Split Decisions: The Blog for Women from Bridge Divorce Strategies
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How will the One Big Beautiful Bill Act (OBBBA) affect my finances in divorce?
You’ve heard all about it: The One Big Beautiful Bill that was struggling through Congress seemingly forever has become the law of the land. It’s officially H.R. 1: The One Big Beautiful Bill Act. All 900-odd pages of it.
But will it affect you?
Answer: Yes. It’s going to affect nearly everyone in the United States.
As a CPA, a CERTIFIED FINANCIAL PLANNER® professional, and a Certified Divorce Financial Analyst® professional who provides divorce financial counseling for affluent women in the next chapter of their lives, let me give you some highlights of what’s changing, and how those changes will affect you.
- Changes for wealthy husbands. Many of the details are below, but the takeaway for you is this: Depending on your husband’s situation (and the tax and investing advice he receives), his situation could get better, or worse, with OBBBA. If your case involves splitting assets that are taxed differently (for example, if you get the house and he gets the 401(k)), I want to scrutinize what the after-tax value would be. I want to look at his tax return. I want to help your attorney to get you the most equitable settlement possible.
Speaking of attorneys, I’m now going to do something I haven’t done before in one of these articles: I’m going to give you a “highlights reel” of the more detailed version of the points below which I’ve posted on the “For Attorneys” side of my website. Feel free to look at that version of this post if you want more detail.
- New deductions for seniors. While Congress wasn’t able to eliminate the tax on Social Security income which they’d promised (because it turned out to be, um, a violation of tax law!), they did come up with a kind of workaround, which will help most taxpayers age 65 or older. I’m already seeing this change affect clients of mine who thought they would owe taxes… and now are expected to receive refunds.
- Gift/estate tax. Congress actually got a little more generous here. So for cases where there’s significant wealth, you can continue your wealth-transfer plans with newfound confidence.
- Charitable donations. With new thresholds and deductions, many affluent families will be able to deduct more charitable donations than before, thanks to OBBBA.
- Mortgage interest deductions got worse. The loan-balance limit was supposed to go up to $1 million… but ended up being capped at $750k. That’s a ding against anyone with a large mortgage balance.
- AMT changes. I won’t get into the weeds here, but if your husband has certain types of income (such as incentive tax options and passive income), OBBBA’s changes in the Alternative Minimum Tax or AMT might actually make his financial life worse.
- SALT. The state-and-local-tax or SALT deduction has been temporarily (though 2028) been made more generous, thanks to OBBBA. This will provide a reprieve for people in areas with high state and local taxes; think New York and California.
Bottom line: OBBBA affects pretty much everyone: You, your spouse, even your attorney. Speaking of attorneys, they come to me for help with stuff. And so should you.
Contact me today and let’s talk.
