The One Big Beautiful Bill Act (OBBBA) was signed on July 4th, 2025, marking one of the most significant tax and budget changes in years. The primary purpose is to make the 2017 tax cuts permanent for individuals and businesses. It also, however, increases federal spending on areas like border security, military defense, and energy. These increases are funded in part by cuts to spending on public programs such as Medicaid and food assistance, and add new work requirements for benefit recipients.

According to government estimates, OBBBA is expected to add about $3.4 trillion to the national deficit over the next 10 years. For many taxpayers and business owners, it also brings continued or expanded tax savings, along with some important planning opportunities.

What Will Stay the Same

• Social Security and Medicare eligibility rules, with limited exceptions for certain immigrant populations.
• Inflation indexing/matrix structure of key tax brackets under the TCJA.
• State and local tax (SALT) regulations, aside from the newly increased cap, and the municipal bond tax exemption.
• Non-federal programs and regulations, including state licensing, zoning, and education standards.

What OBBBA Changes

Tax Reforms

• 2017 Tax Cuts Made Permanent: Including individual brackets, higher standard deduction, and extended SALT cap (now up to $40,000) 
  
• New income tax breaks:
  • No federal tax on tips or overtime income (excluding Social Security, Medicare, and state/local taxes).
    
  • Enhanced small business write-offs: bonus depreciation and pass-through deductions raised (from 20% to ~23%) 
    
• New “Trump Accounts”: Automatic $1,000 deposit into a tax-deferred investment trust for every child born between 2025 and 2028, with contributions allowed until age 18 for education/homeownership/small business.

Healthcare and Social Welfare

• Medicaid cuts: Nearly $912 billion over the next decade, affecting ~10–12 million enrollees by 2034; includes:
  • New 80-hour monthly work/volunteer/study requirements (age 19–64).
  • Tighter eligibility verification (twice yearly) and retroactive eligibility reduced to one month.
  • Copays up to $35 per service will apply to individuals earning more than 100% of the Federal Poverty Level. The law also includes restrictions on high-equity applicants, nursing home staffing rules, and defunding of Planned Parenthood (temporarily blocked by a court injunction).
    
• SNAP (food aid) cuts: Up to $279 billion in reductions via work rules and state cost shifts.
  
• Medicare adjustments:
  • A $500 billion cut in Medicare spending from 2026 onward (auto-triggered reductions), though major reforms were removed from the final law.
  • Exclusion of undocumented/non-qualifying immigrants from eligibility.
  • Social Security and age-based rules are unchanged.

Federal Spending and Security

• Debt ceiling raised by $5 trillion, but projected deficits to grow by $3–3.4 trillion over 10 years (some estimates up to ~$4 trillion).
  
• Defense and border security funding:
  • +$150B to defense (drones, shipbuilding, IndoPacific operations, Coast Guard, missile defense)
  • +$70B border enforcement (including physical barriers, personnel, inspection tech).
    
• Environmental policy rollback:
  • Repeals or phases out Inflation Reduction Act credits (e.g., methane emissions, clean energy incentives), delaying or rescinding key programs through as late as 2034.

Education and Workforce

• Pell Grant expansion: Covers short-term certificates and trade programs (8–15 weeks) beginning mid 2026.
  
• Student loan and tuition benefits:
  • Student loan forgiveness for death/disability made permanently tax-exempt.
    529 plans expanded to cover K12 and vocational tuition; annual withdrawal limit raised to $20,000

What the Changes Mean for You

For many tax payers, OBBBA means stability in terms of no surprise tax hikes, a higher standard deduction, and continued access to valuable credits. Parents may benefit from the boosted child credit, while business owners will see increased flexibility to grow and reinvest.

The new estate tax limits merit a close look by wealthier families and estate planners. And anyone living in a high-tax state may want to take advantage of the temporarily expanded SALT deduction over the next few years.

Those who earn tips or overtime may also benefit from new deductions through 2028. Seniors and retirees will see a higher deduction and may want to revisit their filing strategy. Families saving for children’s futures can now open tax-advantaged accounts for education, health, or housing needs, with up to $5,000 in annual parent contributions and a $1,000 federal match for new accounts.

OBBBA is complicated but its core message is this: Most of the 2017 tax cuts are now permanent, and several new savings opportunities have been added. If you own a business, have children, or are planning your estate, now is the time to review your strategy.

Sassoon Cymrot Law attorneys are here to help you understand how OBBBA impacts your family, your business, and your future. Please reach out with questions, we are ready to help guide you through what’s next.