Blogs

Guest columnist Dr. Ronald Dritz invites young anesthesiologists to join him for a series of articles focusing on the lifecycle of financial health. In this follow-up to his recent blog on federal income tax, Dr. Dritz provides a quick overview of the One Big Beautiful Bill Act and how its new tax provisions may impact your bottom line.

In my blog post on federal income taxes, I noted that Congress was debating the One Big Beautiful Bill Act (OBBBA). This piece of legislation has now passed the Congress and been signed by President Trump. It contains important changes to the federal tax code. Here are the most important changes that could affect you going forward.

1. The existing tax brackets have been made permanent. Had this legislation not passed the current tax brackets would have expired on December 31, 2025 and the tax brackets that existed prior to the 2017 Tax Cuts and Jobs Act (TCJA) would have been automatically reinstituted.
2. For younger taxpayers (those under age 65) the standard deduction currently in place will increase by $750 for single taxpayers ($1500 for married filing jointly). Thus the new total standard deduction for tax year 2025 is $15,750 for single filers and $31,500 for joint filers.
3. State and Local Tax (SALT) deduction limit has increased from $10,000 to $40,000. When you make top line deductions to your gross income you have a choice. You can either take the standard deduction or itemize your deductions individually. Because the TCJA limited the SALT deduction (a component of itemized deductions) to $10,000 most taxpayers chose the standard deduction. The main components of SALT are state and local income taxes and property tax. If you live in certain high tax/high property value states like California and New York your total itemized deductions may exceed the new standard deduction (see above) and give you an increased deduction by itemizing. This provision is only in effect for five years. In 2030 the SALT limit will revert to $10,000.
4. If you are planning to buy a new car between now and 2028 that goes through final assembly in the United States you are eligible to deduct up to $10,000 in auto loan interest payments annually. This provision is in full effect for single filers with taxable income under $100,000 and joint filers under $200.000. The deduction phases out over those limits at the rate of $200 for every $1000 over the limit.
5. If you and your partner are planning to have a child between the beginning of 2025 to the end of 2028 you will receive a $1000 “Trump account” deposit.
6. People who have purchased Bronze and catastrophic plans under Obamacare are now eligible to contribute to HSA accounts. In my next blog post I’ll explain how Health Saving Accounts interface with the federal tax code.