What the One Big Beautiful Bill Could Mean for You
Congress has passed the "One Big Beautiful Bill" (H.R. 1), a sweeping tax package that affects retirees, workers, families, and business owners. Signed into law in July 2025, many of its provisions apply to the 2025 tax year, which began on January 1. Several key measures are scheduled to expire after 2028. Now is the time to prepare.
New Policy Updates
Social Security Tax Relief
A new “Senior Deduction” of $6,000 for individuals and $12,000 for couples reduces taxable income for retirees and is expected to eliminate federal income tax on Social Security benefits for around 88% of retirees. The deduction phases out for incomes above $75,000 (single) or $150,000 (joint).
Above-the-Line Deductions for Workers
If your income is under $100,000 (single) or $200,000 (joint), you can now deduct:
Tip income (up to $25,000 per taxpayer, with phase-outs above $150,000 AGI for singles and $300,000 for joint filers)
Overtime pay (up to $12,500 per taxpayer, with similar phase-outs)
Up to $10,000 per year in interest on qualifying U.S.-assembled auto loans
These deductions apply from 2025 through 2028.
Child Tax Credit Adjustment
The credit increases to $2,200 per child and will be indexed to inflation.
Charitable Giving Deduction
All taxpayers—even if you take the standard deduction—can deduct up to $1,000 ($2,000 for joint filers) in charitable contributions.
Employer Child-Care Credit Expanded
Employers now receive a 40% credit on childcare expenses, with the annual cap rising to $500,000 (or higher for small businesses).
Energy & Oversight Cuts
Some clean energy credits are being phased out. The bill also includes cuts to IRS and CFPB enforcement budgets.
What to Watch For
Most new deductions expire after 2028—so smart planning between now and then is essential.
Some changes may accelerate Medicare and Social Security trust-fund exhaustion (now projected for 2032).
IRS guidance is still pending for several provisions, including how income thresholds are calculated.
Planning Opportunities
Roth Conversions: Lower AGI from the senior deduction may reduce the tax cost of converting traditional IRA dollars.
529 Flexibility: Consider funding for homeschoolers or adult learners pursuing certifications.
Charitable Strategy: New $1k/$2k deduction benefits small donors; high earners may prefer appreciated-asset gifts or DAFs.
Auto Purchase Timing: Vehicle interest deductions apply to qualifying U.S.-built new cars before 2029.
Business Planning: Take advantage of expanded child care credits and temporary tax flexibility.
Our Team is Here for You
These new provisions may open up time-sensitive opportunities—or raise questions about how your existing strategy fits into a shifting tax landscape.
If you’re wondering how these changes might impact your financial plan, tax outlook, or long-term goals, our team at Middlebrook Wealth is here to help.
Thank you,
The Middlebrook Wealth Team
References
U.S. Congress – H.R. 1 (One Big Beautiful Bill Act), 119th Congress https://www.congress.gov/bill/119th-congress/house-bill/1
Axios – “What’s in the GOP’s Big Beautiful Bill” (July 2025)
https://www.axios.com/2025/07/01/republican-tax-plan-big-beautiful-bill
Punchbowl News – Legislative Tracker & Policy Breakdown (July 2025)
Politico – “Congress Sends Sweeping Tax Bill to White House” (July 2025)
https://www.politico.com/news/2025/07/03/congress-tax-bill-passes
Tax Foundation – “Analysis: One Big Beautiful Bill’s Impact on Seniors and the Middle Class”
Committee for a Responsible Federal Budget – “New Tax Law May Accelerate Trust Fund Insolvency”
https://www.crfb.org/blogs/2025-tax-package-and-the-future-of-social-security
The White House – Fact Sheet: “The One Big Beautiful Bill” (July 2025)
https://www.whitehouse.gov/briefing-room/statements-releases/2025/07/02/
IRS – Pending guidance and updates related to H.R. 1 implementation
Joint Committee on Taxation – Projected Revenue Effects of H.R. 1 (expected July 2025)
Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
The information in this material is not intended as tax or legal advice. Please consult your legal or tax professionals for specific information regarding your individual situation. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
