On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”), a significant piece of legislation that includes a broad array of tax provisions affecting individuals and business taxpayers. The primary focus of the bill was to address the sunsetting of many provisions originally in the Tax Cuts and Jobs Act (TCJA) of 2017, which was scheduled to take place at the end of the year. As many of the provisions are still vague and lack some important details, we will be closely monitoring any additional guidance and developments to keep you informed and prepared.
Below is a summary of some key provisions and important tax planning opportunities to consider.
Individual – Income Tax Rates, Standard Deductions, and Personal Exemptions
| Tax Rates & Brackets | Makes TCJA’s 10%, 12%, 22%, 24%, 32%, 35% and 37% income tax rates & brackets permanent.
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Effective 1/1/2026 |
| Standard Deductions | Increases TCJA standard deduction amounts to $31,500 (MFJ/SS); $23,625 (HOH), and $15,750 (Single/MFS).
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Effective 1/1/2025 |
| Personal Exemption Deduction for Seniors | Allows for a personal exemption deduction of up to $6,000 per person for seniors (age 65 and up) that begins to phase out when the taxpayer’s modified AGI exceeds $75,000 ($150,000 MFJ).
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Temporary – for tax years 2025-2028 only |
Tax Planning Opportunities:
- With certainty around future tax rates, we can better plan or manage income within the desired tax bracket.
- By strategically managing your income (e.g., delaying income recognition like the first year required minimum distribution or delaying filing for Social Security), you may be able to stay within the income limits to qualify for the new seniors’ deduction and avoid IRMAA surcharges, net investment income tax (NIIT) and others.
- Alternatively, plan to accelerate income with strategies like Roth conversions and income recognition such as bonus and stock options to help maximize the now expanded lower tax brackets and SALT limitation, discussed below.
- Continue to take advantage of 0% capital gains while in the lowest two tax brackets.
Individual – Itemized Tax Deductions as reported on Schedule A of a Tax Return
| State & Local Tax (SALT) | Increases the SALT deduction to $40,000 and increases it by 1% through the 2029 tax year. Subject to phaseout when MAGI is over $500,000 ($250,000 for MFS) and reverts to $10,000 after 2029. The passthrough entity tax (PTET) is still allowed.
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Temporary – for tax years 2025-2029 only |
| Mortgage Interest | Makes permanent the deductible interest on the reduced $750,000 of acquisition debt and the disallowance of home equity debt. In addition, reintroduced the deductibility of mortgage insurance premiums.
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Effective 1/1/2026 |
| Charitable Contributions | Imposes a limitation by subjecting total donations to a 0.5% floor for individuals who itemize. | Effective 1/1/2026 |
| Charitable Contributions | Provides for a tax credit of up to $1,700 of donations to scholarship-granting organizations that provide scholarships for children to attend public, private, or religious schools in the organization’s state.
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Effective 1/1/2027 |
| Charitable Contributions | For Non-Itemizers: Allows you to claim charitable deductions of up to $1,000 ($2,000 for MFJ) on cash donations.
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Effective 1/1/2026 |
| Miscellaneous expenses subject to 2% AGI floor | Permanently suspends, while the unreimbursed educator’s expenses have been recategorized and are now deductible.
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Effective 1/1/2026 |
| Total Itemized Deduction Limitation | Caps the benefit of itemized deductions for taxpayers in the 37% bracket at 35% by reducing the total by 2/37.
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Effective 1/1/2026 |
Tax Planning Opportunities:
- Consider accelerating and bunching charitable donations this year to avoid the new .5% AGI floor limitation starting in 2026.
- Consider accelerating and bunching deductions this year to avoid the limitation on total itemized deductions if you are in the highest bracket.
- Consider accelerating and bunching deductions to take advantage of the increase in SALT deduction limitation starting this year through 2029.
- Continue with the passthrough entity tax (PTET) election, particularly those in high-tax states if the increase in SALT deduction will still be limited.
- If eligible, consider donating through Qualified Charitable Distributions (QCD) to receive the full benefit and avoid being limited by the 0.5% cap starting in 2026.
- If not itemizing deductions, take advantage of the $1,000 ($2,000 MFJ) deduction by donating cash.
Individual – Provisions that will Impact Those with Children
| Child Tax Credit (CTC) | Increases the CTC to $2,200, and the amount is subject to the same phaseout when MAGI exceeds $200,000 ($400,000 for MFJ).
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Effective 1/1/2025 |
| 529 Plans | Increases limit from $10,000 to $20,000 for K-12 education expenses. | Effective 1/1/2026 |
| 529 Plans | Expands qualified expenses beyond tuition to include primary and secondary education related expenses and qualified credential program expenses.
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Effective 7/5/2025 |
| Trump Accounts | Establishes new IRA-like savings vehicle called “Trump accounts” to be seeded with $1,000 contribution from the federal government for children born in 2025 through 2028 if parents elect to have an account established. Thereafter, parents can make after-tax contributions of up to $5,000 per year. More details about how to establish the account and what will be considered qualified expenses will be forthcoming.
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Effective 1/1/2026 |
Tax Planning Opportunities:
- Review 529 plans this year and align the expenses to cover a wider range of qualified education expenses.
- Track and monitor education-related expenses that qualify to avoid overlap between the 529 plans and the other education tax credits, such as the American Opportunity and Lifetime Learning tax credits.
- Stand by for more information on how to take advantage of the Trump accounts.
Individual – Provisions that Defer, Exclude, or Exempt Income from Taxation
| Qualified Opportunity Zone (QOZ) | Makes QOZ permanent and allows capital gains to be deferred until the earlier of sale or exchange, or five years from the investment. The list of opportunity zones will be updated every 10 years. There is a 10% basis step up for property held for 5 years, 30% when investment is in rural QOZ property. Post-acquisition gain is excluded if held at least 10 years until a maximum of 30 years.
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Effective 1/1/2027 |
| Qualified Small Business Stock (QSBS) | Allows partial exclusion for stock held less than five years (50% if held for three years and 75% if held for four years) | Effective 7/5/2025 |
| Qualified Small Business Stock (QSBS) | Increases the gain cap from $10 million to $15 million and the small business asset test from $50 million to $75 million.
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Effective 1/1/2027 |
Tax Planning Opportunity
- We believe the QOZ is an excellent tax planning tool to take advantage of as it allows you to defer gains realized for up to five years starting in 2027. This allows time to generate and accumulate capital losses to offset those gains.
- All capital gains accumulated during the QOZ period are tax-free if held for 10 years.
- For entrepreneurs who believe they will sell their company in the future, weigh the pros and cons of forming or converting your entity to a C-corporation to take advantage of the now expanded QSBS rules.
Individual – Additional New Deductions
| No Tax on Overtime | Allows an above-the-line deduction for overtime pay of up to $12,500 ($25,000 MFJ) that begins to phase out for taxpayers with modified AGI above $150,000 ($300,000 MFJ)
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Temporary – for tax years 2025-2028 only |
| No Tax on Tips | Provides an above-the-line deduction of up to $25,000 for cash tips given voluntarily to taxpayers in an “occupation that traditionally and customarily receive tips” and that are reported to the IRS on a W-2 or 1099. Deduction begins to phase out for taxpayers with modified AGI of $150,000 ($300,000 MFJ)
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Temporary – for tax years 2025-2028 only |
| Deductible Interest in Certain Qualified Vehicles | Allows an above-the-line deduction of up to $10,000 of interest paid on loans incurred (including refinancing) in 2024 for certain qualified passenger vehicles that are assembled in the U.S. Deduction phases out for taxpayers with modified AGI above $100,000 ($200,000 MFJ).
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Temporary – for tax years 2025-2028 only |
Tax Planning Opportunities:
- If eligible, be sure to track tips and overtime hours. Keep detailed records while the IRS is still in the process of updating their forms.
- The IRS will provide additional guidance to clarify which cars qualify for the interest to be deductible.
Individual – Various Other Provisions
| Various Energy Tax Credits | Repeals the energy efficient home improvement and residential clean energy tax credits (e.g., solar). | Effective 12/31/2025 |
| Various Energy Tax Credits | Repeals the new, used, and commercial electric vehicle tax credits. | Effective 9/30/2025 |
| Estate & Gift Tax Exclusion | Resets the unified exclusion at $15 million per taxpayer and adjusts for inflation beginning with the 2026 tax year.
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Effective 1/1/2026 |
| Alternative Minimum Tax (AMT) | The increased exemption and phaseout amounts under TCJA are made permanent, but the exemption phaseout amount for MFJ and surviving spouse filers reverts to the 2018 $1 million threshold; the rate at which the exemption is phased out is doubled from 25% to 50%.
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Effective 1/1/2026 |
Tax Planning Opportunities:
- Act now on any plans for availing the energy tax credits as they are expiring sooner than originally scheduled this year.
- Now, with certainty around future estate and gift tax exclusion amounts, we can better plan gifting strategies to take advantage of the increased and now permanent lifetime exemption.
Business – Key Provisions
| Qualified Business Income Deduction | Makes the 20% deduction permanent, increases the phaseout range by $25,000 ($50,000 for MFJ), and provides a minimum $400 deduction for small business owners.
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Effective 1/1/2026 |
| Bonus Depreciation | Permanently extends the 100% bonus depreciation for property acquired after January 19, 2025, and allows election for lower percentages for property placed in service during the first taxable year ending after January 19, 2025.
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Effective 1/20/2025 |
| Section 179 Depreciation | Permanently increases the IRC §179 expense limitation to $2.5 million and the phaseout threshold to $4 million, applicable to property placed in service in taxable years beginning after 2024.
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Effective 1/1/2025 |
| Business Interest Deduction Limitation | Permanently reinstates the EBITDA as basis for calculating the adjustable taxable income when determining the amount of deductible business interest.
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Effective 1/1/2025 |
Tax Planning Opportunities
- Manage business income by maximizing deductions like setting up a retirement plan (e.g., SEP IRA) to reduce income and avoid phaseout of the QBI deduction.
- Take advantage of the accelerated depreciation to reduce taxable income or create a net operating loss to offset future tax years’ income.
It is difficult to predict how these various tax changes will impact your personal situation. Work with your Beacon Pointe Advisor, CPA, and estate attorney to help you understand how these changes may affect your personal or business tax situation.
Source: irs.gov
Important Disclosure: Beacon Pointe Advisors does not offer legal or tax advice. Please consult with the appropriate tax or legal professional regarding your circumstances. This information is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. Only a tax or legal professional may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement any design discussed herein. Nothing herein should be relied upon as personalized investment advice, nor should it be considered an individualized recommendation, offer or solicitation for the purchase or sale of any security or to adopt a specific investment strategy. An investor should consult with their financial professional before making any investment decisions. Beacon Pointe is not responsible for errors or omissions in the material on third-party websites and does not necessarily approve or endorse the information provided.
