A 900+ page law! It’s a doozy. Fortunately, the One Big Beautiful Bill Act (OBBBA) mostly makes permanent the tax provisions you used last year and the year before. The good news? It’s no more confusing than last year. 😊
What OBBBA does is tweak several laws. Within those tweaks and new provisions lie opportunities—opportunities to lower your taxes, save more, and perhaps give more to your family or charity. We’ll focus on these real-life, practical applications to help you and your family take advantage of OBBBA in an understandable way.
The father (may his memory be a blessing) of a long-time client was a great man in life and business. A favorite saying of his, passed down to his children and grandchildren, was, “They make the rules; we play the game.” So, let’s play ball! Here are the new rules:
Increased State and Local Tax Deductions (SALT)
- You’ve likely heard the SALT deduction limit is increasing from $10,000 to $40,000.
- This applies only if you itemize deductions. If you take the standard deduction ($15,750 for individuals or $31,500 for joint filers), skip to the next section.
- The $10,000 limit remains, but the enhanced $40,000 limit is available through 2030.
- The $10,000 limit also applies if your income exceeds $600,000 (with phase-outs starting at $500,000).
Age 65 and Over — New and Exciting!
- From 2025 through 2028, you get an extra $6,000 tax deduction.
- You don’t need to itemize to claim it.
- It phases out based on income and filing status:
- Single: $75,000–$175,000
- Joint: $150,000–$250,000
- It does not appear to reduce income used for calculating taxes on Social Security earnings.
Under Age 18 — Access to New Trump Accounts, Beginning in 2026
- These are like an IRA “starter kit.” Children born between January 1, 2025, and December 31, 2028, are eligible for a one-time $1,000 contribution.
- Starting July 4, 2026, parents, relatives, and employers can contribute up to $5,000 annually per child. Employer contributions are capped at $2,500 per employee (or their dependents) under age 18.
- Working children under 18 can still contribute to a traditional or Roth IRA.
- At age 18, the account converts to a traditional IRA. Before 18, rollovers are generally limited to other Trump Accounts or ABLE programs.
Charitable Tax Deductions Tweaked, Beginning in 2026
- A charitable deduction is now available even if you take the standard deduction ($15,750 for individuals or $31,500 for joint filers in 2025).
- Previously, standard deduction users had little tax benefit for charitable donations.
- Now, those using the standard deduction can deduct up to $1,000 per year ($2,000 for couples).
- · For those that itemize, be aware that you can now only deduct gifts exceeding 0.5% of your income (much like the 7.5% threshold to deduct medical expenses).
- Consider accelerating 2026 gifts into 2025 to maximize deductions, or, if you’re a non-itemizer, wait until January 1, 2026.
Estate Tax Exemption Increased and Made Permanent
- In 2026, the exemption increases to $15,000,000 per individual or $30,000,000 per couple.
- This is the amount you can give during your lifetime to individuals other than your spouse (spouses can receive unlimited amounts).
- You can still give $19,000 per year to any person before it counts toward your $15,000,000 exemption. And your spouse can receive unlimited amounts.
- The main benefit is clarity, as the exemption was set to drop to about $7,000,000 in 2026.
- Portability for spouses is now permanent.
For Business Owners
- Bonus depreciation returns to 100% (from 40% in 2025) for qualifying assets placed in service after January 19, 2025.
- Qualified Production Property (QPP) allows companies building manufacturing facilities or production plants to expense assets faster (instead of over 40 years). This is available through 2030.
- Section 179 expense limits doubled to $2.5 million in 2025 (phased out for income over $4 million).
- First-year expensing of domestic R&D is now permanent (instead of over 5 years). Companies with earnings below $31 million may retroactively apply this expense as far back as 2022 for a refund.
This is a great place to remind you to confirm all tax and legal commentary with your own tax and legal counsel. OBBBA is complex, and it builds on existing tax laws. We’ll share more in the coming months. For now, take comfort in knowing the changes are not hugely dramatic, and there are many ways to navigate the new system to lower your tax bill. More soon. We’re here for you.
Arrington, Rep. “H.R.1 – 119th Congress (2025-2026): One Big Beautiful Bill Act.” Congress.gov, 2025, www.congress.gov/bill/119th-congress/house-bill/1. Accessed 19 Sept. 2025.
“One Big Beautiful Bill Act: Tax Deductions for Working Americans and Seniors.” Internal Revenue Service, n.d., www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors. Accessed 19 Sept. 2025.
Title XI – Committee on Ways and Means. The One Big Beautiful Bill: Subtitle A – Make American Families and Workers Thrive Again. Committee on Ways and Means, n.d., waysandmeans.house.gov/wp-content/uploads/2025/05/The-One-Big-Beautiful-Bill-Section-by-Section.pdf. Accessed 19 Sept. 2025.