What the New Tax Law Means for Your Family, Retirement, and Education Planning
By Laurie Allen, CFP® | LA Wealth Management
Congress just passed a sweeping new tax package—the One Big Beautiful Bill (OBBB)—which introduces several key changes that may directly affect your financial plan. Whether you're raising a family, planning for retirement, or helping support aging parents, these provisions offer both new opportunities and new planning considerations.
Here’s a breakdown of what’s changing—and how it could impact you:
Bigger Tax Breaks for Parents and Caregivers
Child Tax Credit Expansion
The Child Tax Credit has increased from $2,000 to $2,200 per child, and both the refundable and nonrefundable portions will now be indexed to inflation.
However, eligibility rules remain strict—phaseouts still begin at $200,000 (single) or $400,000 (married filing jointly), and all children must have valid Social Security Numbers.
Child and Dependent Care Credit
The credit now covers up to 50% of qualified care expenses, up to $8,000 per child or dependent (max $16,000), depending on income.
Importantly, this credit is also available to families providing elder care, making it especially relevant for those supporting aging parents.
Planning Tip: If you’re paying for daycare, summer camps, or in-home elder care, make sure to track and report those expenses. The expanded credit can significantly reduce your tax bill—especially if you’re self-employed or run a small business.
More Flexibility with 529 Plans
The bill expands how you can use 529 college savings plans:
You can now use 529 funds for K–12 educational expenses, including tutoring, online learning, textbooks, and special education services.
You can also apply 529 dollars to vocational programs and professional certifications, not just traditional college tuition.
Planning Tip: If you’re saving for a child’s education, this gives you greater flexibility to tailor the funds to their path—even if they don’t pursue a 4-year degree. We recommend reviewing your 529 allocation annually to align with your evolving goals.
New Tax Deduction for Seniors—But It's Temporary
Starting in 2025, seniors age 65 and older may qualify for a special $6,000 (single) or $12,000 (joint) deduction.
Phaseouts begin at $75,000 MAGI for individuals or $150,000 for couples.
The deduction completely phases out at $175,000 (single) / $250,000 (joint).
This benefit is temporary and expires after tax year 2028.
How this impacts Social Security:
This deduction may reduce or eliminate tax on your Social Security income during those years—but it does not eliminate the underlying taxation of benefits. It also slightly shortens the solvency of the Social Security trust fund, which could have implications in the next decade.
Planning Tip: If your income is close to the phaseout range, we may recommend using Roth conversions, charitable distributions (QCDs), or income deferral strategies to stay within the threshold and capture this deduction.
SALT Deduction Cap Raised
High-income taxpayers in high-tax states finally get some relief:
The SALT (State and Local Tax) deduction cap is now $30,000, up from $10,000 under the previous law.
This applies to married couples filing jointly, with smaller caps for single filers.
Phaseouts begin at $400,000 for joint filers.
Planning Tip: If you live in California, New York, or another high-tax state, this could significantly lower your federal tax bill. It’s especially relevant if you itemize deductions or have high property taxes.
What This Means for Your Retirement Plan
While the bill didn’t directly change retirement account rules, it indirectly creates some smart planning windows:
More incentive to Roth convert: With new deductions reducing your taxable income in certain years (especially for seniors), you may find yourself in a lower tax bracket, which creates a prime opportunity to convert traditional IRA or 401(k) funds to Roth.
Direct indexing and tax-loss harvesting remain powerful: Since capital gains rates weren’t increased, taxable portfolios remain efficient planning tools when properly managed.
529s and Roth IRAs can work together: For clients with young children, the expanded 529 rules open the door to pair tax-free education savings with long-term Roth strategies for legacy or retirement.
Final Thoughts
The One Big Beautiful Bill presents new opportunities—especially if you're proactive about income timing, family support, and education funding. But most of the provisions, particularly the senior deduction and expanded credits, sunset after 2028, which makes now a critical time for planning.
At LA Wealth Management, we’re here to help you navigate these changes and tailor your strategy for maximum benefit. If you haven’t reviewed your retirement income plan or education savings strategy in the last 6–12 months, now is the time.
Disclosures:
Information provided should not be considered as tax advice from GWN Securities, Inc. or it's representatives. Please consult with your tax professional.
An investor's or a designated beneficiary's home state may offer state tax or other benefits that are only available for investments in that state's qualified tuition program. An investor should consider the investment objectives, risks, and charges and expenses associated with municipal fund securities before investing. More information about municipal fund securities is available in the issuer's official statement. The official statement should be read carefully before investing. This and other information can be found in the current program description, which can be obtained from your investment professional. The availability of such a state tax or other benefits may be conditional on meeting certain requirements.
A distribution from a Roth IRA is tax-free and penalty-free provided that the five-year aging requirement has been satisfied and one of the following conditions is met: age 59 1/2, death, disability