One Big Beautiful Bill Act: 10 Key Provisions

On July 4, 2025, the legislative behemoth known as The One Big Beautiful Bill Act (OBBBA) became law in the U.S. The OBBBA will touch nearly every facet of American life, from healthcare and housing to work and wages. Although it’s too early to assess the OBBBA’s full impact, there are several key provisions worth examining, some directly affecting military service members.

Let’s take a closer look at the Act and these 10 selected provisions:

Permanent Extension of Tax Cuts & Jobs Act (TCJA) Individual Tax Rates

What changed? The TCJA of 2017 was a seismic shift in U.S. tax policy, reducing income tax rates across nearly all brackets. The OBBBA extends the TCJA tax breaks permanently.

What’s the impact? This is expected to stabilize tax planning for all income levels, which means individuals and families can make long-term financial decisions, like retirement contributions, charitable giving, or investment strategies, without worrying that income tax rates will suddenly change. By reducing that uncertainty, filers can more effectively forecast future tax liabilities and optimize deductions.

Expanded and Permanent Standard Deduction

What changed? The standard tax deduction is permanently increased:

Single Filers		$15,750
Married Filing Jointly		$31,500
Head of Household		$23,625

These amounts are also indexed to inflation, meaning they’ll rise annually to keep pace with cost-of-living changes.

What’s the impact? This provision is expected to simplify tax filing and lower taxable income for the majority of Americans — according to Forbes, roughly 87% of taxpayers claim the standard deduction.

Enhanced Child Tax Credit

What changed:

• Increased to $2,200 per child starting in 2025
• Refundable portion ($1,700) indexed for inflation
• Phaseout thresholds remain high: $200,000 (single), $400,000 (joint)

What’s the impact? Families with children get some financial relief.

Military note: This enhancement will help offset some of the expenses associated with child care for service members, who often experience unique strain when dealing with child care issues and family stability.

New “No Tax on Tips” Deduction

What changed? Workers in “customarily and regularly” tipped occupations can deduct up to $25,000 in qualified tips. This provision expires Dec. 31, 2028.

What’s the impact? Service industry workers such as waiters, bartenders and stylists can reduce their taxable income and keep more of their money.

Subject to phase out: Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Note: By October 2, 2025, the IRS must publish a list of occupations that “customarily and regularly” received tips on or before December 31, 2024.

No Tax on Overtime Deduction

What changed? Overtime pay is now partially tax-exempt, with a deduction for the premium portion (the additional 0.5x in time-and-a-half) capped at $12,500 for single filers and $25,000 for joint filers. This provision expires Dec. 31, 2028.

What’s the impact? Benefit working-class taxpayers who rely on overtime pay.

Subject to phase out: Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

New Car Loan Interest Deduction

What changed? Borrowers can deduct up to $10,000 in interest on loans for new, U.S.-assembled vehicles purchased for personal use. This provision expires Dec. 31, 2028.

What’s the impact? Makes vehicle ownership more affordable for many Americans and potentially stimulates demand for domestically assembled vehicles.

Senior Bonus Deduction

What changed? Individual taxpayers over age 65 can claim an additional $6,000 deduction on top of the standard deduction. Married couples filing jointly can claim up to $12,000. This relief phases out for single people with over $75,000 in modified adjusted gross income, and $150,000 for married filing jointly. This provision expires Dec. 31, 2028.

What’s the impact? Nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits, according to the Social Security Administration.

Military note: This deduction can provide meaningful tax relief for veterans over 65 years old, especially those relying on fixed incomes or receiving Social Security and VA benefits.

State and Local Taxes (SALT) Provisions

What changed? The SALT deduction cap rises from $5,000 to $20,000 for individual filers, and from $10,000 to $40,000 for married couples filing jointly. However, taxpayers with an adjusted gross income above $500,000 will see a 30% phaseout of the increased deduction.

What’s the impact? This provision lowers the federal tax bill for middle-income households in high-tax states, potentially making itemizing more attractive and boosting disposable income. However, the increased deduction cap phases out for earners making over $500,000, and the relief is set to expire in 2029.

Military note: Service members in high-tax states (e.g. California, New York) may benefit from the increased deduction cap, especially if they own property or file jointly with a civilian spouse.

Changes to Charitable Deductions

What changed? Starting in 2026, single filers using the standard deduction can deduct up to $1,000 for charitable donations and married people filing jointly can deduct $2,000.

For itemizers, only the charitable contributions portion that exceeds 0.5% of their adjusted gross income can be deducted. For people in a higher tax bracket, the value of their deduction is capped at the 35% rate. As an example, if someone donates $100,000, they can only deduct $35,000.

What’s the impact? The expanded charitable deduction for non-itemizers could boost donations from lower- and middle-income households, widening support for nonprofits. However, the new AGI floor and cap may dampen giving from high-income donors, potentially reducing large contributions to major institutions.

Enhancements to Service Member’s Qualify of Life

What changed? The OBBBA mandates 7.3 billion in mandatory funding and 1.24 billion in direct spending to improve the quality of life for service members.

What’s the impact? Increases are expected for Basic Allowance for Housing, and over $1 billion for upgrades to unaccompanied housing and barracks. Also, there will be an increase in Temporary Lodging Allowances, from 14 to 21 days, to help cover out-of-pocket expenses during Permanent Change of Station moves. There will also be additional expansions to child care programs, educational opportunities and professional licensure assistance.

Navigating the OBBBA Strategically

Attempting to read and understand the sprawling OBBBA — which spans hundreds of pages — would be quite daunting. Instead, if you have questions about how the OBBBA may affect your financial future, consult a financial advisor for guidance.

Frequently Asked Questions

When does the OBBBA take effect?

Most of the provisions take effect Jan. 1, 2026. However, changes that are related to health-care programs and housing assistance will roll out gradually over the next several years. Additionally, four provisions expire in 2028: No Tax on Tips, No Tax on Overtime, New Car Loan Deduction, and the Senior Bonus Deduction.

Will the OBBBA affect my SNAP benefits?

Possibly — the bill is expected to remove several work exemptions for the Supplemental Nutrition Assistance Program (SNAP), including those previously granted to veterans. This could impact over 1.4 million veterans who rely on SNAP to meet food needs.

Does the OBBBA change healthcare coverage through the VA?

Not directly — but it includes over $1 trillion in cuts to federal health-care programs like Medicaid and Affordable Care Act Marketplace plans. If you or your family rely on non-VA coverage, you may feel the effects.

Could my military retirement or disability benefits be affected?

There are no direct cuts to VA disability or military retirement pay in the bill. However, changes to tax deductions and healthcare subsidies could indirectly affect your household budget.

Are there any new tax deductions or benefits specific to the military?

While the OBBBA introduces deductions for tips and overtime, it does not specifically carve out new tax benefits for active-duty military. However, existing military tax benefits remain intact.

First Command does not provide legal or tax advice, and this article does not contain any legal or tax advice. Any recommendations provided to you in this article are strictly for financial planning purposes only. Should you require legal or tax advice, you should consult with your attorney or tax advisor.