Congress recently passed the One Big Beautiful Bill, a sweeping piece of legislation that touches nearly every part of the tax code. While the bill is complex, several changes stand out as especially important for families, retirees, and small business owners.
Below is a summary of what matters most and how it may shape financial plans in the years ahead.
Lower Tax Rates and Higher Deductions
The lower individual tax brackets first introduced under the 2017 Tax Cuts and Jobs Act are now permanent. The standard deduction remains elevated, which means many households will continue to benefit from simplified filing and lower overall tax liability.
The State and Local Tax (SALT) deduction cap has been temporarily increased to $40,000 for most middle and upper-middle income households. Those in high-tax states may find more room for deduction planning, although the higher cap is scheduled to phase out in a few years.
Expanded Estate and Gift Exemptions
The lifetime estate and gift tax exemption has been raised to $15 million per individual and will adjust for inflation. This creates a valuable window for families looking to transfer wealth efficiently and plan for future generations.
Now is a good time to review existing trusts and gifting strategies to ensure they take advantage of the higher limits before any future changes.
New Deductions and Credits
A few new deductions have been added for overtime pay, tips, and certain auto loan interest, along with expanded credits for child and dependent care. Each of these provisions has specific income limits and may phase out after 2028, so timing and eligibility matter.
Changes to Student Loans and Family Accounts
The bill streamlines federal student loan repayment options and tightens borrowing limits for graduate and Parent PLUS loans. A new “Trump Account” has been introduced for children born between 2025 and 2028, featuring a $1,000 government contribution and tax-deferred growth. Families may want to revisit how they balance 529 plans, custodial accounts, and other education funding tools.
Support for Small Business Owners
Small business owners are among the biggest beneficiaries of the new law. The 20 percent pass-through deduction has been made permanent, and Section 179 expensing limits have increased, allowing more immediate deductions for capital purchases. In addition, employer child care credits have been expanded, providing an incentive for business owners to invest in family-friendly benefits.
What This Means for You
The One Big Beautiful Bill creates opportunities, but also deadlines. Some benefits are permanent while others have expiration dates. For clients nearing retirement, managing a business, or planning a legacy, it is important to review strategies now while these rules are in effect.
In the coming weeks, we will share a short series that dives deeper into each of these areas: retirement income planning, estate and legacy strategies, small business opportunities, and education funding.
If you have questions about how this new legislation may affect your financial plan, contact your advisor to schedule a review.