What You Need to Know for Your Financial Planning
The One Big Beautiful Bill Act, signed into law on July 4, 2025, brings the most significant tax changes in recent years. This legislation makes many popular tax provisions permanent while introducing new opportunities for savings and deductions. We've outlined the key changes below to help you understand how these updates may impact your financial strategy.
Changes for Individuals and Families
What Changed | How It Affects You |
Income Tax Rates Made Permanent | The lower tax rates from the 2017 Tax Cuts and Jobs Act are now permanent, along with higher standard deductions: $15,750 for single filers, $31,500 for married couples filing jointly. Taxpayers 65 and older get an additional $6,000 deduction through 2028 (subject to income phaseouts). |
Estate & Gift Tax Exemption | The estate and gift tax exemption amounts increase to $15,000,000 per person beginning in 2026. This higher exemption amount is indexed to inflation and made permanent. |
Child Tax Credit | Families now receive $2,200 per child (up from $2,000), with more of the credit refundable. The benefit reduces for higher-income families, with phaseout starting at $200,000 for single filers and $400,000 for married couples filing jointly. |
Trump Accounts for Children | New savings accounts (IRAs) allow contributions for children under 18, with tax-free growth until age 18 when withdrawals can begin. Contributions may begin in July 2026. |
Education Savings Expansion | 529 college savings plans can now cover more K-12 expenses, homeschooling costs, and professional credentialing (including CPA exam fees). |
Homeownership Benefits | The $750,000 limit on mortgage interest deductions is permanent, and now includes mortgage insurance premiums. Home equity loan interest remains non-deductible unless you use the funds to improve your home. |
New Car Loan Deduction | Through 2028, you can deduct up to $10,000 of interest on loans originated after 12/31/2024 for new, US-assembled vehicles when the car secures the loan. Income phaseouts apply. |
Charitable Giving Changes | Starting in 2026, even if you don't itemize deductions, you can deduct up to $1,000 in charitable gifts ($2,000 for married couples). However, if you do itemize, you can only deduct charitable contributions above 0.5% of your income. |
State and Local Tax Relief | The $10,000 limit on state and local tax deductions temporarily increases to $40,000 for 2025-2029, then returns to $10,000. This primarily benefits residents of high-tax states with incomes under $500,000. |
Changes for Business Owners
What Changed | How It Affects Your Business |
Pass-Through Business Deduction | The 20% deduction for business income is now permanent, with expanded income ranges where the full deduction applies. Even small amounts of business income ($1,000) now qualify for at least a $400 deduction. |
Equipment Write-Offs | Businesses can immediately deduct the full cost of most equipment purchases (up from 80% in 2024). Small businesses can now write off up to $2.5 million in equipment purchases annually (nearly doubled from $1.16 million). |
Manufacturing Incentives | New manufacturing facilities qualify for immediate write-offs if construction begins after January 19, 2025. |
State Tax Benefits for Businesses | Pass-through businesses (partnerships, S-corps, LLCs) face no limits on state and local tax deductions, providing significant tax relief beyond the individual caps. |
Qualified Small Business Stock Exclusion | Qualified small business stock now offers graduated tax benefits: 50% tax-free after 3 years, 75% after 4 years, and 100% after 5 years. The program also expands to include larger startups (up to $75 million in assets). |
Opportunity Zones Permanent | The opportunity zone program becomes permanent starting in 2027, continuing to offer tax benefits for investments in designated low-income communities. |
Charitable Deductions for Corporations | Only contributions above 1% of taxable income are deductible up to a 10% limit. |
What This Means for Your Planning
These changes create new opportunities and considerations for your financial strategy:
For Individuals:
- Consider maximizing charitable giving strategies in 2025 prior to the deduction floor in 2026
- Take advantage of temporary car loan deductions
- Review your state tax situation if you live in a high-tax state or were previously limited by the $10,000 SALT cap.
For Families: The enhanced child tax credit and permanent education savings benefits make this an excellent time to review college funding strategies. It may be advantageous to save more in 529 plans given the increased potential for use of the funds.
For Business Owners: The permanent pass-through deduction and enhanced equipment write-offs provide significant planning opportunities, especially when combined with state tax benefits.
For Everyone: With many provisions now permanent, especially the estate tax exemption, you can plan with greater certainty about future tax rates and deductions.
We're here to help you navigate these changes and develop strategies tailored to your specific situation. With significant shifts in the tax landscape, having experienced guidance can make the difference in maximizing these new opportunities while staying aligned with your broader financial goals.
The content provided herein is based on our interpretation of the One Big Beautiful Bill Act and is not intended to be legal advice or provide a tax opinion. This document is a summary only and not meant to represent all provisions within the One Big Beautiful Bill Act.