The One Big Beautiful Bill Act (OBBBA) offers new benefits that can give individuals an upper hand while financially planning for their future. Here are six wealth planning advantages we feel worth exploring.


Roth Conversions

The historically low tax brackets put in place by President Trump during his first term (Tax Cuts and Jobs Act of 2017) will continue indefinitely with the passage of the OBBBA. If you are considering a Roth conversion, you may still benefit from low tax brackets.

529s

If you have a child or grandchild that you would like to help with future education expenses, the OBBBA expands the way funds invested in a 529 plan can be used. Traditionally, the funds had to be earmarked for qualified higher education expenses or K-12 tuition at private schools. Now the funds can also be used for various education costs, from standardized test fees to education therapies, and workforce training and credentials.


Tax Break for Retirees

While the OBBBA doesn’t eliminate tax on social security as was widely discussed, it does address the issue from a different angle. The OBBBA gives a “senior bonus,” a tax deduction that some Americans over the age of 65 will qualify for. This temporary tax deduction will vary in amount depending on the modified adjusted gross income earned by eligible taxpayers. For example, couples who file their taxes jointly and have less than $150,000 in adjusted gross income should receive a tax credit of $12,000. This temporary tax break is scheduled to sunset in 2028 and is phased out with higher incomes.


Considering Buying a New Vehicle in the Next Few Years?

You may want to consider buying an American-made vehicle. The OBBBA will allow a temporary tax deduction (on vehicle purchases from 2025 to 2028) for new vehicles that are assembled in the United States. The measure would allow car buyers to deduct up to $10,000 a year spent on interest on qualifying auto loans. Income limits apply. ATVs, trailers, and campers are not eligible.

Consider Opening a Custodial Roth IRA for your Children and Grandchildren who are Working

This can be a great option any time, but especially if your kids have jobs where they make overtime or tips. The OBBBA changes how/if that income is taxed. Your child may be able to put tax-free income from tips or overtime into a Roth IRA and take advantage of the beauty of that money compounding at an early age. The key is that your child must have earned income and cannot invest more than they earned in any given year.


Expecting a New Baby?

If you have a child between 2025 – 2028, the OBBBA introduces offers a new kind of account for them, dubbed a “Trump Account.” There are no income limitations. The child must have a Social Security number. The account is free to set up and will be seeded with $1,000 from the U.S. Treasury. The accounts are designed for long-term growth and generally difficult and expensive to access before the child turns 18. If invested in a fund tracking the S&P 500 and assuming historical average returns, that original $1,000 investment could grow significantly over time.

If you have questions or need guidance on any information in this article, contact a Dean Dorton Private Wealth Advisor.

This information is for educational purposes only and developed from sources believed to be providing accurate information. We make no representations as to its accuracy or completeness. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed are for general information and should not be considered a solicitation for the purchase or sale of any security.