The OBBB Act introduces several changes designed to support seniors, parents, and families. These adjustments expand deductions, increase credits, and create new savings opportunities that may influence long-term planning. Here are the most important updates
1. New $6,000 Senior Bonus Deduction (2025–2028)
Americans age 65 and older will receive a new $6,000 bonus deduction beginning in 2025.
Key details include:
Available in addition to the standard deduction
Starts phasing out over $75,000 of income for individuals
Phases out over $150,000 for married couples
Fully eliminated at $175,000 (individual) and $250,000 (joint)
Expires after 2028
This provides immediate tax relief for many retirees, though higher-income households may not qualify
2. Child Tax Credit Increase
The child tax credit rises from $2,000 to $2,200 starting in 2025, with annual cost-of-living adjustments.
This modest increase helps offset rising family expenses while the inflation indexing protects its value over time.
3. Newborn Savings Contribution
Parents of children born between 2025 and 2028 will receive a one-time $1,000 government contribution to a designated savings account.
Additional features:
Parents may add up to $5,000 annually
Funds are locked until the child turns 18
This provision encourages long-term financial planning and may serve as an early foundation for education or future expenses.
4. Expanded Dependent Care Benefits
Starting in 2026:
Dependent care FSA limits increase from $5,000 to $7,500
The reimbursable percentage of expenses rises from 35% to 50%
For working parents, especially those with significant childcare costs, this could create meaningful tax savings and better support dual-income households.
5. 529 Plan Enhancements
Beginning in 2026, 529 plans expand to cover non-tuition expenses at elementary and secondary schools.
Additionally, the cap for tuition-related expenses doubles from:
$10,000 → $20,000
This offers families more flexibility in funding K–12 education and planning for future academic costs.
Together, these updates represent a major investment in supporting families across multiple stages of life — from newborns to retirees. Understanding how each provision interacts with your financial strategy may help you take advantage of opportunities the new law provides.
Sources 1. Congress.gov, July 4, 2025 2. Internal Revenue Service, July 25, 2025. 3. Internal Revenue Service, July 25, 2025.