The One Big Beautiful Bill Act (OBBBA) has officially been signed into law. The program brings sweeping changes (some temporary, some permanent) to the tax code that will impact nearly every taxpayer in the U.S. in some way. And while some may have expected these updates to roll out slowly, the reality is the OBBBA is already in effect for the 2025 tax year — meaning the return you file next spring will reflect these changes.
For federal employees, contractors, and families across Northern Virginia, the new legislation presents both opportunities and challenges. The bill was intended to bring tax relief for working Americans and seniors. However, the reality may be more nuanced for individuals based on their unique circumstances. Some provisions may deliver immediate savings, while others introduce new complexities around deductions, credits, and long-term planning.
This is where Big Beautiful Bill year-end planning becomes essential. With new deductions phasing in and out, expanded standard deductions, and specific income cliffs to watch for, you can’t assume that what worked on your tax return in 2024 will still apply in 2025. Instead, you need a clear strategy — one that integrates tax moves with your retirement, investment, and estate planning goals.
Let’s walk through the key provisions, what they may mean for Northern Virginia households, and the practical steps to consider before year-end.
One Big Beautiful Bill Act Overview
At its core, the OBBBA builds on the 2017 Tax Cuts and Jobs Act (TCJA) while layering in new provisions designed to deliver targeted tax relief.
Permanent changes include:
- TCJA’s seven-bracket tax system (10%–37%), now locked in.
- Permanently higher standard deduction ($31,500 for joint filers in 2025).
- The 20% Qualified Business Income (QBI) deduction for small businesses.
- Expanded Child Tax Credit: $2,200 per child, with $1,400 refundable.
- Expanded 529 plan uses for tutoring, credentialing, and nontraditional education.
In addition to these permanent shifts, the law also created several short-term deductions available only from 2025 through 2028.
Temporary deductions (2025–2028)
- Tips: Deduct up to $25,000 in qualified, reported tips.
- Overtime: Deduct up to $12,500 ($25K for joint filers) of overtime “premium” pay.
- Car loan interest: Deduct up to $10,000 of interest on new, U.S.-assembled personal-use vehicles (VIN required on return).
- Senior deduction: An additional $6,000 per taxpayer age 65+, up to $12K per couple; the deduction phases out for taxpayers with a modified adjusted gross income (MAGI) over $75K single/$150K married filing jointly income.
SALT Deduction Cap:
- Raised from $10,000 to $40,000 in 2025, with a 1% annual increase through 2029.
- Reverts back to $10,000 in 2030.
- For households with MAGI above $500,000 ($250,000 if single or filing separately), the expanded deduction phases down by 30¢ for every dollar over the threshold. The phaseout continues until MAGI reaches $600,000, at which point the deduction reverts to the $10,000 cap.
According to the Tax Foundation, the average Virginian will see a tax cut of about $3,554 in 2026 compared to the prior law. However, averages can be misleading — higher earners may see benefits phase out, while retirees and families with significant state and local taxes may feel the most considerable relief.
Key Tax Provisions That Could Affect You Before Year-End
Here’s how some of the new rules could affect the choices you make before December 31st. As always, discuss your specific circumstances with a tax professional to ensure you understand how any of these provisions could directly impact your financial situation.
Expanded Standard Deduction
Some households may find it more advantageous to take the expanded standard deduction rather than itemize. That means the traditional list of deductible expenses, such as mortgage interest, charitable gifts, and medical costs, may no longer reduce your taxable income unless they are unusually high.
New Above-the-Line Deductions
The tips, overtime, car loan interest, and senior deductions apply even if you don’t itemize. This could help federal employees and contractors in Northern Virginia reduce taxable income more efficiently.
SALT Deduction Expansion
Virginia’s state income tax rate of 5.75%, plus property taxes (including personal property tax on vehicles), means many Northern Virginia families will quickly hit the old $10,000 cap. Under the OBBBA, those same families may now deduct up to $40,000 — a major planning opportunity through 2029.
For high earners, however, the phaseout can eliminate much of the benefit. If your modified AGI exceeds $500K, your SALT deduction begins shrinking until it bottoms out at $10,000. This makes discussing how to time income and deductions with a financial advisor essential.
Retirement Account Withdrawals and Roth Conversions
Because the brackets are now permanent, Roth conversion strategies become more predictable. However, you’ll need to coordinate conversions carefully to avoid phasing out other OBBBA deductions. A large conversion in a single year could push your AGI above the $500K SALT threshold or phase out your senior deduction. Spreading conversions across multiple years may help.
Retirement and Investment Planning Impacts
For federal employees nearing or in retirement, the OBBBA provides both relief and reminders:
- Senior Deduction: Virginia retirees age 65 and older can now deduct up to $6,000 each if under $75K income ($12K for couples). For many, this will offset part of their required minimum distributions (RMDs).
- RMDs & Withdrawals: With permanent tax brackets, you can better project your future tax rate. This makes RMD planning, Roth conversions, and strategic withdrawals more precise.
- Investment Income: Capital gains treatment is unchanged, but larger SALT deductions can indirectly reduce taxable income for households with high property taxes and investment income.
If you’re retired from federal service and already drawing your FERS pension, Social Security, and TSP distributions, now is the time to revisit how withdrawals align with these new deductions with an experienced Northern Virginia financial advisor.
Estate & Wealth Transfer Updates
One of the most significant impacts of the OBBBA is stability. For years, estate planners have been working under temporary TCJA provisions.
Now, many of those are permanent:
- Estate and Gift Tax Exemption: The higher thresholds are here to stay — $13.99 million per person in 2025, rising to $15 million per person ($30 million per couple) in 2026. For most Northern Virginia families, this means estate taxes will continue to not be a concern.
- Gifting: Annual exclusion gifting rules remain, but families can now plan more confidently without worrying about sudden exemption changes.
- Charitable Giving: Beginning in 2026, even non-itemizers can deduct up to $1,000 ($2,000 joint) in charitable contributions. Larger gifts face new phaseouts at very high income levels, which may affect philanthropic planning.
For business owners considering an exit, one notable provision increases the exclusion on qualified small business stock (QSBS) up to $15 million per shareholder. If you’re selling a C-corporation or expecting liquidity, coordinate closely with your CPA — the tax savings can be substantial.
What Northern Virginia Families & Professionals Should Consider Now
Living in Northern Virginia means balancing federal benefits with a relatively high cost of living and state tax burden. Here’s what local households should consider:
- Federal Employees: Your FERS pension calculation remains unchanged, and contributions are not increasing. But new above-the-line deductions can lower taxable income even if you don’t itemize.
- Retirees: Use the senior deduction to offset RMD income and look for Roth conversion opportunities before income thresholds phase you out.
- Small Business Owners: Take advantage of the permanent QBI deduction and expanded expensing provisions. For many types of business equipment and improvements, the ability to deduct costs upfront rather than over time is now locked in.
- Families: With the Child Tax Credit increased to $2,200 and SALT deductions expanded, many households will see meaningful tax relief — but don’t assume. Model your situation or consult a professional.
- High Earners: Be cautious around SALT and senior deduction cliffs. Plan major sales, stock liquidations, or Roth conversions with income thresholds in mind.
Year-End Financial Checklist 2025
Here’s a year-end financial checklist for 2025 to help you get started:
- Review your withholding and estimated payments under the new brackets.
- Evaluate Roth conversions in light of permanent brackets and phaseout thresholds.
- Consider timing property sales or capital gains to avoid SALT phaseouts.
- For seniors, confirm eligibility for the $6,000 deduction ($12K joint).
- If buying a new vehicle, verify U.S. final assembly to qualify for the car loan interest deduction.
- Reassess charitable giving strategies — especially if you don’t usually itemize.
- For business owners, revisit your structure, QBI deduction eligibility, and expensing opportunities.
- Coordinate with your CPA and Northern Virginia financial advisor to ensure tax moves align with retirement and estate planning.
Good Life Financial Advisors of NOVA: Turning Complexity Into Clarity
The One Big Beautiful Bill Act reshapes the tax landscape with a mix of lasting reforms and short-term opportunities. For some Northern Virginia households, that means meaningful tax relief. For others, it raises new questions about timing income, deductions, and retirement withdrawals. Either way, it underscores the importance of proactive year-end planning — not waiting until tax season to see how the numbers shake out.
That’s where the right partner makes all the difference. At Good Life Financial Advisors of NOVA, we help federal employees, contractors, and families across Northern Virginia translate complicated tax law into clear, actionable strategies.
If you’re wondering how the OBBBA fits into your retirement, investment, or estate plan, now is the time to start the conversation. Schedule a call today to learn more!
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA. show less
