We released the following key changes under the OBBBA on Thursday, July 24, 2025:
Increase to the Standard Deduction
Retroactive to 2025, the standard deduction increases to $15,750 for single filers, and $31,500 for married individuals filing jointly. This increase is in addition to any other deductions, such as the additional deduction for age 65+ or blind and the new temporary $6,000 senior deduction.
Additional Senior Deduction through 2028
Provides an additional $6,000 deduction for individual taxpayers age 65 or older. This senior deduction begins to phase out at $75,000 MAGI for single filers and $150,000 MAGI for joint filers. And, the new deduction is on top of the standard or itemized deduction and the current-law additional standard deduction for seniors. The deduction is eliminated starting in 2029.
Increase to the SALT limits for itemized deductions through 2029
Under the TCJA (Tax Cuts and Jobs Act of 2017), taxpayers were limited to a max deduction of $10,000 for state and local taxes (SALT), regardless of income. Under the OBBBA tax law changes taxpayers can now deduct up to $40,000 of SALT, subject to phaseout. This cap will rise to $40,400 in 2026 and by one percent thereafter. In 2030, the cap will revert to $10,000.
Under the OBBBA (Opportunity for Balanced Budgeting and Affordability Act), the increased SALT deduction limit is subject to a phaseout based on the taxpayer’s Modified Adjusted Gross Income (MAGI):
Phaseout begins at MAGI of $500,000.
Within the phaseout range, the increased deduction limit is reduced by 30% of the amount the person’s AGI is in excess of the bottom of the phase out.
For example If the AGI is $550,000, then the max SALT deduction limit is $25,000 (550,000 - 500,000 = 50,000 x .30 = 15,000 reduction)
If the taxpayer’s MAGI is high enough to fully phase out the increase, they revert to the base SALT deduction cap of $10,000
What Other Changes will This Release Include?
Removal of the Change to 2017 Tax Rates (TCJA) Toggle
Removal of the toggle ensures that our financial projections accurately reflect the current tax legislation that permanently extends the tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% that have been in place since 2018.
Removal of Itemized Deductions for State Income Tax Calculations
In order to improve the accuracy of our state tax model, we will only use the state specific standard deduction assumptions for state tax calculations until a future release.
Our Roadmap
We also plan to develop a new feature to empower you to assess the impact of higher tax rates (tax risk) on your financial plan.
We are dedicated to evolving our platform and hope to further refine the itemized deductions at the state and federal level in a future release.
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