How the Big Beautiful Bill Could Impact Your 2025 Tax Filing

Hello, and welcome to Blue Chip Chats. My name is Gina DiGirolamo, and I’m a certified financial planner. This is the series where I sit down with advisors to talk about the technical and emotional sides of financial planning.

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Today I’m here with Adam Larkin. Adam is a certified financial planner and financial advisor here at Blue Chip Partners. Adam, thanks for joining me today.

Thanks for having me.

Absolutely. Today we’re talking about the One Big, Beautiful Bill that’s been in the news pretty often here in 2025. We’re going to talk about how it applies to taxpayers, what they might want to think about in their financial plan, and how it factors into year-end planning and tax filing season.

To start, can you give some context on what this bill is and why 2025 is such an important year?

Yeah. The reason it’s coming out now is because back in 2017, during the first Trump administration, the Tax Cuts and Jobs Act was passed. That legislation put provisions in place that were set to expire at the end of 2025.

So now lawmakers needed to come out with something different if they wanted to either make some of those provisions permanent, extend them, or introduce new ones altogether. That’s what made 2025 such an important year—either to extend those changes or allow the tax code to revert back to what it looked like before that act.

For anyone listening, can you talk through the difference between the standard deduction and itemized deductions and how someone might approach that in their own tax filing?

Sure. One of the main goals of the Tax Cuts and Jobs Act was to simplify tax filing for most U.S. taxpayers. They did that by increasing the standard deduction to an amount that was generally higher than what many people could itemize.

The standard deduction is a fixed number based on your filing status—single or married filing jointly—that you’re allowed to deduct from your income without needing to track individual expenses.

The other option is itemizing deductions. If you have enough individual deductions that exceed the standard deduction, you can deduct more from your taxable income by itemizing.

Generally speaking, itemized deductions fall into four main categories: medical and dental expenses, state and local taxes (often referred to as SALT taxes), interest paid—most commonly mortgage interest—and charitable contributions.

If the total of these exceeds the standard deduction, itemizing may reduce your taxable income more than taking the standard deduction.

Some taxpayers take the standard deduction, while others are able to itemize and deduct more.

One of the itemized deductions you mentioned is the SALT tax. What changes were made under the One Big, Beautiful Bill related to that?

Under the Tax Cuts and Jobs Act, the state and local tax deduction was capped at $10,000. Even if you paid more than that in state and local taxes, you could only deduct $10,000.

The new change increases that limit to $40,000. There are income-based restrictions to be aware of, but that increase is what’s been making headlines. This change mainly benefits taxpayers who itemize or may now be able to itemize because of the higher deduction.

Right—this potentially adds up to $30,000 more in deductible expenses than in prior years. That could allow more people to itemize and potentially lower their tax liability.

Another provision applies whether someone itemizes or takes the standard deduction—the enhanced senior deduction. Can you explain how that works?

The enhanced senior deduction applies to individuals age 65 and older. Each qualifying individual is eligible for up to a $6,000 deduction.

If you’re married filing jointly and both spouses are over 65, that’s up to $12,000 combined. It doesn’t matter whether you’re receiving Social Security or enrolled in Medicare—only age matters.

There are income phaseouts, though. For married couples filing jointly, the phaseout begins at $150,000. For single filers, it begins at $75,000. Once you exceed those thresholds, the deduction begins to phase out.

Can you give an example of how someone might use these new deductions in practice?

Let’s start with the SALT deduction. Say we have a married couple earning $550,000 in gross income. The income phaseout for the SALT deduction begins at $500,000 for married filing jointly and fully phases out at $600,000.

That means this couple could look for strategies to reduce income—such as maximizing pre-tax 401(k) contributions or using deferred compensation—so they can take fuller advantage of the increased deduction.

The same thinking applies to the enhanced senior deduction. Imagine a married couple over 65 managing their income carefully for Medicare and tax bracket reasons, targeting around $200,000 of income.

That approach may still make sense long-term, but they should be aware that exceeding the $150,000 threshold could reduce or eliminate their enhanced senior deduction. In some cases, reducing IRA distributions or deferring income could help preserve the deduction, if it fits the broader plan.

If you had to leave listeners with one key takeaway, what would it be?

The big takeaway is that while headlines highlight new and expanded deductions, many of them come with income phaseouts. You need to understand whether those deductions actually apply to your specific situation.

If you’re hearing about these changes and wondering how they affect you, it’s worth looking deeper to see if income thresholds limit your eligibility—and whether managing income differently in a given year makes sense.

There’s often more beneath the surface than the headline suggests.

Exactly—and working with a trusted advisor can help make sure you’re accounting for these changes properly, especially since tax laws continue to evolve.

Absolutely. This is something we’re actively discussing with clients. If this applies to you, reach out to our team at Blue Chip Partners. We’d be happy to review your tax situation and see how we can help.

Thanks for joining me today, Adam.

Thanks again for having me.

Absolutely. And thanks for watching. Can’t wait to chat again soon.