OBBB 2025: Trump Accounts and Personal Tax Reform

Introduction 

The “One Big Beautiful Bill Act” (OBBB Act 2025), signed by President Donald Trump on July 4, 2025, has introduced some of the most significant changes to personal tax law in recent years. These updates officially took effect in September 2025 and are expected to impact millions of American taxpayers.  

Among the highlights are the permanent extension of the lower tax rates first introduced in 2017, new temporary deductions aimed at supporting groups such as seniors, workers who earn tips, and those with overtime income, as well as the launch of tax-advantaged “Trump Accounts” to help children build financial security from a young age.  

In this blog, we’ll take a closer look at these reforms, with a special focus on Trump Accounts and other significant personal tax changes brought about by the OBBB 2025. 

Key Personal Tax Changes You Should Know 

The OBBB Act brings several significant personal tax changes for 2025 and beyond.  

• First, it makes permanent the lower income tax rates that were initially introduced under the 2017 Tax Cuts and Jobs Act. These were supposed to expire at the end of 2025.  

• The standard deduction has also gone up. This is now set at $15,750 for single filers and $31,500 for married couples filing jointly in 2025.  

• Families will benefit from an increase in the Child Tax Credit, which rises from $2,000 to $2,200 per child and will now be adjusted for inflation in the future. 

• For taxpayers who itemize, the state and local tax (SALT) deduction cap has temporarily increased from $10,000 to $40,000 for 2025, although this higher cap will phase out for those with higher incomes.  

• In addition, the Act introduces several new temporary deductions available between 2025 and 2028. These include a deduction of:  

• Up to $25,000 a year for qualified tip income 

• A senior bonus deduction of up to $6,000 for Americans aged 65 and older (with phase-outs at higher incomes) 

• A deduction on certain overtime earnings 

• A deduction of up to $10,000 annually for interest paid on new auto loans. 

In addition to these changes in deductions and credits, the OBBB Act also brought in a completely new way for families to save. This is through the introduction of “Trump Accounts,” which are designed to give children a financial head start while offering tax benefits for parents. 

Trump Accounts: A New Savings Option for Kids 

The OBBBA also introduced new tax-preferred “Trump Accounts” designed to give minors a financial head start. These accounts are a new type of savings account created under the OBBB Act. They are designed specifically for children under 18 and come with special tax rules. Think of them as similar to Individual Retirement Accounts (IRAs), but with some key differences in how contributions, withdrawals, and tax treatment work. These accounts are meant to help families save money for their children’s future needs, like education, healthcare, or even buying a first home, while following rules that balance flexibility with long-term growth.  

Summary of OBBB Provisions (Trump Accounts) 

• Who qualifies:

  These accounts are for children under 18 who are U.S. citizens and have a Social Security Number. 

• Who can contribute:

  Money can come from parents/individuals, employers, non-profits, or government programs. 

• Individual contributions: 

• Parents or individuals can put in up to $5,000 per child each year. 

• Contributions are made with after-tax dollars. 

• When money is withdrawn, the original contributions are tax-free, but any earnings are taxed as regular income. 

• Employer and organization contributions: 

• Not limited by the $5,000 cap. 

• Employers can add up to $2,500 per year for each child of their employees. 

• These contributions (and any earnings) are taxed as regular income when withdrawn. 

• Organizations must give the same amount to all children in a defined group (for example, all kids in a certain area). 

• Withdrawal rules: 

• No withdrawals before the child turns 18. 

• After 18, money can be used for certain expenses without penalty, such as: 

1. First-time home purchase 
2. Education costs 
3. Medical or disability expenses 

• Withdrawals for other reasons before age 59½ come with a 10% penalty (like IRAs). 

• After age 59½, money can be taken out for any reason without penalty. 

• Automatic setup and credit: 

• For children born between 2025 and 2028, a Trump account will automatically be created (unless parents opt out). 

• These accounts come with a one-time $1,000 government credit. 

• Investment requirement: 

• Until the child turns 18, the account must be invested in low-cost funds (mutual funds or ETFs with fees below 0.1%). 

Table 1: OBBB Act 2025 at a Glance 

Read Also: The One Big Beautiful Bill Act: Key Federal Tax Changes for 2025      

How KMK Ventures Can Help 

The new rules under the OBBB Act bring both opportunities and challenges for taxpayers. While benefits like higher deductions, expanded credits, and Trump Accounts sound attractive, understanding how to use them correctly can be tricky. At KMK Ventures, we help individuals and families make sense of these changes. Our team can guide you on how to maximize deductions, plan contributions to Trump Accounts, and ensure you remain compliant with the new rules. We also assist with tax planning strategies, so you don’t miss out on any benefits while avoiding costly mistakes. 

Conclusion 

The OBBB Act has reshaped personal taxes in 2025 with permanent tax cuts, bigger deductions, and new ways for families to save for their children’s future. While these changes can ease the tax burden, they also require careful planning to make the most of them. Still not sure how these updates apply to you? That’s where KMK comes in—with expert guidance to help you navigate the new tax landscape with confidence.