2025 isn’t just another tax year; it’s a pivot point. The One Big Beautiful Bill (OBBBA) locks in major rate changes, introduces brand-new tax vehicles, and reshapes deductions, credits, and limits. If you’re advising clients (or preparing your own planning), here are the top three shifts you must understand — and how our upcoming course can help you turn them into opportunities.
1. “Trump Accounts” — A New Savings Vehicle with Major Implications
One of the boldest new provisions is the so-called Trump Account (a pilot savings/IRA hybrid for minors). Under the law, eligible children (born 2025–2028) will receive a $1,000 government seed deposit, and families (or employers) can contribute up to $5,000 annually in non-deductible contributions.
These accounts must invest in low-cost indexed funds (capped fees) and will convert into a Traditional IRA when the child turns 18, with standard IRA rules applying.
From a planning perspective, this opens new opportunities (and pitfalls) around basis tracking, rollover elections, employer contributions on behalf of children, and integration with other tax-advantaged savings strategies.
2. SALT Deduction Expansion + Phase-Down Mechanics
Perhaps the most widely felt change for many taxpayers is the temporary expansion of the SALT (state and local tax) deduction. The cap jumps from $10,000 to $40,000 for joint filers (or $20,000 for separate filers) starting in 2025.
However, this increased cap isn’t unlimited. Taxpayers with MAGI above $500,000 will see the $40,000 limit phased down by 30% of the excess over that threshold, but the deduction cannot drop below the old $10,000 floor.
This means many high-income clients will still be constrained despite the higher nominal limit. Understanding phaseouts, the state-local tax mix (income vs. sales), and where clients fall on the income scale is now critical.
3. New Deductions & Credits: Tips, Overtime, Senior Exemptions & More
Beyond Trump Accounts and SALT, OBBBA introduces several brand-new below-the-line deductions and credits that didn’t previously exist:
- A tip deduction and overtime deduction (satisfying certain criteria) allow adjustments not to AGI but to taxable income.
- A senior exemption (for taxpayers age 65+) becomes available from 2025 to 2028.
- Changes in charitable deduction rules, including a return of non-itemizer deduction and a 0.5% AGI haircut starting 2026.
- Adjustments to dependent care credits, educator expense deductions, and wagering loss deductibility.
All of these provisions add complexity, but also open doors. If you know which clients can benefit most, and when to accelerate or defer, you can capture real incremental value.
Want to know more?
We dive deep into each of these three pillars (Trump Accounts, SALT strategy, and the new deductions) in our course: 2025 Individual Planning: Trump Accounts, PTET, and SALT Planning. You’ll get hands-on examples, compliance traps to avoid, and more to apply these strategies client by client.
If you’ve read this far, I invite you to check out our course here.
Final Thoughts
Change breeds opportunity, but only if you’re prepared. In 2025:
- You must master how new accounts (Trump Accounts) interact with existing IRAs and gift strategies.
- You’ll need to model SALT deductions carefully (especially the phase-down mechanics).
- You must integrate the new below-the-line deductions and credits thoughtfully in overall planning.
Sources & URLs
- White House announcement on Trump Accounts
- One Big Beautiful Bill Act (general background) – Wikipedia
- RSM US LLP – Big Beautiful Bill Tax Insights
- Journal of Accountancy – Tax changes in Senate budget reconciliation bill
- H&R Block – OBBB tax law overview
- Smith & Howard – 2025 Tax Reform Signed Into Law: What to Know
