The New Tax Landscape Under the One Big Beautiful Bill Act

When you’ve spent a lifetime building your wealth and aligning it with the life you want to live, shifts in tax policy aren’t just headlines. They’re signals. Signals to reevaluate, reposition, and re-engage with your financial plan.

But, still, there is a headline. On July 4, President Trump signed the One Big Beautiful Bill Act (OBBBA), which codifies one of the most comprehensive tax policy overhauls in recent history, affecting everything from estate strategies to the available deductions for both individuals and businesses.

The OBBBA introduces a sweeping set of tax provisions across individual, business, estate, international, and administrative tax policy.

Maintaining the 2017 tax cuts set to expire

The OBBBA locks in many of the 2017 Tax Cuts and Jobs Act (TCJA) provisions, making them permanent and slightly expanding them. The OBBBA makes the current tax rates and brackets permanent, with a maximum rate of 37%. It also permanently increases the standard deduction for 2025 and adjusts it for inflation thereafter. The 2025 standard deductions are:

• $15,750 for single filers
• $23,625 for heads of household
• $31,500 for married couples filing jointly

SALT deduction cap temporarily increased

The cap on state and local tax (SALT) deductions rises to $40,000 and increases by 1% until 2030, where it reverts back to the original $10,000. The maximum deduction of $40,000 starts to phase down at a rate of 30% of modified AGI (MAGI) exceeding $500,000. Taxpayers whose MAGI exceeds $600,000 will face the original $10,000 cap.

Repeal of the Pease limitation and cap on itemized deductions

The Pease limitation, which previously reduced itemized deductions for high earners, is permanently repealed. In its place, taxpayers in the highest income tax bracket at 37% only receive tax savings of 35% for their itemized deductions.

Other itemized deduction changes

• Miscellaneous itemized deductions permanently terminated.
• Permanent $750,000 cap on mortgage interest deduction.
• Interest on home equity loans remains excluded from deductibility.

New deductions & expanded credits

A temporary $6,000 deduction for seniors aged 65+ is available from 2025 to 2028, subject to phaseout based on MAGI. This deduction can be claimed if the taxpayer uses the standard deduction or itemizes.

For charitable givers, a deduction of $1,000 (single) or $2,000 (joint) is now allowed for anyone who uses the standard deduction. Itemizers are subject to a new floor.

Interest paid on auto loans can be deducted up to $10,000 annually if the vehicle is a new, U.S.-assembled vehicle purchased between 2025 and 2028. Phaseouts begin at $100,000 for single filers and $200,000 for joint filers.

Benefits for taxpayers with children

The Child Tax Credit increases slightly to $2,200, with the refundable portion of $1,400 made permanent. Families caring for dependents will benefit from an increase in the Child and Dependent Care Credit from 35% to 50% of qualifying expenses. The exclusion for employer-provided dependent care assistance also jumped from $5,000 to $7,500. Families with 529 accounts can now use up to $20,000 annually for K–12 expenses, tutoring, homeschool costs, and career credentials.

Qualified Business Income (QBI) deduction

The popular 20% deduction under Section 199A is made permanent, preserving a substantial tax break for owners of pass-through businesses and self-employed individuals. Service-based businesses (SSTBs) benefit from higher income thresholds before phaseouts apply, and all qualifying taxpayers with more than $1,000 of active income are guaranteed at least a $400 minimum deduction.

Excess business losses

Section 461(l), which limits the deductibility of business losses for non-corporate taxpayers, has become a permanent feature of the tax code, extending its impact to business owners with significant pass-through losses.

Business investments & innovation incentives

Bonus depreciation and Section 179 expenses received a boost, offering small business owners broader immediate deduction opportunities for assets purchased for their businesses. Bonus depreciation of 100% for certain qualified property acquired after January 19, 2025, became permanent and Section 179 expense limits also increased to $2.5 million.

Domestic research and development expenses are now fully deductible in the year incurred (retroactive to 2022 for small businesses), enhancing cash flow for innovation.

Improvements of highly used tax strategies: QOZs & QSBS

The Opportunity Zone program is no longer scheduled to sunset in 2026. Although this does not extend the date for mandatory gain recognition on previous sales resulting in capital gains, new investments in Qualified Opportunity Funds (QOF) can be made beginning in 2027 to defer any capital gains for five years. Taxpayers will also qualify for a step-up in basis after five years and be exempt from any capital gains on the appreciation of a QOF if held for ten years.

Qualified Small Business Stock (QSBS) rules were updated for new stock issued and acquired after July 4, 2025. The exclusion cap was increased to $15M (up from $10M), and the gross asset threshold to qualify as a small business increased to $75M (up from $50M). The exclusion percentages and holding periods became more favorable, allowing for a 50% exclusion if the stock is held for three years, a 75% exclusion if held for four years, and a full 100% exclusion if held for five years.

Estate & gift taxes

The estate and gift tax exemption is now permanently set at $15 million per individual or $30 million per couple, beginning in 2026, and adjusted for inflation annually, removing the uncertainty surrounding the prior sunset and providing a long-term runway for wealth transfer planning.

Alternative Minimum Tax (AMT)

The OBBBA preserves many favorable provisions while modifying thresholds and exemptions. The AMT retains the higher exemption levels introduced by the TCJA but now includes faster phaseout rules that reduce exemptions at a 50% rate for high earners.

Energy efficiency credits eliminated

Starting in 2026, the government will eliminate several clean energy and home improvement credits created under the Inflation Reduction Act, signaling a shift in policy priorities. Taxpayers will only receive credits for purchasing electric vehicles if they acquire the vehicle before September 30, 2025.

Newborn Savings Accounts (“Trump Accounts”)

Children born between 2025 and 2029 will receive a $1,000 tax-free account, with families allowed to contribute up to $5,000 annually through the child’s eighth birthday. The child can use these accounts starting at age 18. They can be used for education, vocational studies, buying a home, or starting a business. The funds grow tax-deferred. The child must fully withdraw the account by the time they reach age 31.

What should you do now that the OBBBA is the law?

Reevaluate estate planning strategies

With the lifetime estate and gift exemption now permanently set at $15 million per individual or $30 million per couple in 2026, families now have clarity, but also urgency. If you built your estate plan to “use it or lose it” under the old sunset timeline, you may need to revise your gifting strategies, GRATs, or trust structures.

Reassess deductions and income timing

The permanence of TCJA tax rates and the redefined itemized deduction limits may alter your timing on income recognition, charitable contributions, and other deductions. This is especially true for taxpayers with MAGI of $400,000 or more, as the available deduction from SALT begins to phase out.

Explore alternative investment solutions

When you recognize a large capital gain — whether from selling a concentrated security, experiencing a liquidation event, or selling a business—explore alternative options to defer or mitigate tax.

Leverage expanded special-purpose accounts

From continued HSA contributions post-Medicare enrollment to the launch of “Trump Accounts” for minors, the bill creates opportunities to expand tax-advantaged savings across generations. Consider coordinated contributions as part of your family wealth plan.

The bigger picture: strategy over headlines

This is the moment to be intentional. The new tax landscape presents an opportunity to realign your wealth with your purpose. At Brighton Jones, we don’t chase headlines. We integrate them into a strategy built around you, your family, your goals, and your richer life.

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.