Key Tax Changes and How To Plan for Them
While the recently passed One Big Beautiful Bill Act (OBBBA) solidified many of the tax rules enacted by the 2017 Tax Cuts & Jobs Act (TCJA), it also made new additions to our tax code, introduced new savings strategies for minors and established notable changes for business owners.
Let’s break down key implications of the bill – and discuss the planning opportunities associated with them:
Changes to Income, Taxes and Credits Related to the TCJA
- The current tax rates and brackets, previously set to expire after 2025, will remain – avoiding a 1–4% rate hike for most.
- The enhanced child credit established by the TCJA increased to $2,200 per child in 2025, with annual inflation adjustments starting in 2026.
- Starting in 2026, more taxpayers – particularly couples earning over $1 million – may be subject to the alternative minimum tax, a secondary tax that limits the benefit of certain deductions.
- Instead of falling to around $7 million, the amount you can gift over your lifetime or at death without incurring tax will rise to $15 million in 2026 – with annual inflation adjustments to follow
KEY PLANNING OPPORTUNITY Households with over $30 million in net worth now have the most critical need to plan around the estate tax – but estate planning is vital for all taxpayers. Take this time to ensure your estate plans are up to date and reflective of your circumstances, wishes and current tax laws.
Changes to Deductions Related to the TCJA
- The standard deduction increased again for 2025: $31,500 for joint filers and $15,750 for singles, allowing taxpayers even more tax-free income.
- The state and local tax deduction – available for itemizers – temporarily rose from $10,000 to $40,000 for 2025 through 2029.
KEY PLANNING OPPORTUNITYThe increase in the SALT deduction begins to phase out for those with income between $500,000 and $600,000 – potentially raising the tax cost on that range of income. Your advisor can help you explore strategies to mitigate this impact.
New Deductions (Available From 2025–2028)
- Employees can now deduct up to $25,000 in qualified tip income and up to $12,500 in overtime ($25,000 for couples).
- Up to $10,000 of interest on loans used to purchase qualifying vehicles can now be deducted, given certain stipulations are met.
- Those aged 65 or older can claim a $6,000 deduction per person.
KEY PLANNING OPPORTUNITY Phaseout rules apply to each of these and vary by filing status – and Roth conversions or capital gains could push you over the limits. Your advisor can help you build a multi-year tax strategy that accounts for these limits and helps optimize your total wealth plan.
Charitable Giving, Education Funding and Family-Related Changes
- Couples claiming the standard deduction can deduct an extra $2,000 in eligible cash gifts in 2026.
- Beginning in 2026, only charitable contributions exceeding 0.5% of gross income will be deductible for itemizers. High earners will also face a cap on all itemized deductions.
KEY PLANNING OPPORTUNITY Consider accelerating or delaying charitable contributions to maximize your tax benefit. Talk with your Financial Advisor about strategies – like bunching – that could work best for you.
- 529 plans can be used for up to $20,000 in K-12 tuition (up from $10,000) and for other expenses for elementary, secondary, religious and private schools beginning in 2026.
- A new tax-deferred savings account for minors has been created, functioning similarly to a traditional IRA. Contributions can be made until the beneficiary turns 18, but accounts cannot be opened until July 2026. Stay in contact with your advisor team as more information becomes available.
Changes for Business Owners
- The new bill permanently reinstates TCJA’s program that allows businesses to fully deduct qualified property in the year it’s purchased.
- Owners of pass-through businesses can continue to exempt a portion of their income from tax, with expanded phaseouts in 2026 – allowing more businesses to qualify.
- The tax exclusion when selling qualified small business C corporation stock has been expanded.
KEY PLANNING OPPORTUNITY These provisions make entity structure critical when starting a business. Your advisor can help you make an informed decision.
Behind the Bill
Exploring the many moving parts of the new tax bill – and analyzing what they could mean for you.
As you prepare for the end of 2025, be sure to consider new planning opportunities associated with the newest legislation.
The One Big Beautiful Bill Act marks a turning point in U.S. economic policy – what does it mean for growth and stability?
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