Congress passed, and President Donald Trump signed into law, a major spending and tax-cutting package called H.R.1, the One Big Beautiful Bill Act (OBBB). The bill has been praised by some and criticized by others.
We talked with Heath Grossman, a Certified Financial Planner (CFP) and partner with Johnson Brunetti, the Wethersfield-based retirement planning and investment firm, to ask him his thoughts on what this new law could mean to real people.
What do you see as the major components of One Big Beautiful Bill that people most need to know about?
The One Big Beautiful Bill introduces far-reaching changes in taxes, social spending, defense and energy policy. It makes the 2017 tax cuts permanent, keeping lower individual and estate tax rates in place while expanding deductions for small businesses. For workers and families, taxes will stay low. Some workers whose compensation includes tips, and overtime can see some of that income being tax free. The bill also raises or alters the cap on the state and local tax (SALT) deduction, a key issue for residents of high-tax states. Conversely, as tax cuts must be paid for, this bill reduces funding for social safety net programs—one major example is Medicaid, which faces new work requirements, stricter eligibility verification and reduced state support.
The non-partisan Congressional Budget Office (CBO) estimates the bill will significantly raise the federal deficit by $3.4 trillion over 10 years and could cause millions to lose health coverage.
Who will tend to benefit from it? Who could be adversely impacted, at least financially?
In a general sense, most everyone should benefit tax-wise from this bill to varying degrees; the tax cuts are broad ranging. By making the previous 2017 tax cut permanent, the standard deduction will remain at high levels and tax rates will remain at reduced levels. What’s more, the additional deduction of $6,000 per person for those 65 and over can be a positive. This additional deduction is not permanent, though.
In terms of potential adverse impacts, people who rely on Medicaid or SNAP benefits could be impacted, as SNAP benefits would also be cut back by shifting costs to states and enforcing additional work obligations and administrative burdens.
What are you advising clients right now who come to you with concerns about this new law?
At the outset, we are advising clients to update their withholding to minimize potential tax overpayments. This also adds importance to people considering Roth IRA conversions, especially for folks that are 65 and over.
For those who are concerned it could have a negative impact on them, should they alter their long-range planning, stick with their current plan, or is it a hybrid of the two?
This is a very common question and a good one. And the answer really comes down to people should stick with the plan they have already set for themselves— trust the plan, trust themselves. Could there be a reason to make some alterations depending on what the market is doing as a result of this bill? Of course, there always are. But the worst thing people can do at a time like this is panic. If there is a plan for retirement in place, stick with it and make adjustments as needed. If they have no plan as of yet, this is an ideal time to put one together.
Some economists have said the cuts in this bill, coupled with the uncertainty created by the administration’s changing plans for tariffs on imported goods and supplies, could create a level of chaos that may not be financially healthy. Do you agree, and if so, what could the impact be?
People are always wise to detach their politics from their overall investment strategy—a strategy like that is designed to last for decades, and with politics, obviously, positions and policies can change every few years, if not from year to year. The bill as signed into law certainly has generated its share of discussion and concern in many sectors, but that only turns to chaos when people start reacting rashly and emotionally. If they remove emotion from the equation, they will be much better off in letting their investments work for them.
Finally, looking ahead, what are the key steps individuals and families should take now to prepare themselves—financially and mentally—for the changes One Big Beautiful Bill could bring?
Looking ahead, individuals and families can take several practical steps to prepare for the possible impacts of the One Big Beautiful Bill. First, it is important to review household budgets with an eye toward flexibility; changes to tax deductions, credits and benefits could either increase or reduce take-home income, so families should understand where their money goes and know where they can tighten spending if need be. Building or reinforcing an emergency savings fund is also wise, especially if healthcare or food assistance costs rise due to new eligibility rules or work requirements—having the equivalent of a few months of salary in savings is a good rule of thumb.
On the positive side, families who may benefit from extended tax cuts should consider how to use that relief strategically; this could be done by paying down debt, investing in education or saving for retirement, to name just three good examples. But mental preparedness matters too. Policy shifts often bring uncertainty and understanding that adjustments may be required can reduce stress, so people should stay engaged, ask questions of employers and use this to make better informed decisions.
Heath Grossman, is a certified financial planner and partner with Johnson Brunetti.
