6 Things Financial Advisors Need To Know About the One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBA) of 2025 is perhaps the most significant overhaul of tax policy and federal spending in decades. As financial advisors, you need to understand both the immediate planning opportunities and the long-term risks this legislation creates for your clients.

Here’s your essential guide to helping your clients navigate a very different terrain for their taxes, estate planning, and more.

1. Estate Planning Shifts

The law increases estate and gift tax exemptions from $13.99 million to $15 million for individuals and from $27.98 million to $30 million for couples, with adjustments for inflation made annually going forward.

This creates a narrow but important window for carrying out wealth transfer strategies. Clients who were previously constrained by exemption limits can now implement more comprehensive gifting strategies, particularly through techniques such as grantor-retained annuity trusts or charitable lead annuity trusts.

The business income deduction also becomes permanent at 20% for pass-through entities, making business succession planning more attractive. For clients with family businesses, this could be the time to explore sales to intentionally defective grantor trusts or other succession strategies.

2. Healthcare Costs To Plan For

The bill’s healthcare changes could prove crucial for many in their financial planning. About 71 million Americans rely on Medicaid, and the Congressional Budget Office estimates almost 12 million could lose coverage by 2034 due to new work requirements and administrative hurdles.

For clients with aging parents or adult children on Medicaid, this creates serious financial planning risks. The bill requires 80-hour monthly work requirements for Medicaid recipients, including parents of children 14 and older, starting in late 2026. It also adds co-payments of up to $35 for medical services and requires eligibility verification every six months instead of annually.

3. Immediate Tax Savings Your Clients Can Act On

The OBBBA delivers a mix of permanent and temporary tax breaks that create immediate planning opportunities—but many expire in just a few years.

Permanent Changes

The standard deduction jumps to $15,750 for singles and $31,500 for married couples (up from the previous $15,000/$30,000), with heads of household getting $23,625.

For high-income clients in high-tax states, the SALT deduction increase to $40,000 is significant and adjusts upward each year after 2025, but it phases down starting at $500,000 income and expires at the end of 2029, reverting to $10,000.

Time-Limited Opportunities (2025 to 2028)

Several provisions create narrow windows for strategic planning:

• Older clients: The $6,000 bonus deduction for those 65 and older can eliminate Social Security taxes for many retirees, but phases out at $75,000 single/$150,000 married.
• Service workers: Up to $25,000 in tips become tax-deductible (phasing out at $150,000/$300,000).
• Hourly workers: Overtime deductions are capped at $12,500 for singles, $25,000 for couples.
• Car buyers: Interest on auto loans (up to $10,000) becomes deductible—but only for U.S.-assembled vehicles.
• Charitable gifts: Non-itemizers can now deduct $1,000 single/$2,000 married.

4. Student Loan Planning Faces Dramatic Overhaul

The bill fundamentally reshapes college financing in ways that will impact multigenerational wealth planning. Graduate students now face borrowing caps of $20,500 annually, and Parent PLUS loans are limited to $20,000 per year, with a lifetime limit of $65,000.

Most significantly for current borrowers, the generous SAVE repayment plan is eliminated in favor of a new Repayment Assistance Plan, which dramatically increases monthly payments.

For clients with outstanding student loans, immediate action may be needed. The elimination of unemployment deferment and economic hardship deferment means fewer safety nets for clients who face financial difficulties.

5. ‘Trump Funds’ vs. 529s for Kids’ Education Savings

The bill creates “Trump accounts”—tax-advantaged savings accounts for children born 2025 to 2028, with a $1,000 government contribution at birth. Parents can contribute up to $5,000 annually, employers can add $2,500 tax-free, and the money can grow tax-deferred in U.S. stock index funds.

At 18, the owner of the account can use it for education and other expenses, including starting up a new business. So should one use it instead of 529s for college savings?

Trump Accounts Advantages:

• Free $1,000 government seed money
• Employer contributions don’t count as taxable income
• Broader withdrawal purposes (not education-restricted)

529 Plan Advantages:

• No annual contribution limits (vs. $5,000 Trump account limit)
• Tax-free growth AND tax-free qualified withdrawals (vs. taxable at capital gains rates)
• State tax deductions in many states
• Established track record and broader investment options

6. Tax Planning Shifts Depends on the Client Segment

The bill’s impact varies dramatically by income level, creating different planning priorities for different client segments.

Clients Losing Healthcare and Other Safety Net Options

The bottom 20% of earners face reduced after-tax income of about 2.3%, according to the Yale Budget Lab. The impact on these clients could go deeper and requires planning around the following:

• Emergency fund expansion for potential Medicaid/SNAP disruptions
• Healthcare cost budgeting with new co-payments and requirements
• Family financial support planning for relatives losing benefits

Middle-Income Clients

Benefits include larger child tax credits ($2,200 vs. $2,000) and potential deductions for older adults. However, watch for the following:

• SALT deduction benefits (if they itemize)
• Impact of eliminated clean energy credits on home values
• College planning adjustments for rising education costs

High-Income Clients (Top 20%):
The Yale Budget Lab estimates these clients gain an average of $5,700 annually. Areas to focus on with these clients:

• Maximizing the enhanced SALT deduction (now $40,000 through 2029)
• Estate planning with increased exemptions
• The qualified business income (QBI) deduction is now permanent with a 20% deduction
• Advanced tax-loss harvesting as clean energy and other credits disappear

The Bottom Line

Financial advisors will be crucial for many Americans trying to negotiate the effects of the OBBBA on their finances. The combination of temporary but substantial benefits (estate exemptions, older adult deductions) with rapidly disappearing opportunities (clean energy credits ending by late 2025) demands immediate client outreach.

You’ll want to get started with many clients for estate planning discussions, then systematically review every client’s healthcare, education funding, and investment allocation needs.