Washington has been busy. Last month, Congress passed – and President Trump signed – the One Big Beautiful Bill Act (OBBBA). At nearly 900 pages, the bill changes the tax landscape in ways that will affect many of our clients – high earners, business owners, and families planning for retirement.
Here’s a plain-English summary of the provisions most relevant to this group:
1. Estate and Gift Tax Planning: A Big One
- Estate exemption made permanent:
The exemption that was scheduled to be cut in half in 2026 (from $13.61 to ~$7M) will instead increase to $15M in 2026 and continue to grow with inflation.
- For a married couple, this means roughly $30M shielded from estate taxes.
2. Income Tax Brackets and Standard Deduction
- Current tax brackets (10% to 37%) stay put permanently starting 2026.
- Standard deduction remains higher:
- $31,500 for couples in 2025, plus temporary add-ons for the next few years.
- $15,750 for single filers
- Additional $6,000 deduction for those 65+ (2025–2028) – subject to income phaseouts.
3. SALT (State and Local Tax) Deduction
- Temporary relief: From 2025–2030, the SALT deduction cap rises to $40,000 for couples (with income phaseouts starting at $500k). After 2030, the cap reverts to $10,000.
4. Charitable Giving
- New floor for itemizers: Only donations that exceed 0.5% of your AGI count toward deductions.
- Non-itemizers: A permanent “above-the-line” charitable deduction of up to $2,000 per couple.
- Planning note: For larger gifts, bunching strategies (donor-advised funds, etc.) become more important.
5. 529 Plans and Education
- 529 plans expanded: Can now be used for K–12 (including homeschooling), credentialing programs, and other qualifying expenses.
6. Business Owner Provisions
- Section 199A (20% pass-through deduction) is now permanent.
- 100% bonus depreciation and increased §179 expensing made permanent.
- R&D expenses can be fully deducted domestically (2025–2029).
What Does This Mean for You?
For many of our clients:
- Estate planning flexibility improves with a permanent $15M exemption.
- Charitable giving and SALT deduction strategies may need a refresh.
- Business owners gain long-term clarity on 199A and accelerated depreciation.
2025 and 2026 will be prime years to revisit tax strategy—particularly gifting strategies, Roth conversions, and large charitable gifts.
As always, we’ll be reviewing these changes individually for Deerfield clients and incorporating any relevant updates into your planning. No need to decode all 900 pages — that’s what we’re here for.
