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The One Big Beautiful Bill Act

by | Sep 23, 2025

Key Provisions of the “One Big Beautiful Bill Act”

 

On July 4, 2025, Congress passed the One Big Beautiful Bill Act, a comprehensive tax and estate law. It makes permanent several popular tax provisions first introduced in the Tax Cuts and Jobs Act (TCJA), adds new deductions, and creates planning opportunities for individuals, families, and small business owners.

Below is our breakdown of what we believe are the most important provisions for our clients, along with plain-English explanations, why they matter, and planning tips.

 

Permanent Tax Rate & Standard Deduction Changes

 

Brief Description:

  • Tax rates are the percentage of your income that you pay to the federal government. They are structured in “brackets,” so your income is taxed at different rates as it increases.
  • The standard deduction is a flat-dollar amount you can subtract from your taxable income, reducing the amount of income that is subject to tax. Taxpayers choose between taking the standard deduction or itemizing deductions (whichever is larger).

What changed:

  • The lower tax brackets introduced in 2018 are now permanent and will be adjusted annually for inflation.
  • The standard deduction is nearly double the pre-2018 amount, remains in place permanently, and is also indexed for inflation.

Previous high: Before the TCJA in 2018, the standard deduction for a married couple filing jointly was $13,000; now, for 2025, it is $15,750 (single), $31,500 (married filing jointly), and $23,625 (head of household), with annual inflation indexing going forward.

Why it matters:

  • Predictability: Knowing these rates won’t revert to higher levels absent legislative changes makes long-term planning for retirement, investments, and trust distributions more reliable.
  • Estate and trust planning: Trustees can better plan distributions to beneficiaries by considering stable tax brackets.
  • Business owners: Can project income tax exposure for future years without worrying about sudden rate increases.

 

Estate & Gift Tax Exemption Increase

 

Brief Description:

  • The estate tax is a federal tax on the value of your estate when you pass away, above a certain exemption amount.
  • The gift tax applies to large lifetime gifts you make to others, with certain exclusions.
  • The GST (generation-skipping transfer) tax applies to transfers made to grandchildren or others more than one generation below you.

What changed:

  • Starting January 1, 2026, the exemption amount will rise to $15 million per person (or $30 million for married couples), indexed annually for inflation.
  • The GST exemption matches these amounts.

Previous high: The TCJA temporarily doubled the exemption to around $13 million per person, but that was scheduled to “sunset” in 2026 back to roughly $6–7 million per person. This new law locks in an even higher exemption.

Why it matters:

  • Fewer estates will owe tax: Most families will not pay any federal estate tax at these levels.
  • Planning flexibility: You may be able to shift focus from purely tax-minimizing trusts to trusts aimed at asset protection, wealth preservation, blended family planning, and legacy goals.
  • Gift opportunities: You can transfer more wealth during your lifetime without triggering gift tax, including through irrevocable trusts, family LLCs, or outright gifts.

 

Key Business Provisions

 

Brief Description:

  • Qualified Business Income (QBI) deduction: Allows many small business owners and certain rental real estate owners to deduct up to 20% of their business income.
  • Bonus depreciation: deduct the entire cost of property in the year it’s placed in service.
  • Section 179 expensing: Similar to bonus depreciation, but with different eligibility rules and limits.

What changed:

  • QBI deduction has a guaranteed $400 minimum deduction and higher income limits before the phase-out begins.
  • Bonus depreciation stays at 100% permanently.
  • Section 179 limit increased to $2.5 million, with a $4 million phase-out threshold, both inflation-adjusted.

Why it matters:

  • Cash flow boost: Small businesses can deduct more immediately rather than depreciating costs over years.
  • Tax strategy: Combining QBI with Section 179 and bonus depreciation can significantly reduce taxable income.
  • Estate/business succession: Lower taxable income may allow business owners to reinvest more into the business or fund buy-sell agreements.

 

Temporary Individual & Family Benefits (2025- 2028)

 

Brief Description:

  • Special deductions and credits designed to reduce taxable income or provide direct tax savings for certain expenses.

What changed:

  • Child Tax Credit: $2,200 per qualifying child, indexed for inflation.
  • Tip Income Deduction: Up to $25,000 of qualified cash tips is deductible. (Phaseout for higher earners)
  • Overtime Deduction: Up to $12,500 ($25,000 joint) in qualified overtime pay is deductible. (Phaseout for higher earners)
  • Car Loan Interest Deduction: Up to $10,000/year for new, U.S.-assembled personal-use vehicles.
  • “Trump Accounts”: Tax-deferred accounts for children, seeded with $1,000 for births in 2025–2028; $5,000 annual contribution limit.

Why it matters:

  • These provisions are short-term, so timing purchases, work hours, or contributions is key.
  • Families should consider front-loading certain expenses before 2028 to maximize benefits.

 

Charitable Giving & SALT Deduction Changes

 

Brief Description:

  • Charitable deduction: A tax break for donations to qualifying charities.
  • SALT deduction: Lets you deduct certain state and local taxes (income, sales, and property taxes) on your federal return.

What changed:

  • Non-itemizers can now deduct up to $1,000 ($2,000 married filing jointly) for cash gifts to public charities.
  • SALT cap rises to $40,000 in 2025, with phased increases until 2029, then dropping back to $10,000 in 2030.

Why it matters:

  • Charitable giving is now tax-advantaged even if you don’t itemize.
  • High-income clients in high-tax states have a larger window for property tax and state income tax deductions.

 

Mortgage Interest Deduction Made Permanent

 

Brief Description:

  • The mortgage interest deduction allows you to deduct the interest you pay on certain home loans from your taxable income, but only on loans used to buy, build, or substantially improve your primary or secondary home.

What changed:

  • The cap of $750,000 in total acquisition debt is now permanent. (Before TCJA, the limit was $1 million.)
  • Home equity loan interest is only deductible if the loan proceeds are used to improve the property securing the loan.

Example:

  • If you have a $900,000 mortgage, only the interest on $750,000 of that loan is deductible.
  • If you have two homes, one with a $500,000 mortgage and another with a $400,000 mortgage, you can deduct interest only on $750,000 total between them.

Why it matters:

  • High-value homeowners need to factor in this limit when buying or refinancing.

 

529 Plan Expansion

 

Brief Description:

  • 529 Plans are tax-advantaged savings accounts designed to encourage saving for education. Earnings grow tax-free, and withdrawals are tax-free if used for qualified education expenses.

What changed:

  • Expanded uses: Funds can now be used for a broader range of K–12 and post-secondary expenses, including certain professional credentialing programs and apprenticeship costs.
  • Higher K–12 withdrawal limit: The annual cap for K–12 tuition withdrawals has increased to $20,000 (up from $10,000).

Why it matters:

  • Families can now use 529 funds for more than just college, making them a flexible tool for multi-generational education planning.
  • Estate planning angle: Contributions to a 529 are considered completed gifts for tax purposes but remain under your control as the account owner, making them a powerful,
  • tax-advantaged way to shift wealth while funding education. You can also engage in stacking up to five years, deductible in year 1.

 

Disaster Loss Rules

 

Brief Description:

  • The IRS allows taxpayers to deduct certain uninsured losses resulting from federally declared disasters (such as hurricanes, wildfires, floods, or other major events). These rules normally require strict losses to exceed a percentage of income, and certain disaster-related deductions have expiration dates.

What changed:

  • The law extends the more favorable “qualified disaster” rules indefinitely, making it easier to claim these losses by:
  • Waiving the usual 10% of adjusted gross income (AGI) floor for qualified disaster losses.
  • Allowing you to deduct the loss in either the year it occurred or the prior year, giving flexibility for the biggest tax benefit.

Why it matters:

  • For Florida residents (and other hurricane-prone states), this could mean significant tax relief after a major storm.
  • Planning tip: If you suffer a loss late in the year, you might choose to apply it to the prior year’s tax return for a faster refund.

 

Planning Action Steps

 

  • Schedule a planning session before year-end to take advantage of temporary deductions.
  • Update your estate plan to align with the increased exemption.
  • Consider major asset purchases for business before year-end to use Section 179 and bonus depreciation.
  • Maximize charitable giving during years when SALT cap relief is available.
  • Educate family members about new savings options like Trump Accounts.

 

Author:

Joseph Giambrone, Esq. and Barry E. Haimo, Esq.
Haimo Law
Strategic Planning With Purpose(R)
Email: joseph@haimo.law
YouTube: http://www.youtube.com/user/haimolawtv

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