Earlier this summer the One Big Beautiful Bill Act (“OBBBA”) was enacted, putting into place numerous tax provisions that will affect our financial lives for years to come. A mere summary of the legislation would far exceed the space limitations of this column (and most likely your attention span). Instead, we’ll focus on the areas that are most pressing and actionable now.
David Gardner / For the CameraElectric Vehicle and Clean Energy Credits Will End Soon: If you’ve noticed a surge of electric vehicles on the road with temporary tags, this legislation may be the reason. In short, the existing federal tax credits for electric and plug-in hybrid vehicles will end for those purchased after Sept. 30 this year. In Colorado there are additional state income tax credits available but these may be reduced starting next year due to our state government’s fiscal situation.
If you are thinking about purchasing an electric or plug-in hybrid vehicle in the next few years, consider moving up your acquisition to this month. Note that many would-be EV car buyers are leasing their new rides because it’s much easier for many to qualify and apply the tax credits to a lease. This may make sense even if you intend to eventually buy the vehicle.
Also, homeowners considering solar panels have until the end of the year to have them installed to qualify for the 30% federal tax credit. Because selecting a vendor and scheduling installation can take months, I’d jump-start this process right away. My hunch is that given this deadline, many solar panel installers already have a significant backlog of work.
Student Loan Availability and Repayments Changing Dramatically: The changes to the federal student loan program are truly profound. First, the federal student loan program for parents paying tuition and living expenses for children entering college has a new limit of $20,000 a year per child with a $65,000 lifetime cap. Parents with a student already enrolled may continue borrowing at prior levels for up to three more academic years. While undergraduate students can continue to borrow directly for college, the limit of $27,000 over four years will still be in place. With some private universities nearing $100,000 for a total cost of attendance for a single year (I’m looking at you, USC!), many families will need other ways to pay for undergraduate education.
Graduate students including those in professional schools will also see federal loan limits reduced. Starting next school year graduate students will qualify for federal student loans of up to $20,500 a year with an aggregate limit of $100,000, while those in professional degree programs will be limited to $50,000 per year and $200,000 total. Like the undergrads, those already enrolled in a graduate or professional program could be grandfathered with borrowing available up to the full cost of attendance.
A broader impact of these changes is that it could significantly destabilize the financial viability of many universities and programs. Most universities depend on tuition dollars being funded through federal loans, which before now were generally limited to the cost of attendance of the school (including living expenses). What happens to those programs with these new limits? When considering a university, I would take care to evaluate the financial strength of the institution using such resources at the College Scorecard and Forbes’s annual College Financial Grades report.
Student loan borrowers have another set of decisions to make as the generous repayment programs and deferral options that were introduced in the previous administration have been tightened up significantly. Perhaps most immediately, Parent PLUS loan borrowers have until July 1, 2026, to consolidate their loans if they want to qualify for income-based repayment. The new federal student loan repayment options could fill a chapter in a book, so stay tuned to studentaid.gov for changes.
David Gardner is a certified financial planner and is admitted to practice before the IRS. As financial planning is only possible after knowing the client, the column is not intended to be personal financial or tax advice. Data presented is believed to be accurate at the time of writing.
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