7 Tax Changes from OBBB High Earners Should Know

The One Big Beautiful Bill (OBBB), signed in July 2025, reshaped the U.S. tax code with provisions that directly affect high-income households. If you earn $250,000 or more, these are the updates most likely to impact your tax planning.

1. Federal Tax Rates Locked In

Your current brackets, including the top 37% federal income tax rate, are now permanent. This brings stability for long-term planning and avoids the 2026 “sunset” hike that was looming.

2. Higher SALT Deduction Cap (With Phaseout)

The cap on state and local tax deductions (SALT) rises from $10K to $40K through 2029. However, the benefit phases out once income exceeds $500K for joint filers or $250k for single filers, meaning the biggest earners may see little or no change.

3. New Deductions for Overtime & Tips

For the first time, certain workers can deduct up to $25K in overtime pay and $25K in tip income. This change creates tax-saving opportunities, especially in dual-income households where one spouse earns variable income.

4. Above-the-Line Charitable Deduction

Even if you don’t itemize, you can deduct $1,000 ($2,000 for couples) in charitable gifts. This expands tax benefits for giving and rewards generosity at all income levels.

5. Bigger Standard Deduction for Seniors

Taxpayers age 65+ receive an extra $6,000 standard deduction through 2028. The benefit phases out at $75K income for single filers and $150K for joint filers.

6. Expanded 529 Plan Uses

529 education accounts are now more flexible. Funds can cover homeschool expenses, apprenticeships, and student loan repayments, in addition to tuition. This makes them a stronger planning tool for families.

7. Expanded HSA Eligibility in 2026

Starting in 2026, more health plans qualify for Health Savings Accounts (HSAs), including Bronze and Catastrophic ACA plans. Direct Primary Care memberships and telehealth coverage will no longer disqualify you, broadening access to these tax-advantaged accounts.

The Bottom Line for High-Income Taxpayers

There were a ton of changes in the tax law, and it seems like all of them have a phaseout or some stipulations so it's important to really dive into the details. Hopefully this narrowed down list provided some clarity and highlighted changes that most impact you.

Let me know if there are other changes you want our opinion about, or if there is a change I missed!