The New Tax Bill is Here: How to Make it Work for You
On July 4 President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. This legislation brings some of the biggest tax changes we have seen in years. Many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are now permanent, along with new rules that could directly impact how you earn, save, invest, and pass on your wealth.
While the headlines have focused on politics, what truly matters is how this bill affects your financial plan, your income, your business, and your long-term goals. Understanding the new law’s implications can help you make informed financial decisions and make the most out of the potential opportunities presented by the bill. Read below and download our full OBBBA tax comparison guide to discover how to take advantage of the changes in these areas to better position your portfolio and your tax situation.
1. Individual Tax Rates
One of the most significant aspects of the OBBBA is the permanent extension of the TCJA’s individual tax cuts that were due to expire at the end of 2025. These brackets will continue to be adjusted with inflation over time, potentially preserving a favorable environment for income earners.
What this means for you: You now have more certainty for long-term tax planning, especially if you are timing income, selling a business, or planning Roth conversions during lower income years. If you’re planning for retirement: the OBBBA provides clarity around future tax rates so that you can plan for your financial future with confidence. If you’re a high-income earner: You might want to consider income-smoothing strategies to better position your tax brackets over time.
Here’s a Tip: With guidance from your advisor, consider Roth conversions during low-income years.
2. Deductions and Credits
The 2017 TCJA eliminated or limited many popular deductions and credits with the goal of simplifying the tax code overall, but many of those changes were temporary. The OBBBA makes many changes from TCJA permanent, but adds a few temporary provisions, including tax breaks for certain types of income and short-term changes to deductions
Highlights of TCJA changes made permanent by the OBBBA include:
Increased standard deduction ($15,750 single / $31,500 joint) effective as of January 1, 2025 and adjusted with inflation in subsequent years
Personal exemptions terminated
Increased child tax credit to $2,200 per child with future inflation adjustments
Mortgage interest deduction limited to the first $750,000 of indebtedness
Home equity loan interest deduction disallowed
Permanently eliminates clean vehicle and energy credits for both individuals and businesses after 2025
Additional temporary OBBBA tax breaks (all subject to income limitations):
No tax on tips up to $25,000 per taxpayer (available 2025-2028)
No tax on overtime up to $12,500 per taxpayer (available 2025-2028)
Car loan interest deduction for new purchases of U.S.-assembled passenger vehicles (available 2025-2028)
Enhances standard deduction by $6,000 for seniors age 65+ (available 2025-2028)
Expands limit on the itemized state and local tax (SALT) deduction from $10,000 to $40,000 with an annual adjustment (available 2025-2029)
In addition, the OBBBA makes a couple of permanent changes to charitable deductions. First, it creates a charitable deduction for non-itemizers of up to $1,000 for single filers and $2,000 for joint filers. Secondly, it limits the charitable deductions for taxpayers who itemize such that contributions may only be deducted to the extent that they exceed 0.5% of a taxpayer’s income and the tax benefit of those deductions is limited to the 35% income bracket.
What this means for you: You may have more flexibility to itemize, capture deductions, and reduce taxable income, especially if you plan the timing of your income and expenses carefully.
Here’s a Tip: Rethink charitable giving strategies to potentially maximize tax benefits in light of new rules. For example, you can give away appreciated stock held for longer than one year to eliminate the embedded capital gain in addition to generating a tax deduction.
3. Estate Planning and Wealth Transfer
In a significant shift, the OBBBA makes permanent the expanded federal estate and gift tax exclusion. This exclusion amount, currently $13.99 million, was set to decline to roughly $7 million under the TCJA, but under OBBBA is permanently raised to $15 million per individual (or $30 million per couple) beginning in 2026 and will continue to increase with inflation.
The estate tax rate remains at 40%, but the higher exemption threshold provides a significant opportunity for wealth transfer. The OBBBA also preserves the valuable “step up” in cost basis at death, which eliminates unrealized capital gains on assets passing through a decedent’s estate.
These changes are particularly relevant for affluent individuals and families. The expanded exemption allows for more aggressive gifting strategies, including the use of irrevocable trusts, family-limited partnerships, and charitable giving vehicles.
What this means for you: If you have significant assets there is more room for strategic gifting, trust planning, and charitable giving, but you still need a plan to take full advantage of the exemption while it lasts.
Don’t forget about state-level estate tax: It is also important to remember that state-level estate taxes can still apply. Oregon’s estate tax exemption is currently $1 million and Washington’s is $2.193 million, which means many estates may still owe state tax even if they are under the new federal limits. You can read more about Washington’s rules in my recent post here.
Here’s a Tip: If your estate is likely to exceed your state exemption, consider lifetime gifting strategies or funding an irrevocable life insurance trust (ILIT) to cover potential estate tax liabilities without burdening heirs.
4. Business Tax Breaks
For business owners there are several important changes to note. While the biggest business tax change in the 2017 TCJA was a permanent reduction in the corporate tax rate, the OBBBA makes permanent some TCJA business tax provisions that were set to expire and enhances others.
The Section 199A Qualified Business Income deduction was made permanent, which allows a 20% deduction for pass-through income for certain businesses. In addition, the phaseout amounts were increased, and the rules for service businesses modified so that more taxpayers may take advantage of this break.
The new law also makes permanent depreciation deductions and Research and Development (R&D) deductions with expanded thresholds for businesses.
In addition, the OBBBA significantly expands the potential capital gains exclusions in Section 1202 for holders of Qualified Small Businesses Stocks (QSBS). For stock owners to take advantage of this exclusion, the business must be a qualified U.S. C Corporation (a qualified business must create something, not just offer services), and the taxpayer must acquire stock in an original issue from the company. Under current law, an eligible small business is defined as having less than $50 million in assets at the time the stock is acquired. If the stock is held for at least five years, a taxpayer can exclude a gain of up to $10 million or 10 times the cost basis from capital gains taxes when the stock is sold.
For businesses created after July 4, 2025, the asset threshold has increased so that businesses with up to $75 million in assets qualify and the capital gains exclusion is now available at an early exit. You can get 50% of the exclusion at year three, 75% at year four, and 100% at year five. Plus, the exclusion increases to $15 million.
What this means to you: If you’re a business owner, especially a small business owner, you may have some additional opportunities to lower your tax liability.
Here’s a Tip: Work with your CPA and advisor to model the long-term tax impact of changing your business structure now. The right setup could help you capture QSBS benefits, stack Section 199A deductions, and use accelerated depreciation, potentially saving hundreds of thousands in future taxes.
5. Investment Incentive Programs
As noted previously, the QSBS rules provide a strong incentive for early investors in qualified U.S. C-Corporations. The OBBBA also restarts and expands the popular Opportunity Zone (OZ) program for investments in designated areas of the country. The program will now run on a rolling 10-year timeline beginning in 2027 with special rural area incentives through 2033.
The OZ program generally allows investors to defer capital gains and potentially exclude future gains from taxation if investments are held for at least 10 years. In addition, it provides a 10% adjustment to cost basis for gains deferred to a traditional OZ and 30% adjustment to cost basis for gains deferred to a designated rural OZ. Treasury will issue further guidance on the OZ program prior to 2027.
What this means for you: This is a potential win for investors looking to align with tax-advantaged social impact strategies. Real estate and private equity investors, in particular, may find expanded opportunities for tax-efficient growth.
Here’s a Tip: If you’ve recently realized large capital gains, explore whether reinvesting them into a qualified Opportunity Zone could defer taxes and potentially reduce future taxable gains.
Bottom Line
The OBBBA is not just about lower tax rates. It is about timing, structure, and strategy. The sooner you begin planning around these changes, the more you can take advantage of them.
To fully capitalize on the opportunities presented by the OBBBA, now’s the time to work with your financial advisor to take a proactive approach. This includes:
Revisiting tax strategies
Updating estate plans
Exploring new investment vehicles like Real Estate Investment Trusts (REITs) and Opportunity Zones
As with any major legislation, the true impact of the OBBBA will unfold over time. But one thing is clear: those who understand and adapt to its provisions will be best positioned to achieve their long-run financial goals.
If you want to explore how the new tax bill may impact your plan, let’s talk. Now is the time to make these changes work in your favor.
This material was created for educational and informational purposes only and is not intended as tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
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