The Good, Bad, and Ugly: What the Big Beautiful Bill Means for You

On July 4th, President Trump signed into law H.R. 1 — the One Big Beautiful Bill Act of 2025 (OBBBA). This sweeping tax legislation reshapes major parts of the Internal Revenue Code. While much of it locks in earlier changes from the Tax Cuts and Jobs Act (TCJA), it also introduces new provisions worth watching.

Whether you’re still working or already retired, here’s what the OBBBA could mean for your finances.

TL:DR What the OBBBA means for our clients

There’s a lot to cover but if you want to skip to what you need to know, our top takeaways*:

• Still working: New SALT deduction cap: a higher amount of local tax deducted from your federal taxes
• Retired: Much higher exemptions for estate and wealth transfer taxes; lower taxes on social security 
• Everyone: Potential $10,000 interest deduction from income on car loan interest if your car purchase qualifies

Keep reading for a more in-depth analysis. *Please keep in mind that this article contains research that is accurate to the best of our knowledge as of October 2, 2025.

How the OBBBA Applies to Those Still Working

So you’re a tech employee who is still gainfully employed (even as AI threatens to come for your job). Most new deductions — like those for overtime or car loan interest — phase out at income levels below this group.

The bigger picture: by keeping the top marginal tax rate at 37% and temporarily expanding the SALT deduction cap, the bill avoids a steep tax hike that many feared.

Income taxes and deductions

The bill locks in current income tax rates and permanently raises the standard deduction. It also delivers long-awaited relief on state and local tax (SALT) deductions.

The following table details the permanent federal income tax brackets for the 2025 tax year as outlined by US Bank:

For high-earning individuals, the OBBBA’s primary benefit is the prevention of a tax increase. The bill’s new, targeted deductions for overtime and car loan interest are irrelevant to this demographic due to their low-income phase-outs.

Keep in mind, the retention of a 37% top marginal tax rate and the temporarily increased SALT deduction cap provide direct tax savings compared to the reversion scenario.

Tax Liability Scenario for a High-Earning Married Couple (Joint Filers)

Profile: Married filing jointly, with a total taxable income of $750,000, consisting of $600,000 in salary and $150,000 in investment income. The couple pays $50,000 in state and local taxes.

Note: The taxable income and tax liability in both scenarios are calculated based on the respective tax brackets and deductions. The “before” scenario assumes a reversion to the pre-2018 brackets, with a 39.6% top rate, and a $10,000 SALT cap. The “after” scenario uses the permanent OBBBA/TCJA brackets, with a 37% top rate, and the new $40,000 SALT cap (the benefit of which is phased down for high-income earners). The calculation for Scenario B is an approximation based on the new brackets and deductions.

This scenario demonstrates that OBBBA is designed to prevent a significant tax increase, providing a direct financial benefit to high-earning individuals by maintaining lower marginal rates and expanding the SALT deduction.

SALT Cap

While Washington doesn’t have an income tax, rising home values have made property taxes a factor in overall financial planning. The SALT cap has been temporarily raised — from 2025 through 2029 — from $10,000 to $40,000, giving homeowners in costly markets like Seattle more room to deduct. (But reverts back to $10,000 in 2030, so keep this in mind.)

For higher earners, this deduction phases down as income rises, but it still provides meaningful relief compared to the old cap. Keep in mind, the higher cap is subject to a phaseout for high-income earners: 

• Threshold: The phaseout begins when a taxpayer’s modified adjusted gross income (MAGI) exceeds $500,000 ($250,000 for married filing separately).
• Reduction rate: The deduction is reduced by 30% for each dollar of MAGI over the threshold.
• Floor: Once a taxpayer’s MAGI reaches $600,000 ($300,000 for married filing separately), the deduction automatically reverts to the original $10,000 cap.

Nearly 17% of Seattle homeowners previously exceeded the old cap — that figure drops to under 2% under the new rule. For many who bought during the housing boom, this means a much better chance of deducting their full bill.

The change could also ripple through the market. With more favorable deductions, some owners may finally feel freer to sell, opening up inventory in places like Bellevue and Redmond.

Narrowly Tailored Deductions

The OBBBA also introduces several new, narrowly tailored deductions:

• No tax on tips: Employees in eligible service industries can deduct up to $25,000 of qualified, reported tips ($300,000 income cap for joint filers). This won’t apply to most tech employees directly, but it could matter if you or your spouse or kid has a side hustle in a tipped occupation.
• No tax on overtime: Workers can deduct up to $12,500 ($25,000 for joint filers) of overtime pay above their base rate. For those in the tech sector where overtime is less common, this may not be a game-changer, but it could benefit household members in other fields.
• No tax on car loan interest: Effective 2025–2028, individuals can deduct up to $10,000 in interest paid on qualified personal vehicle loans — from their income — provided the vehicle was newly purchased and underwent final assembly in the United States. That means you’ll need to check the VIN or vehicle label to confirm your car qualifies.

View the IRS Factsheet for more information.

Together, these provisions are designed to provide targeted relief to certain households, though the benefits are income-limited and temporary. For most high earners in Seattle, the SALT deduction remains the most impactful change. Reviewing your plan with an advisor can help you see if any of the smaller deductions add value.

Child tax credits and retirement accounts for minors

Parents will see a modest increase in the child tax credit — from $2,000 to $2,200 per qualifying child under age 17. The credit begins in 2025 and will be indexed for inflation starting in 2026. To claim it, both parent and child must have a Social Security number. While this is good news for families, critics note that many of the nation’s lowest earners won’t make enough to benefit fully, since the credit remains only partially refundable.

In addition, the bill introduces a new “Trump Account” program. For U.S. citizens born between 2025 and 2028, the Treasury will deposit $1,000 into an investment account at birth. Relatives, employers, and nonprofits can add contributions of up to $5,000 annually. While some see this as a chance to set children on an early path to compounded growth, others question whether these accounts will be as useful as 529 plans, which allow tax-free withdrawals for education.

Finally, the OBBBA makes the paid family leave tax credit for employers permanent and adjusts adoption incentives. The adoption tax credit is now partially refundable, with families eligible for up to $17,280 in 2025 and a refundable portion capped at $5,000. Together, these provisions create more options for families planning for the future, though how beneficial they are will depend on your income and overall tax situation.

New targeted tax breaks

Even if your income puts you outside the range for many broad-based credits, the OBBBA sprinkles in a handful of niche deductions that may still affect you or your household. These breaks are narrow in scope but might add up in the right situations. It’s worth scanning the details to see whether any apply to your family or situation.

Among them: A car loan interest deduction, which could reduce borrowing costs. As outlined by the IRS factsheet above:

• New deduction: Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)
• Maximum annual deduction: $10,000.
• Phase-out: Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).
• Qualified interest: To qualify, the loan must be originated after December 31, 2024, used to purchase a new personal-use vehicle, and secured by a lien. Used vehicles don’t qualify, though refinanced loans generally remain eligible.

The OBBBA also introduces a deduction for qualified overtime pay:

• Qualified overtime pay: There is a maximum annual deduction of $12,500 for single filers and $25,000 for joint filers. The overtime deduction phases out for taxpayers with a modified AGI over $150,000 ($300,000 for joint filers) — this likely won’t affect you, but could impact your kids or older relatives if they are still working. 

Permanent mortgage interest deduction 

With the OBBBA, the mortgage interest deduction limitation is permanently extended to the interest on the first $750,000 ($375,000 if married filing separately) of home acquisition debt, which could be helpful in high-cost housing markets like Seattle. Keep in mind that interest deductions on home equity indebtedness are now permanently disallowed. These changes may not dramatically shift your tax picture, but could create incremental savings if they line up with your financial situation.

Depreciation and business equipment

The OBBBA expands bonus depreciation rules, allowing you to deduct the entire cost of new equipment in the same year. If you own a side business or do consulting, this could make reinvesting in your work more attractive.

Overall, while the bill makes certain benefits permanent, it also limits some deductions. For tech professionals with stock options, RSUs, and high salaries, proactive planning is still key.

What It Means If You’re Retired

For retirees, the OBBBA also includes updates. These changes could affect how you draw income, plan for healthcare, and think about passing wealth to the next generation.

Estate tax and wealth transfer

The estate tax exemption jumps to $15 million per person (indexed for inflation after 2026). For wealthy families, this creates more room to transfer assets without incurring federal estate taxes. (Forbes points out that for a married couple, that effectively means $30 million of wealth can be passed to future generations without any estate tax.) Sources point out that the top federal rate on amounts exceeding the new exemptions remains at 40%.

The OBBBA’s permanent increase in the estate tax exemption is a game-changer for wealthy families, as it removes the risk of a dramatic reduction in the exemption and simplifies long-term wealth transfer. 

The following scenario models the tax impact for families at different net worth levels:

Profile: Two hypothetical families (Family 1 and Family 2), both married couples, with projected estate values of $20 million and $35 million, respectively.

Note: The calculations assume the estate is passed to heirs in 2026. Scenario A uses the scheduled reversion of the exemption to approximately $7 million per individual ($14 million per couple), outlined here. Scenario B uses the new, permanent exemption of $15 million per individual ($30 million per couple) outlined here.

Social Security

Perhaps the most headline-grabbing change for retirees: Social Security benefits are no longer taxed at the federal level — for a limited time and if you fall within the right threshold. In what Social Security Commissioner Frank Bisignano calls “A historic step forward for America’s seniors,” the bill ensures that nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits. For seniors 65 and older, this should translate into more predictable income and less need for complex withdrawal strategies. 

The OBBBA deduction alters your AGI, which can move you below the standard income thresholds where federal taxes on Social Security benefits begin. These thresholds are not adjusted for inflation and are: 

Single filers:

• $25,000 or less: No taxes on benefits.
• $25,000 to $34,000: Up to 50% of benefits are taxed.
• Over $34,000: Up to 85% of benefits are taxed.

Married couples filing jointly:

• $32,000 or less: No taxes on benefits.
• $32,000 to $44,000: Up to 50% of benefits are taxed.
• Over $44,000: Up to 85% of benefits are taxed.

Other provisions

The bill also makes some Tax Cuts and Jobs Act (TCJA) rules permanent — such as limiting casualty loss deductions to declared disasters — which may or may not be relevant depending on where you live. But the headline here is that retirees have more favorable rules for both income and estate planning.

Don’t Overlook the Risks

The OBBBA is not without potential drawbacks. One, it could be repealed. Two, the Affordable Care Act (ACA) faces funding risks under this law, which could affect premiums and subsidies down the line. And while some tax credits are more generous, others remain narrow — meaning benefits won’t be felt equally across households. For high earners, the ripple effects on charitable giving, retirement withdrawals, and real estate may matter most.

Talk to Your Financial Advisor About the Big Beautiful Bill

The OBBBA is one of the largest tax code rewrites in recent memory. Some provisions are genuinely beneficial, others are cosmetic, and a few could carry hidden costs. For high-earning tech professionals and retirees alike, the stakes are high.

At Northern Lights Advisors, we help clients cut through the noise, run the numbers, and adapt tax strategies to legislation like the OBBBA. Reach out today to see how these changes might affect your plan. Reach out today to schedule a call.

Northern Lights Advisors is a fiduciary, fee-only Registered Investment Advisor (RIA) firm based in Seattle, Washington. The information in this article is not intended as tax, accounting, or legal advice. Read the full disclosure here.