August 14, 2025 – It’s been over a month since Congress passed the One Big Beautiful Bill Act (OBBBA), and investors, accountants, and planners are still studying the impact of this 900-page bill. If the 2017 Tax Cuts and Jobs Act did much to amplify the tax code, this bill makes it significantly more complicated, creating risks and opportunities for all taxpayers.
Here are the 10 changes we expect will matter most for you:
- Permanent Extension of 2017 Tax Rates & Standard Deduction
What Changed: The individual income tax brackets introduced by the 2017 Tax Cuts and Jobs Act—ranging from 10% to 37%—are now permanent fixtures of the tax code. The enhanced standard deduction, which roughly doubled in 2017, will also remain, indexed annually for inflation. These provisions remove the “sunset” date that was previously set for the end of 2025.
What It Means to You: A stable rate structure creates more certainty when deciding when to realize capital gains, convert retirement accounts, or structure business income. Still, “permanent” in tax law is not the same as “forever”—rising deficits may eventually put upward pressure on rates, so taking advantage of today’s brackets should be part of long-term planning. - Qualified Small Business Stock (QSBS) Expansion
What Changed: The gain exclusion on the sale of Qualified Small Business Stock under Section 1202 has been expanded, allowing more industries to qualify and increasing the maximum gain exclusion amount for certain taxpayers. Holding period requirements have been reduced to create partial exemptions, the exemption amount has been raised to $15 million, and it’s now available to large companies with up to $75 million in assets.
What It Means to You: Entrepreneurs and early-stage investors may have new opportunities to shelter significant gains from federal income tax. Revisiting entity structure and tracking acquisition dates, entity qualifications, and share issuances is critical to taking full advantage of the expanded benefits. - Permanent Excess Business Loss Limitations & QBI Deduction
What Changed: The limitation on excess business losses—set at $250,000 for single filers and $500,000 for joint filers—has been made permanent. In addition, the 20% Qualified Business Income (QBI) deduction for pass-through entities, which was set to expire this year, will remain indefinitely, with the same income phase-outs.
What It Means to You: These rules can affect both the optimal timing and structure of business income and losses. Combined with the changes to QSBS, this is a good time to review whether your current entity structure is still optimal. - Increase in Estate & Gift Tax Exemption
What Changed: The lifetime exemption for estate and gift taxes has increased to $15 million per individual (double for married couples), with inflation adjustments starting in 2026. This is a substantial jump from prior expectations that the exemption would revert to roughly $7 million in 2026.
What It Means to You: Many estates that were preparing for a reduced exemption will now fall well below the federal threshold. However, state-level estate or inheritance taxes remain a consideration, and thoughtful strategies—such as lifetime gifting, irrevocable trusts, or charitable bequests—can further reduce potential liabilities. - Temporarily Expanded SALT Deduction
What Changed: The cap on state and local tax deductions has been raised from $10,000 to as much as $40,000 for tax years 2025 through 2029. The higher cap phases out for single filers with adjusted gross income over $250,000 and joint filers over $500,000, with the deduction returning to $10,000 in 2030. Property taxes, state income taxes, and certain local taxes all count toward the limit.
What It Means to You: For residents of high-tax states, this creates a short-term opportunity to deduct a greater portion of taxes paid. Managing Adjusted Gross Income (AGI), and coordinating the timing of property tax payments, state estimated taxes, and other deductible items can help fully use the higher cap before it expires. - Limits on Charitable Giving—Front-Load, Bunch, or Use a DAF
What Changed: Beginning in 2026, charitable deductions will be subject to a 0.5% adjusted gross income floor, and the deduction rate for top earners will drop from 37% to 35%. This effectively reduces the tax benefit for high-income donors and limits smaller gifts from qualifying for a deduction.
What It Means to You: Consider accelerating larger charitable contributions into 2025 to take advantage of the current, more favorable deduction rules. Techniques such as bunching several years’ worth of gifts into one year or funding a Donor-Advised Fund can help surpass the AGI floor and preserve more of the deduction value. - “Trump Accounts” for Children
What Changed: These new federally created accounts are available for children born between 2025 and 2028. Each account receives a $1,000 federal seed contribution, with the option for parents, grandparents, or others to contribute up to $5,000 per year. Funds can be used tax-free for certain approved expenses when the child reaches adulthood, though withdrawal rules are more flexible than 529 plans.
What It Means to You: While the balances may be modest compared to other vehicles, Trump Accounts can still be a useful complement to existing education or starter-asset plans. Integrating them with 529s, custodial accounts, or early-stage investment accounts can create a layered approach to funding a child’s future needs. - Energy Credits for Individuals Are Rolling Back
What Changed: The bill scales back several clean-energy incentives for individuals, including reduced credits for residential solar, energy-efficient home improvements, and certain electric vehicles. While some credits remain, the thresholds and eligibility requirements have tightened, and the phase-out schedule has accelerated.
What It Means to You: If you’ve been considering significant energy-efficiency upgrades or solar installations, acting sooner rather than later may help you capture credits before they shrink further. Coordinating these projects with your broader tax strategy—especially in a high-income, high-asset situation—can ensure you’re not missing opportunities to offset taxable income. - Healthcare Provisions May Indirectly Affect You
What Changed: The bill makes a series of changes to healthcare-related tax provisions, insurance requirements, and subsidy structures. While most of these changes will not directly impact those with private coverage or employer-sponsored plans, they could affect other members of your family, particularly those who rely on marketplace plans or government programs. Over time, these adjustments could also contribute to higher overall healthcare costs.
What It Means to You: Even if your own coverage remains stable, shifts in healthcare policy can have ripple effects on family members’ financial needs, charitable priorities, and broader household expenses. It’s worth understanding these changes and factoring them into your longer-term planning conversations. - Rising Deficit Means Possible Future Tax Increases
What Changed: The bill’s tax cuts are not offset by new revenues or spending reductions, which means the federal deficit is expected to grow substantially. Historically, rising deficits have often led to eventual tax increases or base-broadening measures.
What It Means to You: Even with today’s favorable rates, there is a strong case for accelerating taxable events into lower-rate years, using strategies that lock in current exemptions, or shifting growth out of your taxable estate. Planning ahead can help insulate long-term wealth from future tax policy shifts.
There’s Much More
The bill also makes a wide range of smaller—but still notable—adjustments to the tax code, including:
- Expanded uses for 529 plan withdrawals
- Modified tax credits for seniors
- Exemptions for certain categories of income, such as tips and overtime pay
Taken all together, OBBBA represents sweeping and complex updates to the tax code that carry both risks and opportunities. Understanding how these provisions interact with your broader financial picture is critical, especially when investment income, estate considerations, and cross-year tax planning are in play.
If you’d like to explore how these changes fit into your broader financial plan, let’s talk.
— AMD