Ever since the first Trump Administration passed the Tax Cuts and Jobs Act (TCJA) in 2017 with most of its provisions expiring on December 31, 2025, observers have speculated about what would happen next. 

That question was finally answered on July 4, 2025, when President Trump signed the “One Big, Beautiful Bill (OBBB)” into law. His signature legislation makes the 2017 tax cuts permanent, along with several other important provisions.   

At 870 pages, the OBBB also contains a long list of additional changes that will affect taxpayers for years to come. Our specialists have broken down the list into some key highlights for you. 

Here’s what you need to know about the new tax law. 

Estate and gift tax exemptions 

The TCJA doubled the lifetime gift and estate tax exemption, meaning that far fewer families would be subject to federal estate taxes. The expiration of the TCJA would have meant that many more people would face federal estate tax liabilities, but the new law has made the higher exemption amounts permanent.  

The OBBB increases the lifetime gift and estate tax exemption to $15 million per person ($30 million per married couple) starting in 2026. This will be indexed for inflation annually. 

This allows families a more long-term approach to wealth transfers without the uncertainty of potential tax increases from expiring tax provisions. People will have greater flexibility in deciding whether to gift during their lifetime or wait until death for the “step-up” in cost basis on assets. 

Tax cuts made permanent  

One of the top headlines of the OBBB is the fact that it permanentized the tax cuts that were enacted during the previous Trump administration. Federal income tax brackets will remain unchanged at 10%, 12%, 22%, 24%, 32%, 35%, 37%, indexed for inflation. This is a key point for taxpayers across income levels, particularly high-income earners. Without this change, tax brackets were previously scheduled to revert to 2017 levels, adjusted for inflation. This would have resulted in higher taxes for many people.  

The OBBB did not adjust the corporate tax rate, which was reduced from 35% to 21% when the TCJA was enacted. 

In addition, the TCJA created a new temporary provision called the Qualified Business Income Deduction (QBI). This 20% deduction was designed to help small business owners who were unable to benefit from the reduced corporate tax rate.  

Under the OBBB, the 20% QBI deduction for qualified business income (§199A) will remain unchanged and become permanentized, along with an extended phaseout range. This will allow more people to qualify for this deduction.   

Standard deduction  

The OBBB slightly enhances and permanentizes the increased standard deduction amounts enacted under the TCJA. For 2025, the standard deduction is now $15,750 for individuals and $31,500 for married couples who file jointly.  

The law also creates an additional “Senior Bonus Deduction” of $6,000 for taxpayers ages 65+, effective in 2025. This provision is temporary and subject to phaseout, but while in effect, it has the potential to create a significant tax planning opportunity for seniors, whether they are utilizing the standard deduction or itemizing their deductions. 

Itemized deductions  

Under the OBBB, the standard deduction will receive a temporary enhancement from TCJA levels in 2025.  

For those itemizing their deductions, state and local taxes (or SALT) were capped at $10,000 under the TCJA. This cap in turn created the Pass Through Entity Tax (PTET) loophole, whereby state and local taxes are paid at the entity levels and passed down to shareholders in the form of a deduction that is not subject to the SALT cap.  

The OBBB will also increase the SALT cap to $40,000 (subject to phase out) starting in 2025, while keeping the PTET loophole in place.  

The SALT cap will likely increase the number of taxpayers taking the itemized deduction, especially in states with higher tax rates, such as New York, New Jersey, and California. 

In addition, the TCJA temporarily capped mortgage acquisition debt at $750,000 and temporarily eliminated miscellaneous itemized deductions. These changes were made permanent by the OBBB. 

New “above the line” deductions 

The new tax law is designed to create benefits for taxpayers who receive tips and overtime pay. It allows deductions for qualified tips and qualified overtime compensation. These measures are temporary and subject to phaseouts and caps.  

These changes could provide significant tax savings for service and hourly employees. However, it’s important to note that Social Security and Medicare still apply, so earnings are not entirely tax free.  

There is also a new tax deduction of up to $10,000 for car loan interest on new cars assembled in the United States. This deduction is subject to a cap. 

For taxpayers who make charitable cash donations, there will be a deduction available for non-itemizing taxpayers up to $1,000 (single) or $2,000 (married filing jointly) starting in 2026. 

Clean energy credits 

People who are interested in investing in energy efficiency updates for their homes or buying “clean” vehicles need to be aware that green energy tax credits previously scheduled to expire in 2032 will now expire within a year. 

Clean vehicle credits will now expire on September 30, 2025, while energy efficient home improvement credits and residential clean energy credits will expire on December 31, 2025. 

Depreciation 

The OBBB restores 100% bonus depreciation for property placed in service from January 19, 2025. This is now permanent.  

Under Section 179, starting in 2026, the maximum deduction amount will increase to $2.5 million (with a phase-out threshold at $4 million).  

Our tax specialists recommend these strategies: 

Strategic timing of asset purchases 

• Immediate expensing of qualified property
• Maximize deductions to significantly lower taxable income and tax liability
• Consider combining bonus depreciation and Section 179 for optimized tax benefits 

Real estate focus: Consider a cost segregation study to help make the most of bonus depreciation by reclassifying assets into eligible categories. 

Opportunity Zones 

The new tax law includes changes to Opportunity Zone (OZ) investments. These investment opportunities were created as part of the TCJA as a way for investors to invest in underserved communities in exchange for tax benefits.  

The new law accelerates the expiration of the current OZs to December 31, 2026 (2 years early). It creates a new round of permanent, rolling 10-year designated zones starting in 2027. 

This strategy offers a 10% step-up in basis for investments held for at least 5 years. This increases to 30% for qualified rural OZs. 

For investors who are already invested in Qualified Opportunity Zones, any eligible capital gains invested before January 1, 2027, would be subject to the existing law and, as such, subject to gain inclusion on December 31, 2026. 

For investors who are considering QOZ investments in the future, these changes and enhancements are a positive sign.  

Other notable provisions 

Trump accounts: Tax-preferred savings account for children will provide an initial $1,000 federal subsidy per child born 2024-2028. 

Heath savings accounts: The House proposed major changes in its initial bill, but the Senate did not include these in the final version.   

Personal exemptions: These have been suspended permanently. 

Alternative minimum tax: Increased exemption and phaseout thresholds have been made permanent. 

529 plans: These educational savings accounts have been expanded to include home schooling and post-secondary credentials (including Certified Public Accountant or Certified Financial Planner). 

Child tax credit: Slight enhancement ($2,200); this is now permanent. 

1099 MISC/NEC reporting requirements: Increased threshold to $2,000. 

Want to review your financial plan or learn how to make the most of these new tax laws? Please reach out to our team to learn more about how these changes might affect your personal financial plan. 

2025-8406