Addendum–Lever #2: Taxes–What to Know About The "One Big Beautiful Bill Act"(a/k/a OBBBA)

Is the "OBBBA" as "B" as they say it is?

In case you haven’t heard, another tax bill has been passed. Really? Yep. But this one’s actually kind of a big deal. On July 4, President Trump signed into law the “One Big Beautiful Bill Act” (a/k/a OBBBA)—a broad package of tax and spending reforms. If you're in your 20s or 30s and thinking, “I’ll worry about tax stuff when I'm older,” don’t tune out. This law includes a bunch of changes that affect your paychecks, savings, giving, and long-term financial planning—some starting right now in 2025.

If you’ve been reading this Substack, you know that I’ve already written about taxes–a LOT! Well, because of the OBBBA, I’ve had to go back and revise almost all of the tax articles (Lever #2). (In them, I cover almost all of the basic income tax topics you need to know about—check out the “Start Here” page to find them.) Take a look if you’re interested, but I will summarize the changes that may apply to NextGenStewards in this special article, which I will add to the end of the Lever #2 tax series.

On July 4, the “One Big Beautiful Bill Act” (OBBBA) of 2025 was signed into law by the President. This legislation introduces significant tax changes that will affect both individual taxpayers and businesses of all sizes and income levels. Below is a summary of the law’s key points and why they may matter to NextGenStewards:

Income tax rates stay low (permanently). Had this bill not passed, tax rates would have jumped in 2026. Instead, they’re staying locked in at the lower levels from the 2017 Tax Cuts and Jobs Act (an older OBBBA). That means more take-home pay for you and a little more predictability for your financial planning.

Why it matters: Lower brackets usually result in lower taxes on your income, now and in the future.

The Standard Deduction grows (a little). If you’re single, you’ll get a $750 bump (single); it will be $1,500 if married, on the standard deduction in 2025. Not huge, but it’s more than nothing. Standard deduction amounts for 2025:

• Single: $15,750

• Married filing jointly: $31,500

• Plus, inflation adjustments will be made every year going forward

Why it matters: A higher standard deduction reduces your taxable income, which in turn reduces your tax. Combined with the low tax rates, it means less tax for the foreseeable future.

The mortgage interest deduction cap of $750,000 is made permanent. Many of you may be hoping to purchase a home. This may not have been an issue for you, but the cap is relevant to those who buy an expensive house. What may apply to you is that, starting in 2026, private mortgage insurance (PMI) counts too.

Why it matters: If you’re a first-time homebuyer with a low down payment, the PMI inclusion could be a meaningful deduction.

The state and local tax deduction (a/k/a SALT) cap is higher (temporarily). If you live in a high-tax state (NY, NJ, CA, etc.), good news: The SALT cap (state and local tax deduction) is going from $10,000 to $40,000—but just from 2025 to 2029.

There’s a catch, though: This cap phases out for incomes between $500K and $600K, and drops back to $10K in 2030. This may not matter much if you're not itemizing yet, but it’s good to know as your income grows and you live in a high tax area.

Why it matters: High state and local taxpayers were disadvantaged (some would say unfairly) under the old law, and that has been addressed.

A special $6,000 deduction for seniors (with limits). This one is good for people like me, but if you help older parents or grandparents with their finances, it’s good to know about it. Seniors 65+ can deduct $6,000 per person starting in 2025 through 2028. But it phases out above $75K (single) or $150K (married) in adjusted gross income.

Why it matters: This is a good-sized additional deduction for older parents and grandparents. This will lower their taxable income, so more money to spend on you (just kidding).

Good news for business owners (and side hustlers). The Qualified Business Income (QBI) deduction is now permanent and a bit more generous. This helps if you’re:

• A freelancer or contractor

• Running a side hustle

• Operating an LLC or other pass-through business

Income phaseout limits for the deduction increase to $75,000 (single) and $150,000 (married)

Why it matters: This helps existing business owners, but if you’ve considered starting your own business, this deduction is one more reason to think seriously about it.

The charitable giving deduction is a mixed bag. First, there is a new standard deduction gift: Starting in 2026, you can deduct $1,000 (single) or $2,000 (married) for charitable gifts even if you don’t itemize.

However, there is also a new hurdle for itemizers: If you do itemize, only the amount above 0.5% of your AGI is deductible. So if you earn $100K and give $2,000, only $1,500 is deductible.

Why it matters: If you're younger and taking the standard deduction, you're better off in 2026 if you make small charitable gifts. If you itemize, consider front-loading gifts in 2025.

529 accounts are more flexible and generous. Starting in 2026, the annual withdrawal limit for K–12 education increases from $10K to $20K per student. Plus, 529s can now also be used for vocational schools and credential programs.

Why it matters: This makes 529s more appealing if you’re saving for current or future kids or want flexibility beyond just traditional college.

New “Trump Accounts” for kids. There is a new child savings account coming in 2026, called “Trump Accounts”:

• Annual limit: $5,000

• No income required to contribute

• Employers can contribute for employees' kids

• $1,000 tax credit for children born 2025–2028 if the account is opened

• Designed to hold ultra-low-cost index funds (≤0.10% expense ratio)

• No withdrawals allowed before age 18

Why this matters: This is a big deal for young families—more ways to jumpstart generational wealth.

Car loan interest deduction (temporary: 2025–2028). A new $10,000 deduction is available for car loan interest (U.S.-assembled vehicles only). Phases out for high incomes over $100K (single) or $200K (married).

Specific EV and energy credits are being phased out. The following are being phased out on the dates shown:

• Used EV Credit: Sept 30, 2025

• New EV Credit: Sept 30, 2025

• Home Efficiency Credit (Sec. 25C): Dec 31, 2025

• Residential Clean Energy Credit (25D): Dec 31, 2025

Why this matters: If you're planning to purchase an EV (hopefully with cash) or a qualifying item for your home, it may save you a lot of money to do so this year before the credits expire.

No taxes on tips (kinda). If you work in a hospitality or any tip-heavy job, you can deduct up to $25,000 in qualified tip income. This deduction phases out above $150K income (single) or $300K (married).

Why this matters: If you make $50,000 and $30,000 of that is tips, you’ll deduct $25,000 and save about $3,000 in taxes!

No tax on overtime (also temporary — 2025 thru 2028). There’s a $12,500 (single) or $25,000 (married) deduction for overtime income. These are the same income limits as the tip rule. If you make $100,000 and $10,000 is overtime, you can deduct that $10,000 and save about $2,200

Why this matters: Many young adults may be working in jobs where part of the compensation is from gratuities. This will reduce their taxable income.

So, what’s the catch? This all sounds like pretty good stuff. I like it myself (or most of it). But there is a “catch.” According to the Congressional Budget Office, this bill adds $3.4 trillion to the national debt over 10 years. That’s on top of the current $36 trillion. Interest payments on the debt will keep growing. That said, some argue that less regulation and lower taxes will spur broad economic growth, which will generatemore taxes and help reduce the deficit. I hope so,

Why it matters: The growing national debt and the cost to service that debt are growing fast. These tax breaks may not be forever. If the debt rises even faster, Congress could reverse course and raise rates, especially if it decides to tackle the debt issue more aggressively.

The bottom line for NextGen Stewards:

• Income tax rates will stay lower for the long haul

• You can give and save more with fewer tax penalties

• Side hustles, families, and generosity all get a little easier

• More deductions for tips, overtime, and cars = lower taxes (or bigger refunds)

• Future tax hikes? Still possible—so keep planning ahead

If you’re working, giving, saving for the future, or starting a business, this law gives you some new tools. But as stewards, let’s also remember: our ultimate trust isn’t in tax policy—it’s in God’s provision (Phil. 4:19).