June 2025 Newsletter – One Big Beautiful Bill

One Big Beautiful Bill; AKA OBBB & Implications

Investment Implications from Coming Change

 By Vaughn L. Woods, CFP, MBA

 Since you only have a few more months to consider how the so-called “One Big Beautiful Bill” (making its way through the senate) may affect you, your investment portfolio and your tax planning insights for 2025 and beyond I thought I’d give you a summary of what we know about the initial rough draft of the bill. So read on for what we now expect to be in the final bill. I begin with a summary of how the legislative process works.

How the OBBB Process Works

After a bill passes the House, it moves to the Senate for consideration. The Senate can amend, reject, or pass the bill as is. If the Senate changes the bill, those changes must be reconciled with the House version, often through a conference committee made up of members from both chambers. Only when both chambers pass an identical version does the bill go to the President for signature and become law.

The OBBB is advancing under the “reconciliation” process, which allows budget-related bills to pass through the Senate with a simple majority, bypassing the filibuster. However, the Senate’s rules—especially the Byrd Rule—can strip out provisions deemed unrelated to the budget, so some House-passed measures may not survive.

OBBB Specifics

1. Tax Policy Adjustments

• The House bill would make the 2017 Trump tax cuts permanent and introduce new breaks, including eliminating federal income tax on tips and overtime for workers earning under $160,000, and repealing certain excise taxes.
• The Senate is almost certain to revise these provisions, as several Republican senators have voiced concerns about the bill’s impact on the deficit and the fairness of certain tax breaks.

2. Medicaid and Supplemental Nutrition Assistance Program (SNAP) Cuts

• The House version proposes up to $1 trillion in cuts to Medicaid and SNAP over a decade, mainly through tighter eligibility and work requirements.
• Some Senate Republicans, especially those from states with large Medicaid populations, are pushing back against these cuts, citing both moral and political risks. Expect possible softening or restructuring of these reductions in Senate version.

3. State and Local Tax (SALT) Deduction

• The House bill would raise the SALT deduction cap from $10,000 to $40,000, with a phaseout for high earners—an important concession to House Republicans from high-tax states.
• Senate Republicans are signaling they may scale back or eliminate this expansion, as few senators represent states that would benefit, and there are concerns about the fiscal impact.

4. Child Tax Credit and Other Benefits

• The House bill temporarily increases the Child Tax Credit and introduces “Trump savings accounts” for newborns.
• The Senate may adjust the size, duration, or eligibility for these benefits to reduce costs or address equity concerns.

5. Deficit and Tariff Revenue

• The Congressional Budget Office (CBO) scored the House bill as adding $2.4 trillion to the deficit over 10 years, not counting revenue from tariffs, which are enacted by executive order and excluded from legislative scores.
• The administration argues that tariff revenue will offset the deficit impact, but critics note that tariff income is volatile, can be reversed by future administrations, and may harm economic growth.

What to Watch For:

• Senate Negotiations: Expect significant changes as GOP senators seek deeper spending cuts or modifications to controversial provisions. The Senate must balance deficit concerns with constituent needs and political realities.
• Conference Committee: If the Senate passes a different version, a conference committee will reconcile differences. The final bill must then pass both chambers again.
• Timeline: Republican leaders hope to send the bill to the President by July 4, but internal divisions could delay or reshape the outcome.

The OBBB Outlook in Brief

 The final OBBB could look very different from what passed the House. Key tax breaks, benefit cuts, and deficit projections are all subject to change as the Senate debates the bill and negotiates a compromise. Financial clients should stay alert for updates, as the final law will impact tax planning, government benefits, and the broader economic outlook.

OBBB Provisions Which Rollback, Cut and Reduce Government Borrowing

The “One Big Beautiful Bill” proposes sweeping cuts and rollbacks to several existing policies beyond the elimination of electric vehicle (EV) incentives. Here are the major provisions being cut or scaled back from previous law:

• Green Energy Tax Credits: The bill eliminates or sharply reduces tax credits for clean energy, including those for solar panels, wind turbines, geothermal heat pumps, energy-efficient windows, and more. These credits, hallmarks of the Inflation Reduction Act, currently allow homeowners to claim up to 30% of the purchase cost. The bill also ends tax incentives for installing EV charging stations.
• Electric Vehicle Incentives: All federal tax credits for new and used EVs—up to $7,500 for new and $4,000 for used—would end after December 31, 2025. This also includes the end of credits for home and business EV charging equipment.
• Student Loan and Education Programs: The legislation would slash $330 billion from student loan spending over a decade, replacing existing repayment options with a new income-based “Repayment Assistance Plan” and tightening Pell Grant eligibility by increasing required credits per semester.
• Medicaid and SNAP: The bill introduces stricter work requirements for Medicaid and SNAP (food stamps) recipients, with estimates that up to 10 million people could lose health coverage due to new eligibility rules and administrative hurdles.
• Other Tax Credits and Deductions: The bill repeals several smaller tax expenditures, including the federal excise tax on gun silencers and tanning services. It also restricts the child tax credit to children of U.S. citizens with citizen parents, disqualifying nearly two million children from mixed status families.
• Temporary Tax Cuts: Many new tax breaks—such as those for tip income, overtime, and auto loan interest—are set to expire after 2028, making them temporary rather than permanent features of the tax code.

OBBB Winners and Loser In Summary:

The bill targets a wide range of previous policy provisions for cuts or elimination, especially those related to clean energy, education, health care, and certain tax credits, while offering new or expanded tax breaks that are often temporary or targeted toward specific groups. The groups targeted for increased benefits are working families, middle and Upper Middle-Income Households, seniors, business owners and entrepreneurs, adoptive parents, law enforcement and border security personnel, veterans and military families.

In addition, the bill cuts or eliminates tax and welfare benefits for illegal immigrants, imposes new taxes on elite universities, billionaire sports team owners, and certain nonprofits, and introduces retaliatory tax measures against foreign countries and corporations that impose or benefit from “unfair” taxes on U.S. interests.

Potential Investment Winners and Losers Under the OBBB 899 Provision

If Section 899 is enacted and foreign investors face new taxes, there could be a reduction in foreign capital inflows, which may pressure U.S. asset prices and liquidity, particularly in commercial real estate, equities, and Treasuries. This may also further pressure rates, the value of the dollar, declining real estate values, increased precautionary savings and weaker sentiment if deficits spiral. Industries free from section 899 concerns include US Defense and Aerospace, Domestic Utilities, Regional Banks, U.S. focused-healthcare providers, construction and infrastructure, U.S. telecom, Domestic Transportation and logistics, and pipeline operators.

If Section 899 is enacted, the technology sector—especially large U.S. tech firms and startups with significant foreign investment—would face notable headwinds given increased cost of capital and reduced foreign investment. Moreover, potential retaliatory policies by foreign nations could limit market access to large U.S. digital service providers. Moreover, even with tariffs, the risk of new taxes, barriers or restrictions in key international markets is a growing threat.

Nevertheless, in an America first world the following industries may outperform during this phase of new policy focus: Data Center Builders, Infrastructure Specialists, Water Infrastructure and Management, Semiconductor Manufacturing, Charging Networks, Nuclear Fuel and Small Nuclear Reactor Developers, Rare Earth Mineral Providers, Raw Materials Providers for Batteries, Advanced Electrical Grid Providers and those companies focused on renewables including Next-Gen Battery and Storage Component providers.

I trust you have found this newsletter informative and predictively accurate. You may be able to compare this content with the final version of the OBBB by this time next month since the President wants a final copy on his desk for authentic signature by the fourth of July.  

Sincerely Yours,

Vaughn Woods, CFP, MBA

Vaughn Woods Financial Group, Inc.

2226 Avenida De La Playa

La Jolla, CA 92037

858-454-6900

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Investors should be aware that there are risks inherent in all investments such as fluctuations in investment principal.  Past performance is not a guarantee of future results.  Asset allocation cannot assure a profit nor protect against loss.  Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed.  Views expressed in this newsletter are those of Vaughn Woods and Vaughn Woods Financial Group and may not reflect the views of Bolton Global Capital or Bolton Global Asset Management.  The information provided is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice.  VW1/VWA0319.