You may have heard about the One Big Beautiful Bill Act, signed into law on July 4th, 2025. With nearly 1,000 pages, it’s no surprise that headlines have been full of noise and confusion. Some provisions are permanent, others temporary, and rules are constantly shifting.

Our goal here is simple: Cut through the clutter and focus on the changes that matter most to you. This way, you’ll have a clear sense of how the law could impact your finances—without getting lost in details that don’t affect your long-term strategy.

Tax Brackets: A Lifeline You Don’t Want to Lose

One of the most important parts of the bill is what didn’t change: the tax brackets. The U.S. tax system is progressive. Higher income gets taxed at higher rates but without this bill, brackets would have reverted to pre-2017 levels in 2026. Middle brackets would have jumped to 25% and 28%, and top rates could have reached 39.6%.

Thanks to the 2017 Tax Cuts and Jobs Act, brackets have been lower:

Low: 10% and 12%, instead of 10% and 15%
Middle: 22% and 24%, instead of 25% and 28%
High: 32%, 35%, 37%, instead of 33%, 35%, 39.6%

The new bill permanently locks in these lower rates; well, permanent until lawmakers decide otherwise. This is arguably the single most impactful change in the legislation.

Standard Deduction: The Express Bus to Simpler Taxes

Deductions reduce your taxable income, which in turn lowers your taxes. You can claim them in one of two ways: by taking the standard deduction or by itemizing.

Standard deduction, the express bus: It’s fast, easy, predictable. You hop on, pay one flat fare, and reach your destination without tracking receipts.
Itemizing, driving yourself: This is potentially faster or cheaper but only if you track every deductible expense, like mortgage interest, state taxes, and charitable contributions.
Since 2017, the bus has been so generous that about 90% of taxpayers don’t need to drive themselves. The new bill keeps the high standard deduction permanent: $15,750 single / $31,500 married filing jointly. If you’re over 65, you’ll get an extra boost: +$2,000 single/+$1600 each married.

A married couple over 65 could claim $34,700. That’s as high as I’ve ever seen it. Most taxpayers can stay on the express bus for a simple, effective way to reduce taxes.

Seniors: Enjoy a Temporary Bonus

For taxpayers over 65, there’s a special bonus deduction from 2025–2029. Think of it as a free upgrade on your bus ticket or extra fuel if you’re driving:

$6,000 per person on top of your standard or itemized deduction
Full benefit if AGI < $75,000 single / $150,000 married filing jointly
Partial benefit phases out entirely at $150,000 single / $250,000 married

Whether you take the bus (standard deduction) or drive yourself (itemize), eligible seniors get this extra boost—a temporary, generous way to lower taxable income.

SALT Deduction: When Driving Might Be Worth It

The State and Local Tax (SALT) deduction only applies to the ~10% who drive themselves (itemize). It covers state income, property, and personal property taxes.

Since 2017, SALT has been capped at $10,000, hitting high-tax states like California and New York. The new bill temporarily raises it to $40,000 from 2025–2029, with a 1% annual inflation adjustment. That’s a 400% increase, which makes driving your own car potentially worth the extra effort again. Incomes above $500,000 phase down, and $600,000+ revert to $10,000 cap. Starting in 2030, the cap returns to $10,000 for everyone.

Charitable Giving: Bus or Car, You Still Benefit

Starting in 2026, a permanent deduction for cash gifts to charitable organizations is available even if you stay on the bus (don’t itemize):

$2,000 married / $1,000 single
Cash only—property donations or donor-advised funds don’t count

For those driving themselves (itemizing), charitable contributions remain a powerful way to reduce taxable income, but there’s a small hurdle starting in 2026. You must first exceed 0.5% of your adjusted gross income (AGI) before your donations count toward your deduction.

For example, if your AGI is $100,000, 0.5% is $500. That means the first $500 of your donations don’t count toward your itemized deduction. If you donated $10,000, only $9,500 would apply.

Whether you take the bus (standard deduction) or drive yourself (itemize), understanding the rules helps you plan your giving effectively and take advantage of the new opportunities.

Other Notable Changes

The bill also addresses estate tax adjustments, car loan interest deductions, taxation of tips and overtime, energy credits and deductions, and other niche provisions. How these affect you depends on your personal situation, so it’s always wise to consult your financial and/or tax advisor.

Playing the Long Game

Tax laws will always change. What we can control is our approach: staying disciplined, focused, and committed to the long-term game, no matter the rules. For most taxpayers, these updates won’t dramatically alter outcomes, but there may be opportunities worth considering—and that will be the focus of our next blog. At Foster Group, truly cared formeans that our clients’ goals always come first. We’re partners in the pursuit of a meaningful and generous life.”

All statistics and data sourced from the One Big Beautiful Bill Act.