President Trump Signs Tax and Spending Cut Bill into Law

On July 4, 2025, President Trump signed into law a package of tax and spending cuts that both houses of Congress narrowly approved, largely on a partisan basis. The legislation, titled the “One Big Beautiful Bill Act,” has evoked strong emotional responses on both sides. This update focuses solely on two components of the act that are important to all CFP® professionals: provisions reflecting CFP Board’s successful advocacy, and provisions likely to impact the financial advice CFP® professionals provide to clients.  

Expansion of 529 Accounts to Cover Professional Certification

Thanks to strong advocacy by CFP Board and many CFP® professionals, the bill incorporated the Freedom to Invest in Tomorrow’s Workforce Act (H.R. 1151/ S. 756). As a result, those with 529 education savings accounts will be able to use those funds to cover fees and expenses related to obtaining or maintaining recognized post-secondary credentials, including the CERTIFIED FINANCIAL PLANNER® certification. This will have the effect of transforming 529 educational savings plans into career savings plans. 

Preservation of Tax Deductions for Small Business Owners

The final bill preserves two key tax provisions that CFP Board championed, enabling small businesses to reinvest in their businesses and contribute to the growth of their communities.   

First, the new law makes permanent the 20% deduction for owners of certain pass-through entities that pay businesses taxes on their individual tax returns. Section 199A of the Tax Cuts and Jobs Act of 2017 (TCJA) introduced a 20% qualified business income deduction to create relative parity between pass-through entities and corporations, complementing the TCJA’s reduction of the corporate rate to 21%. Under current law, the Section 199A deduction is eventually phased out for specified service trades or businesses (SSTBs) — including financial advisors — when an owner’s taxable income exceeds a certain threshold amount. The final bill increases the threshold amount for SSTBs from $100,000 to $150,000 for married filing jointly taxpayers (and from $50,000 to $75,000 for all others).   

Second, while both the House and Senate considered limiting pass-through entity tax (PTET) deductions, that language was not included in the final bill. After TCJA limited state and local tax (SALT) deductions, most states, with Treasury Department approval, let pass-through entities pay state taxes directly, implemented regimes that alleviate the cap’s impact for pass-through entities by shifting the state tax burden from individuals to their pass-through entities. Because the state PTETs reduced the revenue the SALT cap was designed to generate, Congress considered phasing out or limiting  SALT deductions and PTETs for certain taxpayers, including SSTBs, which include financial advisors. Ultimately, the final bill increases the SALT cap from $10,000 to $40,000 until 2030, after which it returns to $10,000. There are no new limitations for state PTETs.   

Recognizing the Importance of Retirement Accounts and Nonprofits 
 
The final bill is also notable for what it leaves out. Congress had considered funding the package by targeting Americans’ retirement plans and nonprofits’ tax-exempt status. CFP Board, alongside other stakeholders, successfully advocated against these measures, which Congress ultimately excluded.  

The act also includes several provisions that may affect the financial advice that CFP® professionals provide to clients, including the following:   

• A permanent extension of the individual tax cuts enacted under the 2017 Tax Cuts and Jobs Act (TCJA), which were set to expire in 2025
• Certain business tax breaks
• A permanent boost to the standard deduction to $15,750 for single filers, $23,625 for heads of household and $31,500 for married individuals filing jointly 
• A $6,000 increase to the standard deduction for seniors from 2025 through 2028
• A temporary increase in the SALT deduction cap to $40,000, which is phased out after $500,000 of income 
• A new charitable income tax deduction for non-itemizing taxpayers, allowing deductions of up to $1,000 for single filers and $2,000 for joint filers 
• An enhanced child tax credit of $2,200 through 2028 
• An increase of the estate and gift tax exemption to $15 million in 2026 
• A new temporary deduction for interest on car loans, which replaces electric vehicle incentives 
• The elimination of the IRS Direct File program 
• Exemptions for tips and overtime pay
• Changes to student loan repayment programs, replacing existing student loan forgiveness with more stringent options 
• The creation of savings accounts for kids, including a pilot program that prefunds the accounts with $1,000 for children born between 2024 and 2028 
• An extension of the limitation on the casualty and theft loss deduction, which was modified to include state-declared disasters 
• Expanded eligibility and new ways to use HSA funds
• Higher taxes for many universities and foundations
• Introduction of a 1% tax on certain transfers of money sent abroad