The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4th, and if you're wondering whether it matters — it does. In the tax world, this is the big one. It changes a lot, clarifies even more, and cuts some things entirely.

Honestly, I went back and forth on how best to get this in your hands: fast enough to matter, but clear enough to trust. Here’s what I landed on — a straight-shooting summary of the key takeaways, with deep dives to follow on topics for families, farmers, small businesses, and estate planning.

Let’s walk through what matters most:

🔒 Tax Rates Are Locked In — For Now

The current tax brackets — 10%, 12%, 22%, 24%, 32%, and 35% — were set to expire after 2025. That’s off the table. They're now permanent, at least until Congress decides to change them again.

What this means for you: You now have clarity. Whether you’re Roth converting, deferring income, planning a retirement draw, or simply budgeting for next year — we finally have a stable foundation to plan from.

🚜 Section 179 and Bonus Depreciation Supercharged

This bill enhances your ability to write off big purchases — think equipment, cows, vehicles, or improvements. You can expense more upfront (Section 179) and use 100% bonus depreciation for new property, permanently.

What this means: Need that new baler, welder, or work truck? You'll get immediate tax benefit, helping offset income and improve cash flow. This is huge for farms, trades, and local businesses.

💵 Tips & Overtime – New Exclusions, With Caveats

These were headline-grabbers, but let’s break them down realistically.

Tips:

You can now deduct up to $25,000 in reported tips from your income at tax time — if your employer reports them correctly, and if you do too. Social Security and Medicare still apply.

Overtime:

A new $12,500 deduction for properly reported overtime income — no extra hoops.

What this means: If your income includes reported tips or overtime, this may lower your tax bill. But if you’re off the books or underreporting, this doesn’t help you — and increases the audit risk.

🚗 Auto Loan Interest Is Now Deductible (For Some)

Starting in 2025, if your income is under $150,000 (single) or $300,000 (joint) and you buy a car — the interest on your loan is deductible.

What this means: A subtle win for working families, especially if your car is your commute, livelihood, or link to town.

👵 Bigger Standard Deduction for Seniors

Retirees get a bump in their standard deduction — subject to phaseouts.

What this means: If your income is modest, this may reduce your taxable income a little further. Unfortunately, Social Security is still taxable, and this won’t change that.

🧾 1099 Thresholds Finally Modernized

Raise your hand if you’re sick of $600 1099s. Me too.

• The reporting threshold goes to $2,000, starting in 2025.

• Third-party pay apps (Venmo, PayPal, etc.) return to the $20,000 / 200 transaction limit.

What this means: Less paperwork noise. More reasonable thresholds for freelancers, side hustlers, and small businesses. But a reminder — income is still income, whether you get a 1099 or not.

🏡 SALT Cap Expanded (Maybe It Helps, Maybe It Doesn’t)

The state and local tax deduction cap (SALT) was raised from $10,000 to around $40,000 through 2030.

What this means: If you itemize, pay state income tax, and own a more valuable home, this may benefit you. If you don’t itemize? It’s a non-factor.

👶 Child Tax Credit, Dependent Care Credit & HSA Changes

• The Child Tax Credit and Dependent Care Credit are both enhanced — stay tuned for specifics.

• HSAs now work with Bronze and Catastrophic plans — finally!

What this means: For many self-employed Montanans or those buying their own insurance, this change makes HSAs a realistic option, unlocking tax savings and better medical planning.

🚫 What Got Cut

• Clean energy tax credits are gone — no more breaks for EVs, heat pumps, or energy-efficient appliances.

• Personal exemptions are permanently repealed — families with 3+ kids still lose here.

• Medicaid changes are substantial, especially for rural states like Montana. We’re tracking this closely.

What Comes Next

This is just the first pass. OBBBA is a landmark tax bill, and we’re going to keep distilling it down to what matters.

Next up:

• Individuals: Rate planning, credits, medical, education

• Farmers: Section 179, land sales, FSA changes

• Businesses: Expensing, QBI, reporting

• Estates: Gifting, trust, and exemption planning

📬 We might not wait for the next issue of Across the Divide — this could be our first-ever half-issue, dedicated solely to the OBBBA. If there was ever a moment to step back, reassess your plan, and ask the right questions — this is it.

As always, our job is to give you Clarity in the Details. Confidence in the Plan.

— Bjorn Swanson

Swanson Agency | Montana Roots. Future Focused.