Congress has passed the One Big Beautiful Bill Act (the “Act”), a wide-ranging tax package that reshapes and makes permanent many provisions originally introduced in the 2017 Tax Cuts and Jobs Act and adds a few new twists. While the Act touches nearly every corner of the tax code, this summary is narrowly focused on what matters most to our clients.
Specifically, we’ve highlighted the provisions most relevant to families with significant investment income, business interests, charitable goals, and complex estate planning needs. We are not attempting to summarize the entire bill but rather to flag the changes likely to impact your planning going forward.
What follows is a curated list of the key provisions that may affect you, along with key takeaways that we will continue to explore with you in the months ahead.
INDIVIDUAL INCOME TAX RATES AND STANDARD DEDUCTION
The new law makes permanent the individual income tax rate brackets originally enacted in 2017. This includes keeping the top marginal tax rate at 37%, avoiding the scheduled increase back to 39.6% that was set to take effect in 2026.
The increased standard deduction is also made permanent with a slight boost through 2028, continuing to replace the personal and dependency exemptions that were eliminated under the prior law.
Takeaway:
For most individuals, these provisions will not materially change current tax outcomes, but they do offer long-term clarity and simplify planning. The elimination of the 2026 “sunset” allows us to plan forward without anticipating a near-term rate hike.
ESTATE AND GIFT TAX EXEMPTION
The new law makes permanent the unified estate, gift, and generation-skipping transfer
(GST) tax exemption at $15 million per individual, indexed for inflation, beginning in 2026. This replaces the scheduled sunset that would have cut the exemption roughly in half at the end of this year and represents a $1 million increase from the 2025 amount.
Takeaway:
The biggest news here is that the increased exemption is made permanent, providing some certainty for families going forward. This change provides additional headroom for lifetime gifts for families who have already used much of their exemption. For others, it removes the pressure to complete large gifts before the end of 2025. We will continue to work with families to assess how best to use the exemption to minimize wealth transfer taxes at death.
STATE AND LOCAL TAX (SALT) DEDUCTION CAP
Much has been made in the news about changes to the so-called SALT cap. The new law raises the cap on the deduction for state and local taxes to $40,000 beginning in 2025. Importantly, however, the benefit phases out quickly: for taxpayers with adjusted gross income (“AGI”) over $500,000, the deduction begins to phase out and is fully eliminated once AGI exceeds $600,000. The increased cap will remain in effect for five years and revert to
$10,000 in 2030.
Takeaway:
For many of our high-income clients, the higher cap will offer little or no direct benefit because of the phase out. AGI includes income from all sources, not just business or salary income. But for those under the threshold, this is one of the more beneficial aspects of the new law.
LIMITS ON ITEMIZED DEDUCTIONS
The new law introduces two limitations that affect itemized deductions for high-income taxpayers. First, it imposes a floor on charitable contributions. Only gifts exceeding 0.5% of AGI are deductible. Second, it replaces the former Pease limitation with a new rule that caps the value of itemized deductions at 35% for taxpayers in the top (37%) tax bracket.
Takeaway:
For most of our clients, these rules will not dramatically change current planning, but they do modestly reduce the tax efficiency of deductions at higher income levels. We will continue to evaluate these changes in the context of charitable giving strategies, SALT deductions, and overall tax management.
QUALIFIED BUSINESS INCOME (QBI) DEDUCTION
The new law makes the 20% deduction for qualified business income under Section 199A permanent. This deduction applies to income from certain pass-through entities, including S corporations, partnerships, and sole proprietorships, subject to limitations based on income level, wages paid, and the nature of the business.
Takeaway:
This change simply removes the prior sunset scheduled for 2026. For clients already benefiting from the QBI deduction, nothing changes, but the permanency provides more certainty for long-term planning.
BONUS DEPRECIATION AND SECTION 179 EXPENSING
The new law extends 100% bonus depreciation through the end of 2029. Under prior law, the bonus rate had already begun to phase down and was scheduled to reach 0% by 2027. The law resets the full deduction for qualifying property placed in service through 2029, with a phase-down beginning in 2030.
Section 179 expensing is also made permanent and indexed for inflation, preserving the ability to deduct up to the full cost of certain business assets, subject to overall limits.
Takeaway:
These provisions continue to support full expensing of capital investments for business owners, which can help reduce current-year taxable income.
PASS-THROUGH ENTITY TAXES (PTET)
The new law preserves the ability of states to impose and administer pass-through entity tax regimes, which allow state income taxes to be paid at the entity level and deducted on the business’ federal return. This structure remains one of the few ways to navigate around the federal cap on state and local tax deductions. Initial proposals indicated that Congress might scale back or eliminate these arrangements, but the new law leaves them intact. The Act also addresses “mismatch” situations in a partnership where a taxpayer receives a larger share of the state allocation than federal income tax allocation.
Takeaway:
For clients who already use a PTET strategy, the structure remains a viable way to manage state income tax exposure, but these structures should be reevaluated with tax advisors in light of the new mismatch rules.
OPPORTUNITY ZONES
The new law creates a second wave of Opportunity Zones with designations beginning in 2027. Like the original program, investments in these zones offer potential deferral and exclusion of capital gains for investments in qualified funds or businesses located in designated areas. While the basic structure of the program remains in place, the delayed start date means investors will need to wait before committing new capital to these zones. Final rules on eligibility and timing are still to come.
Takeaway:
For families anticipating large capital gains in 2027 or later, the revival of Opportunity Zones may offer meaningful tax deferral and exclusion opportunities. This is worth watching closely, especially for those with prior experience in the original program or with capital earmarked for reinvestment. But as with the first round of OZ investments, investors should be confident in the merits of the underlying investment as well as in their ability to tie up capital for many years.
QUALIFIED SMALL BUSINESS STOCK (SECTION 1202)
The new law significantly expands the tax benefits available under Section 1202 for Qualified Small Business Stock (QSBS). Importantly, QSBS only applies to the sale of originally issued stock in a C corporation. Key changes include:
| PROVISION | PRIOR LAW | NEW LAW (2025 OBBA) |
|---|---|---|
| Holding Period for 100% Exclusion | 5 years | 5 years (unchanged) |
| Partial Exclusion for Shorter Holding Periods | Not available (below 5 years = no exclusion) | 50% exclusion at 3 years; 75% at 4 years |
| Per-Issuer Gain Cap | $10 million (or 10x basis), no inflation adjustment | $15 million, indexed for inflation beginning in 2027 |
| Gross Asset Test (at issuance) | $50 million max | $75 million max, indexed for inflation beginning in 2027 |
| Applies To | QSBS acquired after August 10, 1993 | Tiered benefits apply to QSBS acquired after enactment |
Takeaway:
These enhancements make QSBS more accessible and beneficial, particularly for investors and founders in growing businesses. The tiered exclusions provide flexibility for earlier exits while still offering substantial tax benefits. The increased caps and asset thresholds broaden the range of companies and investors who can take advantage of these provisions. And for individuals with significant gains above the cap, opportunities for “stacking” remain attractive.
UNIVERSAL SAVINGS ACCOUNTS (“TRUMP ACCOUNTS”)
The Act introduces “Trump Accounts,” a tax-advantaged savings vehicle designed to help families build long-term capital for children. These accounts are structured to support future expenses related to education, homeownership, or entrepreneurship.
Key Features:
- Available to children under age 8.
- Children born between January 1, 2025 and December 31, 2028 will receive a one-time $1,000 federal contribution to jumpstart savings.
- Parents, relatives, or other taxable entities can contribute up to $5,000 per year in after-tax dollars until the child turns 18.
- Funds must be invested in diversified U.S. equity funds, promoting long-term growth.
- Assets grow on a tax-deferred basis.
- At age 18, up to 50% of the account balance can be withdrawn for qualified expenses such as education costs, first-time home purchases, or starting a small business. These withdrawals are taxed at long-term capital gains rates.
- After age 30, the remaining funds can be withdrawn for any purpose, with taxation at ordinary income rates if not used for qualified expense.
Takeaway:
While the contribution limits are modest, Trump Accounts offer a structured way to accumulate tax-advantaged savings for children’s future needs. For families already maximizing other tax-advantaged accounts, these accounts provide an additional avenue for long-term planning. We can assess their suitability within the broader context of your family’s financial strategy.
ELECTRIC VEHICLE (EV) TAX CREDIT ELIMINATED
The new law eliminates the $7,500 federal tax credit for new EVs and the $4,000 federal tax credit for used EVs on vehicles purchased after September 30, 2025.
Takeaway:
For lower AGI individuals considering the purchase of an electric vehicle, acting before September 30, 2025, may be advantageous to take full advantage of the existing federal tax credits. After this date, these incentives will no longer be available, potentially affecting the overall cost-benefit analysis of such purchases.
SENIOR DEDUCTION (AGE 65+)
The new law introduces a temporary “senior bonus” deduction of $6,000 per individual
($12,000 per couple) for taxpayers aged 65 and older. This deduction is available from 2025 through 2028 and is designed to reduce the taxable income of eligible seniors. It phases out for individuals with modified AGI over $75,000 and for couples over $150,000, with complete phase-out at $175,000 and $250,000 respectively.
Takeaway:
While this deduction does not eliminate taxes on Social Security benefits, it effectively reduces the taxable income for lower-income seniors, but the phase outs will limit the effectiveness for many families.
529 PLAN ENHANCEMENTS
The new law expands the flexibility of 529 education savings plans, allowing tax-free withdrawals for a broader range of educational expenses. Previously limited to college costs and up to $10,000 per year for K–12 tuition, the updated rules now include:
- Homeschooling expenses, such as curriculum materials, tutoring, and testing fees
- Standardized test preparation, including SAT and ACT fees
- Vocational and non-degree credentialing programs, like EMT training or cosmetology licenses
Additionally, the annual limit for K–12 tuition withdrawals increases from $10,000 to $20,000 starting in 2026.
Takeaway:
These changes provide greater flexibility for families to use 529 funds across various educational paths, including non-traditional and vocational training. We will review your current 529 plan strategies to ensure they align with these new opportunities and your family’s educational goals.
CONCLUSION
The Act brings a mix of clarity and complexity. While some provisions offer long-term certainty, others introduce new planning wrinkles that may affect how income is earned, gifts are made, or wealth is transferred.
As always, we’re here to help you sort through what matters and what doesn’t and to adjust your planning accordingly. If any of the changes outlined in this summary raise questions or open new opportunities for you or your family, we look forward to the conversation.