth conversion strategies and stock option exercises remain golden opportunities in future lower taxable income years. Lisa should seek the guidance of a qualified tax professional or CERTIFIED FINANCIAL PLANNER® professional to evaluate whether these planning strategies could be utilized to achieve her goals while minimizing taxes.
Enhanced Standard Deduction
The higher, near double, standard deduction from the 2017 tax cuts becomes permanent and will even increase to $15,750 (from $15,000) for a single filer and $31,500 (from $30,000) for married filing jointly couples for 2025. It will then rise every year for inflation.
Planning Insight: As Lisa might be on the margin between the standard deduction and itemizing, she should consider strategically bunching itemized deductions in certain tax years to maximize the benefit.
Permanent Changes to Charitable Deductions
A few key changes to be aware of:
- Cap on Tax Benefits for Itemized Deductions: Limits the tax benefit from itemized charitable deductions to 35%, reducing the advantage for high-income filers in the 37% bracket.
- New Deduction Floor for Itemizers: Requires qualified charitable contributions to exceed 0.5% of Adjusted Gross Income (AGI) before any tax deduction can be claimed.
- Limited Deduction for Non-Itemizers: Allows a charitable contribution deduction of up to $1,000 for individuals or $2,000 for married couples, even without itemizing deductions.
Planning Insight: If Lisa is projected to fall in a higher tax bracket in 2026, she may avoid this new limitation for those in the top tax bracket by accelerating donations into 2025. In 2026 and future tax years, she also should carefully consider the timing and amounts of her itemized charitable contributions to maximize her tax savings with the new 0.5% floor on deductions. If Lisa does not itemize, she can still give to charities in 2026 and qualify for up to a $1,000 charitable deduction for individuals ($2,000 for married filing couples).
Big Changes to Estate and Gift Tax Exemptions
The OBBBA bill stopped the 2025 federal estate and gift tax exemption limit (currently ~$14M per person), from getting cut in half to about $7 million in 2026. The estate and gift tax exemptions will be set at a permanent base of $15 million for individuals ($30 million for married couples) in 2026 and will adjust higher each year for inflation.
Planning Insight: The elevated estate and gift tax exemption provides Lisa with added clarity on her own situation, as she expects to inherit assets from her parents, who were on the verge of having a taxable estate but no longer do due to the higher limit. Her parents now have greater ability to transfer wealth and manage possible estate tax exposure by making additional lifetime gifts to her children.
We do not know where the political landscape will be in future years, so Lisa’s parents should consult with their professional advisors to revisit gifting and trust strategies to take advantage of the unprecedentedly high exemption level.
Other Changes that could affect Lisa’s family
Child Tax Credit
- OBBBA makes the 2017 changes to the child tax credit permanent and raises the maximum credit in 2025 to $2,200 (from $2,000) for each dependent. The child tax credit and its $1,700 maximum refundable amount will be adjusted and increased yearly for inflation.
Planning Insight: Lisa may consider increasing pre-tax retirement contributions, deferring bonus income or maximizing contributions to her HSA from 2025-2028 to fall below the child tax credit’s $400,000 married couples ($200,000 for individuals) phaseout.
Social Security Income
- Lisa’s parents were excited to hear about the idea of “no tax on Social Security benefits”, but this provision ended up being an additional deduction of up to $6,000 for seniors 65 and older (or $12,000 per couple). This deduction is available from 2025-2028 and is in addition to the regular standard deduction and the additional standard deduction for seniors. While there are parts of this new law that may indirectly reduce SOME of the taxes Social Security beneficiaries might pay, this new provision DOES NOT eliminate federal income taxes on Social Security benefits for most people.
Overtime & Tips
- A temporary change for tax years 2025-2028, permits a federal income tax deduction for certain tips and overtime income. Eligible service industry workers can claim a deduction of up to $25,000 for qualified tips. This deduction starts to phase out at $150,000 of modified adjusted gross income for single filers and $300,000 for married filing joint. Regardless of income level, overtime workers can get a tax deduction of up to $12,500 ($25,000 for married filing couples) for qualified overtime compensation.
Planning Insight: Lisa’s daughter works in the service industry in which she receives tips and occasionally works overtime. If her income starts to approach the phaseout thresholds, she may consider contributing more to her retirement and HSA accounts to reduce income.
Get in touch with a Team Hewins advisor to discuss how you can maximally leverage the new financial planning opportunities from OBBBA. Many provisions take effect immediately or within months. Delayed action could cost you significant tax advantages. Now is the time to get strategic if you are growing wealth, building a legacy, and optimizing your family’s financial future.
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein.