How the One Big Beautiful Bill Act updates the Tax Cuts & Jobs Act

In 2017, the Tax Cuts & Jobs Act (TCJA) overhauled the federal tax code (Internal Revenue Code). Several of the act's most notable temporary tax provisions were scheduled to expire after 2025. But the recent passage of the One Big Beautiful Bill Act (OBBBA) made many of the TCJA's changes permanent—while ushering in some new ones, as well. Now that the OBBBA is law, you may want to review your financial strategy to see if it's time to make some adjustments.

Crafted in part to simplify the tax-filing process, the TCJA implemented changes affecting marginal tax rates (income tax brackets), deduction allowances, the child tax credit (CTC) and the alternative minimum tax (AMT). As a result, many taxpayers started claiming the standard deduction on their returns rather than itemizing deductions as they'd done before.

Many of the TCJA's modifications were established to only remain in place through 2025. Some of the act's provisions—including a reduced corporate tax rate—were permanent.

Signed into law on July 4, 2025, the OBBBA preserved many TCJA provisions that were slated to sunset at the end of the year—and introduced new tax deductions for workers, seniors and auto loan interest. The OBBBA also introduced new tax code changes that affect individuals and businesses. Some OBBBA provisions apply to 2025 taxes. Others don't take effect until 2026. Some of the new law's changes are permanent. Others have end dates.

To help you track the acts' impacts on your tax bills over the past decade, here's a rundown of some key TCJA and OBBBA changes.

The TCJA lowered marginal rates for most individual tax brackets. The OBBBA made those rates permanent, so they continue unchanged in 2025 and beyond.

The TCJA nearly doubled the standard deduction from 2017 to 2018 and instituted annual increases after that. Under the OBBBA, the standard deduction rises again in 2025 and will adjust yearly based on inflation.

For itemized deductions of cash gifts to public charities, the TCJA raised the ceiling from 50% to 60% of adjusted gross income (AGI). The OBBBA made that change permanent—and introduced several new provisions that take effect in 2026:

• People in the highest tax bracket—with a 37% marginal tax rate—only can deduct charitable gifts at a 35% rate.
• Taxpayers only may deduct contributions that exceed 0.5% of their AGI.
• Taxpayers who claim the standard deduction can take additional deductions for charitable contributions up to $1,000 for single filers or $2,000 for joint filers.

Portion of AGI

The TCJA roughly doubled the lifetime estate and gift tax exemption from 2017 to 2018. The OBBBA made the change permanent and calls for continued annual adjustments based on inflation.

Starting in 2018, the TCJA temporarily doubled the maximum child tax credit (CTC). For one year (2021), the American Rescue Plan Act (ARPA) raised it even higher. In 2025, the OBBBA permanently established another increase, to be annually adjusted for inflation.

The OBBBA includes several provisions to let some people claim previously unavailable deductions from their taxable income. Each deduction is capped at a set amount—and benefits begin to phase out at certain modified AGI (MAGI) levels.

Important to note: The following new deductions are temporary. Availability is scheduled for four years: 2025 through 2028.

• Tips deduction. Service workers may deduct up to $25,000 in tips received through their jobs. Self-employed people may not deduct more than their net income from the business that generated the tips.
• Overtime pay. Workers who receive higher pay for overtime hours may deduct the amount that exceeds their regular pay rate.
• Auto loan interest. People may deduct interest paid on an auto loan, taken after 2024, to purchase a new, qualified vehicle for personal use. Lease payments are not eligible. The deduction is only available for vehicles that underwent final assembly in the United States.
• Senior deduction (age 65+). Individuals age 65 and over may claim an additional $6,000 deduction per person, or $12,000 for married couples, must file jointly.

OBBBA new tax deduction limits

In addition to its provisions affecting individual taxpayers, the OBBBA outlines ways businesses can write off certain expenses starting in 2025.

Businesses may deduct the full cost of qualified equipment in the year it's acquired and placed into service (starting with purchases made Jan. 20, 2025, or later). This reinstates what the TCJA allowed in 2017-2022 before it reduced bonus depreciation—the portion of an item's cost that may be expensed in its first year of use—by 20% annually.

Similarly, as of 2025, firms once again may fully deduct qualified domestic research expenses in the year they're incurred. This had been the case for years, but under the TCJA, businesses had to write research costs off over five years starting in 2022.

Given all the changes the OBBBA has introduced or made permanent, you may want to assess how the act could affect—or influence—decisions surrounding your financial strategy.

You might consider a Roth IRA conversion—moving money from a traditional IRA to a Roth IRA to lock in current tax rates. 

When you convert a traditional IRA to a Roth IRA, you pay income taxes on that money in the year you move it. With marginal tax rates now locked in permanently, if you expect to be in the same tax bracket when you take distributions as you are now, you might prefer to pay your income taxes on the money sooner (while you're still working) rather than later (in retirement).

When the TCJA was in effect, the lifetime estate and gift tax exemption was slated to drop dramatically in 2026. That may have provided an incentive to give an inheritance early rather than wait until you pass away. Now that the OBBBA has established a new permanent lifetime estate and gift tax exemption, you might base your estate planning decisions on other priorities and personal goals.

The OBBBA's charitable donation provisions may influence your giving timing, especially the new $1,000 standard deduction add-on and the 2026 changes to itemized deductions. The new act has maintained the TCJA's ceiling (60% of AGI) for cash gifts to public charities. But starting in 2026, gifts up to 0.5% of your AGI won't be deductible. And the highest earners' tax breaks will only equal 35% of their contributions, which is 2% less than their 37% marginal tax rate. So, if you've planned to make multiple gifts over the next several years, "bunching" them in 2025 might result in a higher total tax deduction than if you make some of your contributions in 2026 or later.

However, if you plan to claim the standard deduction during the next few years, you might choose to save some giving until 2026, when you'll be allowed to deduct charitable contributions up to $1,000 for single filers or $2,000 for joint filers.

As you consider how the OBBBA could affect your future, don't hesitate to connect with a Thrivent financial advisor. While Thrivent financial advisors don't provide tax advice, they can work with your tax and legal professionals to help you maximize tax-efficient strategies. Leveraging insights from experts can help you navigate change and stay focused on your long-term goals.