Tax planning has felt like a moving target for years. With so many temporary rules and shifting thresholds, families and their advisors have often been forced to plan around uncertainty, making short-term decisions in a long-term game.
With the passage of the One Big Beautiful Bill Act (OBBBA), several core features of the 2017 tax overhaul have now been made permanent. The lower income tax brackets introduced under the 2017 Tax Cuts and Jobs Act (TCJA) are here to stay, along with the expanded standard deduction and higher exemption for estate and gift taxes. For families and advisors, this creates room to plan further ahead.
The OBBBA also creates space to revisit current strategies. Estate structures, gifting plans and even charitable vehicles that were put on hold can now be reexamined with more confidence. And in some areas, the OBBBA goes beyond simply extending existing rules. It builds on them.
To help clients understand what’s changed, we’ve summarized key updates that may impact planning for individuals, families, business owners and charitable giving.
What’s New for Individuals and Families
Key highlights:
- Permanent seven-bracket tax structure: The OBBBA permanently locks in the TCJA’s seven-bracket system (10%, 12%, 22%, 24%, 32%, 35%, and 37%) with inflation-adjusted thresholds.
- Exemption phaseouts clarified: The personal and dependent exemptions remain permanently set at zero.
- Itemized deduction changes: The Pease limitation, which previously reduced deductions for high earners, has been replaced with a more gradual phaseout above the 37% bracket.
- Child Tax Credit: Increased to $2,200 per child, adjusted annually for inflation, with a $1,400 refundable portion.
The OBBBA builds on the TCJA’s framework to make several provisions permanent. The reduced tax brackets and expanded standard deduction—$31,500 for joint filers in 2025—will continue to adjust with inflation.
Several deductions that were suspended under the TCJA are now permanently off the table. These include personal and dependent exemptions, along with certain miscellaneous deductions, such as unreimbursed employee expenses and advisory fees.
For senior citizens, the bill introduces a temporary new deduction of $6,000 per person (subject to income limits), which is helpful for retirees living on fixed incomes. The provision runs from 2025 through 2028.
The Child Tax Credit has also been enhanced. In addition to the increase to $2,200 per child, the refundable portion of the credit remains at $1,400 and is now indexed for inflation. The income thresholds—$200,000 for individuals and $400,000 for joint filers—are locked in permanently, as is the $500 credit for non-child dependents.
The OBBBA Provides Education and Savings Enhancements for Families
The usefulness of 529 college savings plans gets a boost under the OBBBA, which now allows them to be spent on tutoring, educational therapy, and even testing fees for credentialing and continuing education programs. These updates reflect the growing diversity of educational paths and can be used for covering the cost of nontraditional schooling or technical training.
Trump Savings Accounts
One addition to U.S. tax law is the so-called Trump Savings Account, which is a new type of IRA for minors. Contributions are capped at $5,000 annually, but contributions can come from family members, state governments and even employers. Qualified withdrawals, such as for education expenses or a first-time home purchase, even receive preferential tax treatment. Trump Savings Accounts can play a significant role in early wealth building for children.
New Deductions for Individuals: Overtime, Tips and Car Loans
Several above-the-line deductions, meaning they’re available even if the taxpayer itemizes them, were introduced, including:
- Tips Deduction: Up to $25,000 annually for workers in roles that traditionally earn money from tips. This is phased out for higher incomes.
- Overtime Pay: A similar deduction applies for qualifying overtime pay, with the same income-based phaseouts.
- Car Loan Interest: In a nod to domestic manufacturing policy, OBBBA allows borrowers to deduct up to $10,000 in loan interest for vehicles made in the U.S.
Planning Opportunities for Business Owners
For privately held businesses, the OBBBA shores up and extends many of the most valuable elements of the TCJA, while layering on new benefits that may shift the calculus on growth, investment and even exit planning. Here are some key highlights for private business owners:
- QBI deduction made permanent: The 20% deduction for Qualified Business Income is now a permanent part of the tax code. What’s more, the phase-in thresholds have been expanded, allowing business owners to take full advantage. For married filers, the limit has been moved from $100,000 to $150,000. A minimum deduction of $400 is also guaranteed for qualifying business owners who earn at least $1,000 in QBI. As a result of the extension of the QBI deduction, the income taxation of participants in entities structured as sole proprietorships, partnerships and S corporations will be roughly similar to that of C corporations, negating the need to convert to a C corporation for income tax purposes.
- Bonus depreciation and Section 179 expensing: The OBBBA makes 100% bonus depreciation permanent. It also increases the maximum amount a taxpayer may expense to $2.5 million and raises the phaseout threshold amount to $4 million, with both amounts indexed for inflation for taxable years starting in 2025. This provision is also effective for property placed in service after 2024. Businesses making qualifying capital investments will be able to write off those investments sooner thereby by lowering their taxable income.
- Expanded tax breaks for qualified small business stock (QSBS): The bill makes it easier for investors to benefit from the tax break on selling QSBS by introducing a tiered system. If you hold the stock for at least three years, you can exclude 50% of the gain from taxes. Hold it for four and the exclusion rises to 75%. If you hold the stock for five or more years, 100% of the gain is tax-free. However, these new rules only apply to stock that was purchased after OBBBA took effect. The bill also raises the size limit for companies that qualify from $50 million to $75 million in total assets. Additionally, it increases the amount of gain that can be excluded from $10 million to $15 million (or 10 times what you invested, whichever is more.)
Charitable Giving: Opportunities with New Boundaries
- New deduction for non-itemizers, limits for larger gifts: Starting in 2026, people who don’t itemize their taxes will be able to deduct up to $1,000 each year for charitable donations, or $2,000 for couples filing jointly. For those who do itemize, the new law places a small limit on large donations, gradually reducing the deduction for contributions that go beyond a certain percentage of income.
With so many rules now settled, this is the perfect time to revisit strategies that may have been left in limbo in recent years. Whether it’s planning for the next generation, fine-tuning business structures or updating charitable goals, the clarity provided by the OBBBA gives families and advisors a fresh opportunity to think long-term and act with purpose.
Want to go deeper? Explore our detailed OBBBA fact sheet for a full breakdown of key changes to U.S. tax law.
