Your Guide to Taxes, Planning, & Legacy Under "OBBBA"

For the first time in years, individuals and businesses can plan around a tax code that isn’t on the verge of expiring.

Signed into law on July 4, 2025, the "One Big, Beautiful Bill Act" (OBBBA) is a package of tax and spending changes narrowly passed by Congress, mostly along party lines. It builds on and extends many provisions of the 2017 Tax Cuts and Jobs Act (TCJA), while adding new rules that reshape everything from income taxes to estate planning.

Unlike most major legislation, the bill’s title offers no hint about its purpose. It’s not an acronym or a nod to a particular policy goal. Supporters might call it bold branding; critics might see it as unserious. Either way, OBBBA has wide-ranging implications, especially for high earners, diligent savers, and charitable givers.

Legislation Timeline

• 2025: Bill passed; new standard deduction, child tax changes, SALT relief begins
• 2026: Estate exemption begins, charitable rule changes take effect, student loans change
• 2028: Many provisions expire
• 2029/2030: SALT relief ends/reverts

Popular Tax Breaks vs. Worrying Cuts 

Supporters of the bill highlight its benefits for working families, retirees, and small businesses. Provisions such as no federal tax on tips or overtime, and an extension of 2017-era tax cuts (which led to lower tax bills for most taxpayers) have broad appeal.  

However, these provisions should be weighed against concerns regarding deficit spending, reductions to Medicaid, rural hospitals, food assistance (SNAP), plus the termination of many clean energy tax incentives. High-profile critics, including former administration supporters, have voiced strong opposition to the bill’s fiscal and environmental provisions.

Big Cuts, Bigger Questions

While the bill delivers immediate tax relief, concerns linger about long-term tradeoffs. With $4.1 trillion in projected tax revenue losses and only $1.7 trillion in projected offsets, the fiscal math is under scrutiny.

Some analysts argue that the bill relies on accounting maneuvers to understate its true cost, reinforcing concerns that growing federal deficits have become the country’s "default mode." The bill’s cuts to social programs and clean energy incentives also raise long-term planning questions, especially for clients concerned about the future of healthcare, education, or environmental priorities.

Concerns Over Gutting the Safety Net

Rather than cutting core support, Republicans claim the bill’s reforms to Medicaid and SNAP are updates focused on tightening eligibility, removing waste, and encouraging self-sufficiency. They insist the changes do not dismantle programs but aim to make them leaner and crack down on fraud. 

Still, multiple independent analyses portray the changes as the most significant rollback of Medicaid/SNAP in decades, projected to result in a dramatic reduction in coverage, with 8-12 million fewer Medicaid recipients and 2 million fewer SNAP recipients. As fiduciaries who care deeply about long-term financial security, both for individuals and for our country, we’re watching these policy shifts carefully.

Details on Key Tax Provisions

Here’s a concise summary of the key highlights from the bill’s 870 pages.

Many changes take effect in 2025, then expire in 2028. Other changes are "permanent," which, when used in this article, means that no end-date has been set. Congress can still change these  "permanent" rules.

Tax Certainty with a Tax Cut Extension

Individual income and capital gain tax rates for all brackets are expected to remain low for the next few years.

While an eye should be kept on the 2026 midterms and the 2028 elections, for now, the 2017 tax-rate structure (10–37%) is "permanent." This represents an extension of the TCJA individual tax cuts, which, for the last better part of a decade, were set to expire at the end of 2025 and would have resulted in a large increase in tax rates for most taxpayers.

Early 2025 Inflation Adjustment

Curiously, the bill adds an early and additional inflation adjustment in the middle of 2025.

Income tax brackets are usually adjusted for inflation at the end of each year to prevent “bracket creep,” where rising wages push taxpayers into higher brackets even if their real (inflation-adjusted) income hasn't changed. The bill acts now to adjust the bottom six tax brackets higher , meaning more income will stay taxed at lower rates. The top bracket (currently 37%) will not receive this inflation adjustment. 

Expanded Standard Deductions (2025 to 2028)

A doubled standard deduction will remain in place "permanently," benefiting close to 90% of taxpayers. 

In 2025, the standard deduction increases to $15,750 (for single filers), $23,625 (for head of household), and $31,500 (for married filing jointly), with further inflation adjustments through 2028.

Extra "Senior" Deduction

Additionally, individuals aged 65 and older are eligible for an extra $6,000 deduction per person. This is a new, temporary "bonus" deduction and is provided in addition to the regular expanded standard deduction. Eligibility is income-dependent and begins phasing out at $75,000, then is fully phased out at $175,000 (single filers) or $150,000 to $250,000 (married filing jointly).

Over age 65?

You may qualify for an extra $6,000 deduction. Let’s make sure.

No Tax on Social Security Fails

The bill does not include a proposed tax break for Social Security recipients, an omission noted by some advocacy groups.

Increased SALT Deduction Cap (2025 to 2029)

The state and local tax (SALT) deduction cap has temporarily increased from its current $10,000 to $40,000. This is a significant potential deduction for individuals residing in high-tax states. This deduction applies to state and local income, sales, or property taxes.

The SALT deduction phases down after income exceeds $500,000 (single filers) and $1,000,000 (married filing jointly) at a rate of 30% per dollar in excess. 

Live in a high-tax state (e.g., California)? 

This temporary increase may significantly impact your 2025 return and make itemizing worthwhile.

The cap will increase by 1% per year through 2029. In 2030, the cap reverts back to $10,000.

To claim the SALT deduction, you must itemize deductions. You cannot claim the SALT deduction if you use the standard deduction. 

No Tax on (Some) Overtime Pay & No Tax on (Some) Tip Income (2025 to 2028)

From 2025 to 2028, up to $25,000 in tips and $12,500 in overtime can temporarily be excluded from income for those under $150,000 (single filers) or $300,000 (married filing jointly). The deduction is claimed "above-the-line" and does not require itemizing deductions.

Multiple Enhanced Family Benefits

Now that we’ve covered core income tax changes, let’s turn to provisions affecting families and caregivers.

New "Trump Accounts"

The bill introduces “Trump Accounts,” a new tax-deferred savings option for children born between 2025 and 2028.

• Contributions: Funded initially with a $1,000 tax credit, families can contribute up to $5,000 per year (after-tax). 
• Investment Opportunity: Funds can be invested with the opportunity for growth. 
• Age Restrictions: Access to the account balance is restricted by both age and "qualified" use. More than 50% of the balance cannot be accessed until age 18; 100% of the balance becomes available at age 25. Like it or not, the account is closed and distributed at age 31.
• Taxes: All withdrawals (net of contributions) are taxed, some at income rates, some at capital gains rates.
• Use: "Qualified" use of the account balance includes just three expenses: (1) college tuition, (2) paying a small business loan or expense, or (3) buying a first home. Non-qualified withdrawals face a 10% penalty (net of contributions).

Contributions cannot be made until after July 3, 2026, so more details are expected in 2025 and 2026.

 Welcoming a child in 2025 to 2028? 

This account could jumpstart their financial future.

Child Tax Credit Increase

The Child Tax Credit increases from $2,000 to $2,200 per child in 2025. It is inflation-indexed to increase further in future years. It remains available only to those with incomes under $200,000 (single filers) or $400,000 (married filing jointly). The bill makes these income eligibility thresholds "permanent."

Child & Dependent Care Credit Increase

The bill increases the child and dependent care tax credit from 35% to 50% of qualifying expenses, but only for incomes under $15,000 (single filers) or $30,000 (married filing jointly). Thereafter, the credit is reduced until it is entirely phased out at $75,000 (single filers) or $150,000 (married filing jointly). Regardless of phaseouts, the maximum annual amount excludable from income under a dependent care assistance program is $7,500 under the bill (an increase from $5,000).

ABLE Account Enhancements

The bill introduces several updates to ABLE (Achieving a Better Life Experience) accounts, enabling eligible individuals and their families to save for qualified disability-related expenses without affecting their eligibility for public benefits such as SSI or Medicaid. 

ABLE account contributions grow tax-free, and withdrawals are tax-free when used for qualified expenses. For qualifying individuals, the bill allows available annual contributions totaling approximately $34,650

• The bill locks in the higher annual ABLE contribution limits equal to the annual federal gift-tax exclusion of $19,000 for 2025. 
• Additionally, employed beneficiaries who aren’t participating in employer retirement plans can contribute an extra amount up to the federal poverty level (about $15,650 in 2025). 

The bill also "permanently" qualifies ABLE account contributions for the Saver’s Credit.

Interest Deduction Changes

The bill makes "permanent" the $750,000 cap on mortgage debt eligible for the home mortgage interest deduction.

Generous Estate & Gift Tax Rules

With those changes in mind, let’s explore how the bill affects those planning longer-term for the next generation. The window just opened wider.

For those considering lifetime gifts or legacy planning, the bill’s estate tax changes provide a powerful—but possibly time-limited—opportunity.

Beginning in 2026, the bill increases the lifetime federal estate and gift tax exemption to $15,000,000 per individual, per lifetime (adjusted annually for inflation). While the 40% federal estate tax (sometimes called the "death tax") still applies on any net assets exceeding the exemption, this level is double the amount it was set to revert to if no action were taken. 

Step-Up in Basis Preserved

Notably, the step-up in basis remains intact under the new law. A step-up in basis means that when you inherit assets like a home or stocks, their cost is "reset" to the fair market value on the date of the original owner's death. This can eliminate capital gains taxes on past appreciation. It’s a valuable benefit even for modest estates.

Don’t miss this planning window:

The higher estate and gift exemption may not last. Let’s evaluate your legacy and gifting strategy while the opportunity exists.

Expanded Business Tax Benefits

Next, we'll highlight the bill's opportunities for small business owners.

Qualified Business Income (QBI) deduction made "permanent"

The 20% Qualified Business Income (QBI, Section 199A) deduction for pass-through business entities (e.g., sole proprietors, LLCs, S corps) was made "permanent," starting in 2025.

As pass-through business entities are subject to taxes at the individual's rate (10–37%) the QBI deduction was created in an attempt to balance the reduction of the corporate tax rate to 21%. QBI continues to grant a very slight advantage (~2% for the highest earners), although the QBI deduction also remains phased out for certain "specified service trades or businesses (SSTBs)" with taxable income above $241,950 (single filers) or $483,900 (married filing jointly).

100% bonus depreciation made "permanent"

Businesses can immediately deduct 100% of the cost of qualifying assets such as machinery, equipment, and technology in the year they are placed in service. The bill removes the phaseout that was scheduled to begin after 2026.

Full, immediate deduction for U.S.-based R&D expenses

The bill restores the immediate deductibility of domestic research and development costs under Section 174. It reverses the prior requirement to amortize these expenses over five years.

Loosened business interest deduction limits

The bill "permanently" relaxes the Section 163(j) limitation on deducting business interest expense. This change allows more interest to be deducted, particularly benefiting capital-intensive industries. Financing for certain trailers and campers would also become deductible.

unchanged Corporate tax rate 

The bill maintains the corporate tax rate at 21%, preserving a small tax advantage (approximately 2% for the highest earners) for pass-through businesses once corporate double taxation is considered.

Benefit for Qualified Small Business Stock (QSBS)

The bill significantly sweetens the tax break for investors in Qualified Small Business Stock (QSBS). Under the bill, if you acquire QSBS after the bill’s enactment and hold it for at least four years, 75% of your gain can be excluded from income. Hold it for five years or more, and that exclusion jumps to 100%. This change enhances the already-powerful benefits of Section 1202 for founders and early-stage investors.

Pass-Through Entity Tax (PTET) workaround preserved

The bill does not attempt to address state tax workarounds, such as PTET for owners of pass-through business entities, effectively bypassing the federal SALT cap for many pass-through business owners (e.g., sole proprietors, LLCs, S corps).  

Planning Insight:

Entity structure matters. With higher QBI deductions, bonus depreciation, and QSBS, it may be time to reassess whether your current structure is still optimal.

Student Loans: Big Shifts Ahead (2026 to 2028)

While much of the bill focuses on tax relief, it also introduces more complex and less favorable changes for students and those offering support. Whether you're borrowing for a child, grandchild, or continuing your own education, the loan landscape is changing fast. Here's what’s sunsetting, and what’s replacing it.

Repeal of Current Income-Driven Repayment (IDR) Plans 

Most current Income-Driven Repayment (IDR) plans will sunset by July 1, 2028. This means an elimination of existing IDR plans such as SAVE, ICR, and PAYE. Borrowers on these plans will need to choose new repayment options before that deadline.

New Repayment Plans

After mid-2026, borrowers can select from a limited set of plans, including IBR (Income-Based Repayment), RAP (a new Repayment Assistance Plan), and standard, graduated, or extended repayment plans. RAP calculates payments based on total adjusted gross income (AGI), starting with a minimum payment of $10 per month for individuals with very low earnings. Payments scale with income up to a cap of 10% for higher earners, with forgiveness after 30 years of payments.

Parent PLUS Loans

Borrowers with Parent PLUS loans must consolidate by June 30, 2026, to be eligible for income-driven plans like IBR. After this date, new loans won’t qualify for income-based options and must use the new standard repayment plan. New borrowers will be limited to borrowing $20,000 per year and now have lower aggregate limits capped at $65,000 per student.

Forgiveness and Eligibility

Existing repayment counts on current IDR plans will carry over, but time spent on RAP may not count toward forgiveness under IBR if switching between plans.

Borrowing After July 1, 2026

New loans or consolidations after this date will only have access to the new standard repayment plan or RAP, limiting income-driven options. Grad PLUS loans won't be available after July 1, 2026.

Planning Insight:

Families supporting children or grandchildren may need to adjust education funding plans. Loan consolidation or timing decisions before mid-2026 could preserve repayment flexibility. Let’s explore how this affects your family plan.

Looking Forward to 2026

Many of the key tax changes in the bill won't take effect until 2026:

Charitable Deduction Floors (Starting in 2026)

Easier, Smaller-Dollar Charitable Deductions

The bill makes it easier for those who take the standard deduction to claim a tax deduction for donations to qualified charities. The bill allows an above-the-line deduction of up to $1,000 (for single filers) or $2,000 (for married filing jointly) without the need to itemize deductions.

Harder, Larger-Dollar Charitable Deductions

At the same time, those who itemize their deductions (i.e., those who don't take the standard deduction) will soon face limitations on their charitable deductions. Beginning in 2026, the bill requires itemizers to contribute at least 0.5% of their income before beginning to claim a charitable deduction. Said another way, small gifts won’t count unless they exceed 0.5% of your income. This limitation is similar to the eligibility for deducting medical and dental expenses, with a floor of 7.5%.

For businesses, this "floor" now starts at 1%, and is capped at no more than 10% of income. 

Planning Insight:

Charitable giving remains tax-efficient, but now requires a more strategic approach. Let’s coordinate for maximum impact and deductibility.

Taxes Due on Gambling Losses, Even If You Break Even in 2026

Starting in 2026, the new tax law limits how much gamblers can deduct for their losses.

Until now, if you won and lost the same amount gambling in a year—say $100,000—you wouldn't owe taxes because your gains and losses canceled out. Under the bill's new rule, you can only deduct 90% of your losses. That means you'd still be taxed on $10,000 of income, even though you didn’t come out ahead. This change affects everyone from casual players to professional gamblers and could lead to unexpected tax bills for people who simply broke even.

New Limitations on Itemized Deductions in 2026

While the bill eliminated the limitations on itemized deductions (known as the Pease limitation), it introduced its own new rule with a similar limitation on itemized deductions, to begin in 2026.

The former Pease limitation reduced deductions at 3% of income over approximately $300,000. This new limitation reduces itemized deductions by approximately 5% (2/37th), but only on the amount of either (1) total itemized deductions or (2) the amount of income over the beginning of the 37% tax rate bracket, whichever number is lower. This has the effect of limiting itemized deductions to 35% for those in the 37% income tax bracket. While it’s narrower in scope, it still limits deductions for high-income filers. 

Notably, the bill explicitly excludes the QBI, Section 199A pass-through deduction from this limitation.

Deductions under the new rules: 

Whether you're a standard or itemized filer, the rules are changing. We can help you adjust your strategy.

What This Means for You

The One Big, Beautiful Bill Act (OBBBA) reshapes the financial landscape for families, retirees, business owners, and philanthropists. While the tax cuts offer meaningful opportunities, the deeper tradeoffs, including reduced social support, rising deficits, and added complexity, underscore the importance of proactive planning.

Here are five planning moves to consider now:

1. Evaluate your 2025 filing strategy

Use the expanded standard deduction, SALT cap, or itemized deductions strategically, especially if you live in a high-tax state or are over age 65. 

2. Coordinate giving with tax planning

Lower taxes and less public support make charitable giving more impactful. Philanthropy can align with both your values and your bottom line. In 2026, smaller gifts may be easier to deduct, and larger donations will need more careful timing and coordination to remain efficient.

3. Reassess your business structure

The expanded QBI deduction, bonus depreciation, and enhanced small business stock rules may open up new opportunities.

4. Plan ahead for education funding and student loans

Changes to Parent PLUS and income-driven repayment plans could call for family-level coordination before mid-2026.

5. Update your estate and gifting plan

The higher lifetime exemption opens a valuable, but possibly brief, window for legacy planning and tax-efficient giving.

We're Here to Help

These changes are extensive, but they don’t need to be overwhelming. It's our job to turn complexity into clarity and opportunity.

Call us at (775) 827-0670 or schedule a time here to talk about what this means for you and your family.