Overview of the OBBB Act: 6 More Provisions You Need to Understand

The enactment of the One Big Beautiful Bill Act is going to have far-reaching implications for tax and financial planning. In this second part of an overview of the Act, we take a look at six temporary provisions that may affect your clients.

With the passage of the “One Big Beautiful Bill,” Congress and President Trump have dramatically altered the tax- and financial-planning landscape for financial advisors and their clients.

In the first part of this series, we examined a dozen important permanent provisions in the OBBB. In this second part, we discuss six temporary provisions, all of which may have important implications for many of your clients. Understanding these changes will be crucial for navigating client conversations, identifying new opportunities, and mitigating potential risks. These provisions have been confirmed to reflect the final text signed into law, not earlier drafts or proposed versions. All information presented below has been cross-referenced with recent analyses from the Congressional Budget Office (CBO) and reputable legal and tax advisory firms following the bill’s final passage.

6 Important Temporary OBBB Provisions

1. Increased SALT deduction cap: The cap on the state and local tax (SALT) deduction is temporarily raised from its current $10,000 to $40,000 for single filers and married couples with adjusted gross incomes (AGI) below $500,000 (for married filing separately, the increased deduction and phaseout income threshold are halved to $20,000 and $250,000 respectively). The increased cap and income thresholds would increase slightly each year. This significant, albeit temporary, relief for taxpayers in high-tax states will revert to the original $10,000 limit after five years (in 2030).
   
   
   • SALT income phase-outs: The new $40,000 SALT deduction cap is subject to income phase-outs to ensure that the primary benefits are directed to middle and upper-middle-income taxpayers, rather than the highest earners. This higher cap applies equally to single and married filers and begins phasing out once adjusted gross income exceeds $500,000, fully phasing out at $600,000—regardless of filing status. For example, a married couple or single filer earning $500,000 can claim the full $40,000 SALT deduction, but one earning $600,000 faces the $10,000 cap. Pass-through business owners can still use state-level workarounds to bypass the cap, enabling significant tax savings on high state taxes. This change benefits many taxpayers in high-tax states, especially business owners, though itemizing remains most advantageous for those with substantial state taxes relative to income.
2. Enhanced additional standard deduction for seniors: Critically, the Act now allows each qualifying individual aged 65 or older to deduct an additional $6,000 on top of their standard deduction through 2028. The deduction phases out at a 6% rate for individual filers whose income is more than $75,000 or joint filers whose income exceeds $150,000, fully phasing out at $175,000 for individual filers and $250,000 for joint filers. Therefore, for tax year 2025, a married couple who are both age 65+ and under the $150,000 income limit could take a maximum total standard deduction of $46,700 ($31,500 base standard deduction + senior extra deduction of $3,200 + $12,000 ($6,000 each) new bonus deduction). The deduction is available whether a taxpayer takes the standard deduction or itemizes their deductions. This will eliminate the taxes on Social Security benefits for the vast majority of seniors during these years.
   
   
3. Temporary tax deduction for tips: The act introduces a new, temporary federal income tax deduction for tips. This deduction is available for workers making less than $150,000 annually (phasing out for incomes above this threshold, or $300,000 for married couples filing jointly), with a cap of $25,000 per year on the deductible amount. This provision is set to expire at the end of 2028. It provides a direct financial benefit to individuals in service industries, though it does not exempt tips from state, local, or payroll taxes.
   
   
4. Temporary tax deduction for overtime pay: A new temporary tax deduction is established for overtime pay. This deduction applies to workers earning less than $150,000 per year (with a phase-out above this), capped at $12,500 for single filers and $25,000 for joint filers. Similar to the tip deduction, this provision is temporary and is set to expire in 2028.
   
   
5. Trump Accounts: The act establishes “Trump Accounts,” a new type of tax-deferred savings account designed for children. These accounts aim to encourage saving for a child’s future by allowing parents and others to contribute funds that grow tax-deferred. Children born in 2025 through 2028 (as U.S. citizens with Social Security numbers for both parents and the child) will be automatically enrolled and receive a one-time deposit of $1,000 from the federal government into their account. These accounts have a $5,000 per year (indexed) contribution limit and contributions must cease when the child reaches age 18. Employers can make up to $2,500 in nontaxable contributions per employee. Distributions from the account are generally prohibited until the child turns 18. Once age 18, the full account balance can be withdrawn. Trump Accounts will operate similarly to IRAs with investments growing on a tax-deferred basis.
   
   
6. Temporary auto loan interest deduction: Car buyers can now deduct up to $10,000 per year in auto loan interest. This deduction applies exclusively to vehicles with their final assembly in the United States and explicitly excludes fleet sales or commercial vehicles. It is subject to income phase-outs, beginning for taxpayers with adjusted gross incomes exceeding $100,000 ($200,000 for joint filers), and phasing out entirely for higher earners. This provision is in effect for vehicles purchased between 2025 and 2028.

The OBBB Act represents a truly transformative legislative package with wide-ranging implications for individuals, families, and businesses across the United States. 

As financial advisors, our role is more crucial than ever in helping our clients navigate these complex and far-reaching changes. We must thoroughly understand each confirmed provision, its sunset clauses, and its potential ripple effects on income, investments, and overall financial stability.

Proactive engagement with clients to review and adjust their financial plans in light of this new law will be paramount to ensuring they are well-positioned to adapt and thrive. Let us leverage our expertise to provide informed guidance and strategic solutions in this new, fiscally challenging era.

Sources:
Committee for a Responsible Federal Budget. “CBO Score Shows Senate OBBBA Adds Over $3.9 Trillion to Debt.” June 28, 2025.
Tax Foundation. “One Big Beautiful Bill Act Tax Policies: Details and Analysis.” July 3, 2025.
Tax Policy Center. “House and Senate Plans Boost Child Tax Credit, Could Help More Low-Income Families.” June 25, 2025.
White House. “MEMO: The One Big Beautiful Bill Improves the Fiscal Trajectory.” June 7, 2025.
White House. “WHAT THEY ARE SAYING: Senate Approves Landmark One Big Beautiful Bill.” July 1, 2025.