The One Big Beautiful Bill Act: What Divorcing Clients Need to Know
The recently passed One Big Beautiful Bill Act (OBBBA) brings sweeping tax changes that will impact individuals and families for years to come. While these provisions affect all taxpayers, they carry special importance for those going through divorce. Support calculations, property division, and planning for children’s financial future are all influenced by how the new law shapes income and deductions. Understanding these changes can help divorcing couples and their advisors make informed choices during settlement discussions.
Income and Support Calculations
One of the most significant provisions of the OBBBA is the permanent extension of the individual tax brackets from the 2017 Tax Cuts and Jobs Act. These rates will continue to be adjusted with inflation. Beginning in 2025, the standard deduction increases to $15,750 for single filers, while the child tax credit rises to $2,200 per child.
These numbers matter because child support and spousal maintenance are based on each parent’s available income after taxes. With higher standard deductions and credits, net income may look different in 2025 and beyond compared to recent years. Divorcing couples should carefully review these figures with their tax and financial professionals when calculating fair and accurate support levels.
Division of Property and Home Ownership
The OBBBA makes permanent the mortgage interest deduction limit of $750,000 of indebtedness. It also disallows home equity loan interest unless the loan is used for home improvements. For divorcing spouses deciding whether one person will remain in the marital home, these tax rules play an important role in affordability. Factoring in the limits on deductions can provide a clearer picture of whether keeping the home makes financial sense post divorce.
Education Planning with 529 Accounts
The new law greatly expands the uses for 529 plans. Funds can now cover credentialing programs such as welding, aviation mechanics, or professional licensing exams in addition to traditional college costs. Beginning in 2026, the annual distribution limit for K through 12 expenses doubles from $10,000 to $20,000 per child. Parents can also use funds for tutoring, curriculum materials, standardized tests, and educational therapies for children with disabilities. This change provides divorcing parents with much more flexibility when building parenting plans. It is now important to specify in the divorce agreement how 529 funds will be managed and used for a wide range of education related costs.
Final Thoughts
The One Big Beautiful Bill Act changes the landscape for families in ways that directly touch on divorce planning. From income calculations to education savings, the law offers both opportunities and challenges. Divorcing individuals should work closely with their financial and tax professionals to fully understand how the new rules will affect support, property division, and their children’s financial security.
At the Center for Divorce Resolution, we help clients stay ahead of legislative changes like the OBBBA so they can make informed and confident decisions for their future.