By Adam Kornegay, adam@apcplan.com
I’m not quite willing to say that tax returns are as unique as snowflakes but they’re close. It’s amazing how everyone’s tax situation is unique. It’s important to keep this in mind when thinking about the “One Big Beautiful Bill Act” (often referred to as “OBBBA”) that was signed into law in July.
Will you see a difference in your 2025 taxes compared to 2024? Maybe a bit. Would your tax situation in 2026 be different if the law hadn’t passed? Probably.
Financial planners often like to joke that the answer to every financial planning question is “It depends.” Because your tax situation is different from everyone else’s, the answer to “How will this tax bill affect me?” is also “It depends.” Here are a few key items to know about the OBBBA:
No expiration of the 2017 tax cuts. This should be the big takeaway for most people as the law permanently extended the tax cuts that were implemented in the 2017 Tax Cuts and Jobs Act. Without the new law, most people in the 22% tax bracket would have moved to the 25%. Those in the 12% would end up in the 15%. And if you were in the 35% bracket? Maybe the 39.6% bracket! Depending on your situation, this could be thousands in tax savings.
Enhanced senior deduction. Taxpayers 65 or older are eligible for an additional deduction of $6,000 per person. This deduction is available even if you don’t itemize. But your eligibility depends on your adjusted gross income. Your income needs to be $75,000 or lower (as a single filer) or $150,000 or lower (for married filing jointly) to take full advantage of the deduction.
Increased deduction for state and local taxes. The bill increased the cap on a taxpayer’s ability to deduct state and local taxes (SALT). The value of this change depends on your income, whether or not you itemize, and where you live. Since Tennessee has no state income tax, it may not make a big difference for Knoxville residents.
Changes to charitable deductions. Charitable giving can be a great way to support the organizations you care about, but the new law brings some changes in 2026, including a “cap” and “floor” on charitable deductions (depending on your income).
Deductions on tips and overtime. OBBBA allows taxpayers to take a deduction on income received as tips and overtime. The benefit depends on factors such as your overall income and the type of work.
So will the new bill benefit you? It depends! No matter where you are, the best way to find your answers is with a professional advisor who knows you and your life!
Adam Kornegay is a CERTIFIED FINANCIAL PLANNER® professional and a Certified Kingdom Advisor® with APC Financial Planning, which is celebrating its 50th year of serving clients in East Tennessee and beyond. He can be reached at 865-690-1231 or adam@apcplan.com. APC Financial Planning is a registered investment advisor. The information provided is for educational and informational purposes only and does not constitute investment or tax advice and it should not be relied on as such.