The following will highlight some key income, estate, and gift tax provisions in the “One Big Beautiful Bill” — including changes to the SALT deduction and Medicare.
Dubbed the “Big Beautiful Bill” (officially the One Big Beautiful Bill Act or OBBBA), this sweeping 887-page budget reconciliation package passed the Senate on July 1, 2025 (51–50 with VP Vance breaking the tie), and subsequently the House on July 3. President Trump signed the bill into law on July 4th, 2025. The main aspects of the bill extend the tax cuts temporarily put in place by President Trump in his first term. Many of the tax cuts would have expired without passage of the Big Beautiful Bill.
This massive legislation bundles together tax provisions, entitlements, energy rollback, border and defense spending, and a new debt ceiling increase. Its tax-related provisions are most significant, affecting income, SALT, estate & gift taxes, Medicare, Medicaid, and more.
Income Tax Provisions
a. Permanent Extension of TCJA Tax Rates & Standard Deductions
• The bill permanently extends the 2017 Tax Cuts and Jobs Act (TCJA) individual tax rates and lower brackets, which were set to expire after 2025
• It locks in the nearly doubled standard deduction: in 2025, $15,000 for individuals, $30,000 married filing jointly, and $22,500 heads of household — with a temporary 2025–2028 boost of +$1,000 (indiv) / +$2,000 (married) / +$1,500 (HOH).
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b. Special Deductions: Tips, Overtime & Auto Loan Interest
• For 2025–2028, the bill introduces above-the-line deductions on:
1. Tip income for workers in tipped industries
2. Overtime pay for non-high-income earners
3. Auto loan interest (up to $10,000), if the vehicle is assembled in the U.S. c. Capital Gains Surtax (Under Senate Review)
• A proposed surtax on large capital-gain events is under review — rates and thresholds unclear — aimed at multimillion-dollar transactional gains
SALT Deduction
The bill reverses the existing $10,000 cap on state and local tax (SALT) deductions, but retains income-based phase-outs:
Increased Cap & Phase-out
• Raised SALT cap: Limits on the state and local tax deduction increased from $10,000 to $40,000 per year for married filers ($20,000 for singles filing separately), effective for tax years 2025 through 2029.
• Annual inflation adjustment: In 2026, the cap rises to $40,400, then increases by 1% each year through 2029
• Sunset in 2030: The increased cap reverts back to $10,000 starting in the 2030 tax year . Income-Based Phase-Out
• Phase-out thresholds: The $40,000 cap applies to taxpayers with modified adjusted gross income (MAGI) up to $500,000 (married filing jointly). Beyond that, the cap gradually phases down—and singles start at a $250,000 MAGI threshold
PTET (Pass-Through Entity Tax) Workaround Preserved
• The final text keeps PTET deduction intact, allowing pass-through businesses and professionals to continue using the workaround to deduct SALT at the entity level.
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Estate & Gift Taxes
o Permanently raises the exemption to $15 million per individual ($30 million married) starting in 2026, with annual inflation adjustments thereafter
Medicare, Medicaid and Health-Program Cuts
• Medicaid & ACA:
o Cuts up to $930 billion over 10 years versus CBO projections. Changes include stricter adult work requirements, added co-pays, medical-aid eligibility
restrictions — potentially causing 8–12 million Americans to lose coverage. • Medicare:
o While not deeply detailed, provisions like hampering enrollment streamlining and efficiency reforms could slow modernization initiatives through 2035.
o The Medicare Rights Center warns these changes could “trap people with Medicare in red tape.”
Overall, the bill shifts costs onto beneficiaries and states, with both coverage and administrative access being scaled back.
Other Tax Elements
Aside from income, SALT, and estates, other significant provisions include:
• Child Tax Credit: Boosted to $2,500 (2025-28), then reduced to $2,000 thereafter. • Senior Deduction: Seniors age 65+ receive a one-time additional standard deduction- $4,000 generally, with Senate version offering $6,000—for 2025–2028.
• Green-energy Credits: Many of Biden administration’s clean-energy incentives are scaled back or eliminated.
• Business Incentives: Includes deductions for pass-through business income, expanded bonus depreciation, and R&D tax credits .
Fiscal Impact & Political Debate
Financial watchdogs estimate the bill will add between $2.4 trillion and $3.3 trillion to the national debt over 10 years . The CBO estimated as many as 10.9 million Americans could lose health insurance.
Supporters claim it locks in tax relief, boosts take-home pay, supports seniors, and delivers relief to high-tax homeowners. But detractors argue it largely benefits wealthy individuals, fuels deficits, and undermines health and safety-net protections.
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Strategic Takeaways
1. High-tax-state homeowners & itemizers: Maximizing SALT deductions ($40,000 cap thro 2029) matters—phase-out for >$500,000 AGI applies.
2. Estate planners: Consider leveraging the extended $15 M per person exemption ahead of potential future reductions.
3. Working-class workers: Tip, OT, and auto-loan interest deductions may raise take-home pay in 2025–28.
4. Seniors: Extra deduction ($4,000–$6,000) and higher child credits may support household budgeting.
5. Low-income & Medicaid/ACA recipients: Those in Medicaid or benefit programs should actively monitor potential loss or cost increases.
Conclusion
The One Big Beautiful Bill represents one of the most expansive tax-and-spending packages in recent U.S. history. It firmly extends the legacy of the 2017 tax cuts, tweaks key deductions, and reshapes the SALT and estate tax landscape — balanced by major cuts to Medicaid and other entitlement programs.
Whether you benefit or stand to lose depends on your income, tax-coverage state, estate value, employment type, and reliance on health programs. For millions, 2025 is the year to reassess tax strategy, retirement and estate plans, and healthcare eligibility — before the bill takes effect.
Please let us assist with answering any questions as to how the passage of the Big Beautiful Bill impacts your planning now and going forward.
Louis C. Ciliberti, CFP CLU ChFC BFA
Louis C. Ciliberti & Associates, Ltd. provides all investment advisory services through Concurrent Investment Advisors, LLC, an SEC Registered Investment Advisor. Brokerage Services offered through Purshe Kaplan Sterling Investments (PKS), Member FINRA/SIPC Headquartered at 80 State Street, Albany, NY 12207. PKS and Concurrent Investment Advisors d/b/a Louis C. Ciliberti & Associates, Ltd. are not affiliated companies.