The One Big Beautiful Bill Act (OBBBA) of 2025, signed into law on July 4th, 2025, provides for new planning opportunities within your estate plan, investment accounts and business entities. As a firm, we believe that its not just how much you “make,” it’s also how much you “keep.”
SALT Deduction Enhancements:
The OBBBA temporarily raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 for joint filers ($20,000 for married filing separately), for tax years 2025 through 2029. This cap phases out for individuals with adjusted gross income over $500,000 ($250,000 for married filing separately) and reverts to $10,000 after 2029.
Planning Tip: If you reside in a high-tax state like NY, CA or MN, consider bunching SALT payments into the 2025-2029 window to maximize deductions. Consider switching from Pre-Tax to After-Tax Roth contributions to workplace retirement plans to diversify on the basis of future tax treatment.
Retirement Planning:
Seniors aged 65 and older receive an additional $6,000 standard deduction ($12,000 for joint filers) from 2025 through 2028, phasing out at higher incomes. Catch-up contributions to 401(k)s must be made to Roth accounts for those with prior-year wages over $145,000, starting in 2026.
Planning Tip: Accelerate Roth conversions in 2025 to leverage the permanent lower brackets, especially if nearing retirement. Review catch-up strategies to ensure compliance and optimize after-tax savings.
Expanded Business Deductions:
The Act permanently restores 100% bonus depreciation for qualified property placed in service after January 19, 2025, allowing immediate expensing of capital assets. The qualified business income (QBI) deduction under Section 199A gains a new inflation-adjusted minimum floor of $400, with phaseout thresholds potentially raised, benefiting pass-through entities. Section 179 expensing limits increase to $2.5 million, and new rules provide special depreciation for U.S.-based factories.
Planning Tip: Business owners should reassess entity structures to maximize enhanced QBI deductions and consider relocating operations to qualify for factory-specific incentives.
Estate Planning Advancements:
Starting January 1, 2026, the federal estate, gift, and generation-skipping transfer (GST) tax exemption rises permanently to $15 million per individual ($30 million for married couples), indexed for inflation thereafter. This replaces the scheduled 2026 sunset of the TCJA’s higher exemptions, reducing exposure to the 40% estate tax rate for larger estates.
Planning Tip: With the expanded exemption, revisit trusts and gifting strategies to transfer assets now, locking in current values before potential appreciation.
Deferred Compensation Elections:
This is a reminder for those with deferred compensation elections coming up. Please remember to reach out to discuss appropriate deferrals for the 2026 calendar year.
Please feel free to reach out to us to review how this legislation applies to you. We are committed to building a plan and offering personalized guidance for your family and your business.