July 11, 2025
The Big Beautiful Bill: How Will it Affect You?
By Elliot Palabe, CFP®
The signing of the One Big Beautiful Bill Act (OBBBA), often called the “Big Beautiful Bill,” marks a significant turning point in U.S. economic policy. Signed into law on July 4, 2025, this sweeping legislation promises significant changes to taxes, retirement savings, and social programs. But how exactly does it impact your financial planning? Let’s dive in.
Extended Individual Tax Cuts & Increased Deductions
Perhaps the most immediate impact for many Americans will be the permanent extension of the individual tax cuts originally passed in 2017. Additionally, for taxpayers making less than $500,000 per year, the cap on state and local tax (SALT) deductions will increase temporarily from $10,000 to $40,000, offering significant relief, though this benefit phases out after five years.
New Deductions: Tips, Overtime, and Auto Loans
The bill introduces temporary deductions aimed at providing relief. Workers earning under $150,000 annually can deduct income earned from tips and overtime (up to $25,000 each). Additionally, interest paid on auto loans for vehicles assembled in the U.S. can be deducted, up to $10,000 per year.
A Boost for Newborns
One of the more innovative measures is the introduction of newborn savings accounts created between 2025 and 2028. These accounts begin with a $1,000 government-funded deposit and allow parents to contribute up to $5,000 annually, tax-deferred. Funds can be used toward higher education, job training, or a down payment on a home.
Phasing Out Clean Energy Credits
In a pivot from recent trends, the bill gradually phases out clean energy incentives, including credits for electric vehicles and renewable energy projects introduced under the previous administration. Electric vehicle tax credits end in September 2025, and clean energy project credits sunset by December 2027, which could reshape investment opportunities.
Big Changes for Retirement Savers
The Big Beautiful Bill expands retirement planning flexibility. Most notably, the bill permanently increases the Child Tax Credit from $2,000 to $2,200 per child and indexes it to inflation.
What Does This Mean for You?
This legislation may significantly impact your taxes, investments, and retirement strategies. It highlights the need to proactively review your financial plan and adjust your strategies in line with these new laws.
As always, Palabe Wealth is here to help. If you’re unsure how these changes might affect your financial situation, let’s discuss it together. Schedule a 15-minute introductory phone call, or contact us directly at 847-249-6600 to review your plan today.
This content is for educational purposes only and should not be considered specific financial, tax, or legal advice. Consult with your financial advisor or tax professional before making investment decisions. All investing involves risk, including the potential loss of principal. This material is not insured by FDIC/NCUA or any other government agency and may lose value.
Elliot Palabe, CFP®
Elliot Palabe is a Wealth Advisor at Palabe Wealth, where he plays a pivotal role in designing comprehensive retirement plans and working directly with clients to address their financial needs. Elliot's expertise lies in his ability to combine personalized Financial Planning with strategic Tax Planning, helping to ensure that each client's financial strategy is both optimized and aligned with their individual goals and circumstances.
Elliot has a solid educational foundation that underpins his professional acumen, as he holds a Bachelor’s degree in Finance from the Foster College of Business at Bradley University. His academic background has provided him with a deep understanding of financial markets, investment strategies, and economic principles.
Elliot holds several critical financial industry licenses, including the Series 65, 63, 6, and SIE, held through LPL Financial. He also maintains the CERTIFIED FINANCIAL PLANNER™ designation. These qualifications enable him to offer comprehensive investment guidance and demonstrate his thorough knowledge of the financial services industry.
A specialist in the use of sophisticated financial planning and tax planning software, Elliot brings a technological edge to his approach. This expertise allows him to create detailed and highly personalized financial plans that can adapt to changing market conditions and tax environments. By leveraging cutting-edge technology, Elliot ensures that Palabe Wealth's clients receive the most accurate, up-to-date, and effective financial advice possible.
His work is instrumental in helping clients navigate the complexities of financial planning and retirement preparation, helping to ensure they are well-positioned to pursue their long-term financial objectives.
Outside of work, Elliot competes in pickleball. The game’s blend of strategy and precision reflects the same qualities he brings to financial advising - thoughtful planning, attention to detail, and focus.
