The One Big Beautiful Bill Act (OBBBA) passed in 2025 — the most significant tax overhaul since the 2017 TCJA. Here's what every Indianapolis resident, family, and business owner needs to know to take full advantage.
Provision 1: No Tax on Tips
Up to $25,000 of qualified tip income is now excluded from federal income tax. This applies to workers in restaurants, bars, salons, ride-share, delivery, and hotels. Note: payroll taxes still apply, and the benefit phases out at higher incomes.
Annual Tip Exclusion
Maximum tip income excluded from federal tax
Typical Indy Savings
Estimated $2,400–$4,000 annual savings for a typical Indianapolis server
Provision 2: Trump Accounts
Children born in 2025 and beyond receive a $1,000 federal seed deposit into a new tax-deferred savings account. Family contributions are allowed (verify limits with your CPA), and qualified withdrawals can be used for education, a first home, or retirement.
The Power of Compounding
18 years of growth at 7% with $200/month contributions reaches approximately $90,000 — enough to cover most of a state-school degree.
Action Steps for Families
- Set up the Trump Account — don't leave the $1K seed unclaimed
- Decide on monthly family contributions
- Coordinate with your 529 and Roth IRA strategy
Provision 3: 100% Bonus Depreciation Returns
Business equipment and qualified real estate components can now be fully deducted in year one. This is a game-changer for business owners and real estate investors alike.
Equipment Example
A $250,000 equipment purchase yields $87,500 in tax savings at a 35% effective rate — all in year one.
Real Estate Impact
Described as the "quiet renaissance for real estate investors" — components reclassified and fully deducted immediately.
Section 179 Boost
Section 179 expensing limits have also been raised, providing additional flexibility for business asset purchases.
Cost Segregation: Tax Magic for Real Estate
A typical $1M residential rental contains $200,000–$300,000 of segregable components. These are reclassified from a 27.5-year depreciation schedule down to 5–15 years — and with bonus depreciation, they become fully deductible in year one.
The result: $87,500 in year-one tax savings on a $1M Indianapolis rental property. If you own real estate, hiring a cost segregation specialist should be a top priority before your next purchase.
Before
Components depreciated over 27.5 years
After
Reclassified to 5–15 years, deducted in year one
Savings
$87,500 on a $1M Indy rental
Provision 4: SALT Cap Adjustments & Other Wins
The SALT (State and Local Tax) cap has been adjusted with a higher cap available for some income brackets. The PTET workaround remains available for business owners, and bunching strategies are still effective. Indianapolis homeowners with high property tax and state income tax can expect $1,500–$5,000 in additional deduction value.
QBI Deduction Extended
The 20% Qualified Business Income deduction has been extended — it was previously set to sunset.
Estate Tax Preserved
The federal estate tax exemption is preserved at high levels, protecting family wealth transfers.
SALT Relief
Higher cap for qualifying brackets plus PTET workaround for business owners.
Action Items by Taxpayer Type
The OBBBA creates specific opportunities depending on your situation. Here's what to do next for each profile:
Tipped Workers
- Confirm tip reporting setup with your employer
- Track tips independently throughout the year
- Talk to a CPA about adjusting withholding
Families with Kids Born 2025+
- Set up the Trump Account — don't leave the $1K seed unclaimed
- Decide on monthly family contributions
- Coordinate with 529 and Roth IRA strategy
Business Owners & Real Estate
- Talk to a CPA about bonus depreciation before 2026 purchases
- Hire a cost segregation specialist if you own real estate
- Run PTET scenarios if you're an S-corp or partnership
Where Insurance Fits In
The OBBBA doesn't just change your tax bill — it creates new capacity for smart financial protection. Here's how insurance strategy aligns with each provision:
Tipped Workers
Redirect tax savings into disability income protection — your tips are now more valuable, so protect your earning power.
Business Owners
Bonus depreciation creates capacity for key-person and buy-sell funding through life insurance.
Families
Pair the Trump Account with term life on both parents to ensure the account grows even if the unexpected happens.
Your OBBBA Snapshot
Here's a quick summary of the key savings opportunities unlocked by the OBBBA for Indianapolis residents:
Your Next Step
Ready to understand your specific OBBBA position? Start with a free 15-minute conversation to walk through how these provisions apply to you — whether you're a tipped worker, a growing family, or a real estate investor in Indianapolis.
OBBBA Tax Changes: A Guide for Indianapolis