What the new tax bill means for your taxes, trusts and estate plan

When Congress passed the “One Big Beautiful Bill Act” (H.R. 1), it solidified and extended key provisions of the 2017 Tax Cuts and Jobs Act (TCJA), while introducing a range of new deductions and credits that will affect individuals, families, and businesses, some retroactive to the beginning of 2025.

Whether you're a business owner or simply managing your family finances, it’s important to understand which provisions in the new tax legislation remain the same, which are being revised and how best to position yourself in response. Here are some of the key provisions included in the bill, along with steps you can take to maximize their benefits.

For individual taxpayers:

The bill locks in several provisions from the TCJA that were scheduled to sunset at the end of 2025:

• The individual tax rate brackets (ranging from 10% to 37%) are now permanent.
• For 2025, the standard deduction is increasing to $31,500 for married couples filing jointly and $15,750 for single filers.
• The bill permanently extends the TCJA’s increased alternative minimum tax (AMT) exemption amounts, indexed for inflation.
• Beginning in 2025, the Child Tax Credit increases to $2,200 per child and will be indexed for inflation moving forward.
• The Qualified Opportunity Zone program, originally set to expire for new investments after December 31, 2026, is now permanently extended.
• The deduction for personal exemptions has been permanently eliminated.
• The deduction for miscellaneous itemized expenses has been permanently suspended, with an exception for certain unreimbursed employee expenses for eligible educators.

It also introduces a series of new regulations:

Starting tax year 2025:

• Qualified Small Business Stock (QSBS) Section 1202 Gain Exclusion. The bill expands the Sec. 1202 exclusion. For QSBS acquired after the date of enactment of the bill (July 4, 2025) and held for at least three years, the percentage of gain excluded from gross income will be 50%. If held for four years, the excluded gain will rise from 50% to 75%. If it is held for five years or more, the exclusion percentage will go up to 100%. For QSBS purchased after July 2025, the exclusions cap was raised from $10 million to $15 million per taxpayer.
• Tip income deduction. Tipped workers may qualify for a deduction of up to $25,000, with the benefit beginning to phase out at $150,000 of modified adjusted gross income (MAGI) for single filers, $300,000 if married filing jointly.
• Overtime pay deduction. Workers with overtime pay may be eligible for a deduction up to $12,500, with the benefit beginning to phase out at $150,000 of modified adjusted gross income (MAGI) for single filers, $300,000 if married filing jointly.
• Car loan interest deduction. Up to $10,000 through 2028; starts phasing out at $100,000/$200,000 MAGI. This only applies to new applicable passenger vehicles for personal use assembled in the United States.
• Senior deduction. A new $6,000 standard deduction for taxpayers age 65 and older (for tax years 2025–2029). This deduction begins to phase out for incomes above $75,000 (Single) & $150,000 (MFJ).
• Expanded SALT deductions. The deduction limit for state and local taxes (the SALT cap) is temporarily increased in 2025 from the current $10,000 to $40,000. That amount will then be adjusted for inflation to $40,400 in 2026 and increased by 1% annually through 2029. In 2030, the deduction limit reverts to $10,000. The amount of the available deduction begins to phase down (not to be reduced below $10,000) for taxpayers with a modified adjusted gross income of over $500,000, adjusted annually for inflation.  Although the SALT limitation is increased, the Passthrough Entity Tax (PTET) Deduction remains unchanged.
• Mortgage interest deduction. The new law keeps the $750,000 cap on mortgage interest deductions for loans used to buy, build, or improve a home. It permanently disallows interest on home equity loans unless used for substantial improvements. However, the deduction for mortgage insurance premiums is restored, which now qualifies as mortgage interest under the same cap.

Starting tax year 2026:

• The bill introduces Money Accounts for Growth and Advancement (MAGA), otherwise known as Trump Accounts, which provides $1,000 government-seeded savings accounts for all U.S. citizen children born between 2025 and 2028 with a Social Security number. The funds are intended to grow tax-deferred until age 18. Parents, among others, can contribute up to an aggregate total of $5,000 per year, although contributions are not tax-deductible.
• A perk for education savers: 529 college savings plan funds can now be used to pay a broader range of K–12 and homeschool expenses. Qualified expenses now include not only tuition and fees, but also educational and therapeutic services for students with disabilities, as well as costs associated with post-secondary programs such as trade schools and vocational training. The annual limit for K-12 expenses is also increased to $20,000.
• Plus, ABLE (Achieving a Better Life Experience) account rules for disabled individuals are permanently expanded to allow greater contributions and rollovers.
• Cash Charitable Contributions can now be deducted if you don’t itemize deductions. The new bill makes the universal charitable deduction permanent, allowing non-itemizers to deduct up to $1,000 (single) or $2,000 (married filing jointly).
• Under the new bill, the itemized deduction phaseout—which had been suspended under the TCJA is permanently repealed. Instead, a new overall limitation will be effective starting in 2026 for taxpayers in the top tax bracket.

How you can take advantage of the changes:

• Harvest gains or losses strategically. With capital gains tax rates unchanged, you can maintain your traditional planning approach—strategically managing gains and losses. Consider realizing losses in high-income years to offset taxable gains or timing gains in years when you anticipate large charitable deductions.
• Time your state and local tax (SALT) payments strategically. If your income is within the deduction threshold ($500,000) this year and you anticipate higher income next year, consider prepaying your state or local income and real estate taxes before year-end to maximize the deduction. Conversely, if your income exceeds the threshold this year, it may be more advantageous to defer those tax payments until next year, when you may regain eligibility for a larger deduction.
• Accelerate energy-related purchases. The bill terminates most energy-related tax credits established under the Inflation Reduction Act, including credits for clean vehicle purchases, residential solar and energy-efficient homes. If you’re planning to install solar panels or renovate for energy efficiency, act by December 31, 2025 to capture the last of the federal energy tax credits. Transitional relief may be granted for projects begun before the end of 2025. For the electric vehicle credit, individual taxpayers would need to purchase qualified EVs by 9/30/25 to claim a credit.
• Evaluate charitable giving strategies. Starting in 2026, itemizers can only deduct charitable contributions to the extent they exceed 0.5% of their AGI and for individuals in the top tax bracket (37%), the value of the deduction is capped at 35%. Bunching donations into a single year may help exceed the 0.5% AGI floor and maximize deductibility.
  • Donor-advised funds (DAFs) remain eligible for itemized deductions, but non-itemizers cannot deduct contributions to DAFs under the new above-the-line rule.
  • Give appreciated securities to charity to avoid capital gain taxes while also receiving the benefit of a charitable deduction.
  • High-income donors may want to accelerate large gifts into 2025 to avoid the 35% cap on itemized deductions taking effect in 2026.
  • Charitable contributions to scholarship-granting organizations create a nonrefundable tax credit for up to $1,700. This applies to contributions made to public charities that primarily grant scholarships to students attending elementary and secondary schools. 

Changes to estate and gift tax provisions

While the estate and gift tax exemption was scheduled to be cut in half at the end of 2025, that is no longer a concern. For 2025, the estate and gift tax exemption is $13,990,000 and the bill increases the exemption to $15 million per individual starting in 2026 ($30 million for married couples), and it will be indexed for inflation each year after that.

This presents a key opportunity to review your estate plans and shift wealth strategically.

How you can take advantage of the changes:

• Maximize your use of expanded gifting options. Even though the exemption amount is increasing in 2026, anything passed to your heirs in your estate above the exemption amount is still subject to 40% taxes. You want to make strategic gifting choices if you have a large estate. By using your exemption, you can transfer assets now that would be subject to tax in the future. You also push the future appreciation in the value of the assets out of your estate and into the hands of your beneficiaries.
• Use trusts to direct how assets are transferred. It’s often more advantageous to make large gifts through a trust rather than giving assets outright, as a trust allows you to control when and how those assets are distributed to your beneficiaries. This may be especially important if your beneficiaries are young or your gift is designed to benefit multiple generations. Trusts can also help ensure your estate is managed effectively and provide a layer of protection for your assets against certain creditors of your beneficiaries, including former spouses. 

What to know about business and corporate taxes

For business owners, the new legislation permanently restores 100% bonus depreciation for qualified assets placed in service after January 19, 2025, allowing you to deduct the full cost of eligible purchases in the year they’re put into use, rather than spreading the deduction over time.  In addition, starting in January of 2025, the Section 179 expense limit will increase to $2.5 million, with the phase-out beginning at $4 million starting in January 2025. If you have plans to purchase new business property or equipment, timing them in a high-income year can help you maximize deductions and reduce your overall tax liability.

The bill permanently extends the 20% Qualified Business Income (QBI) deduction under IRC §199A for pass-through entities, such as S corporations, partnerships, and sole proprietorships. This ensures that eligible business owners can continue to deduct up to 20% of their qualified business income from taxable income, providing a significant and ongoing tax benefit. Additionally, beginning in 2026, the legislation introduces a minimum $400 deduction for taxpayers with at least $1,000 of QBI and expands access to the deduction by increasing the income-based phase-in thresholds—from $50,000 to $75,000 for single filers and from $100,000 to $150,000 for joint filers—making it more accessible to a broader range of business owners.

Consider your plans and next steps

Overall, the “One Big Beautiful Bill Act” extends current law and introduces reforms that create valuable new opportunities for tax strategies, estate planning and business tax planning. With higher deduction limits, expanded savings options and a larger estate tax exemption starting in 2026, now is the time to review your financial, charitable and business plans to ensure you capture all the benefits available.

Our advisors are always available to help you evaluate your options to form the best strategy for your circumstances.