How key provisions of the one big beautiful bill impact your finances

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, has generated no shortage of headlines and opinions. While the legislation has sparked debate across political and economic circles, it provides taxpayers and advisors with a rare moment of legislative clarity.

With many provisions made permanently, or extended well into the next decade (effective starting in Tax Year 2025), the OBBBA cements a more stable tax framework that supports long-term planning with greater confidence.

This article walks through the most relevant changes – from estate and gift tax exemptions to income tax thresholds, education savings, and business incentives – helping you and your advisory team identify where to act and where to plan ahead.

Considerations for education and savings for children

The OBBBA introduces a suite of enhancements aimed at supporting families in planning for their children's education and financial future. These changes expand eligibility for key programs and offer new opportunities for tax-advantaged savings.

Key provisions

Expanded 529 plan uses
Families can now use 529 plan funds, previously limited to qualified college expenses, for a broader range of educational expenses, including certain postsecondary credentialing and career training programs. This expansion increases flexibility for students pursuing non-traditional or vocational paths.

Increased child tax credit
The child tax credit has been permanently increased to $2,200 per child (adjusted for inflation starting in 2026), providing greater financial support to families. Income-based phaseouts still apply, so higher-income households should evaluate eligibility annually.

Trump accounts for children's savings
Families with children born between 2025 and 2028 are eligible for a $1,000 refundable federal credit per child, automatically deposited into a government-established savings account. These accounts are designed to grow tax-free and can be used in the future for qualified expenses such as education, housing or health needs. Eligibility is determined through the tax filing process, so parents do not need to apply.

Expanded ABLE account eligibility
The age of onset for qualifying disabilities has been raised from 26 to 46, significantly broadening access to ABLE accounts (tax-advantaged savings vehicles that can be used for education, housing, medical expenses and other qualified disability-related costs). This change allows more individuals with later-onset disabilities to save and spend on essential needs without jeopardizing eligibility for public benefits.

Charitable tax credit for private school scholarships
Taxpayers can now receive a dollar-for-dollar federal tax credit for contributions to scholarship-granting organizations that support private school tuition. The credit is limited to the greater of $5,000 or 10% of adjusted gross income per year and is available through 2029. Donations may be made in cash or appreciated assets such as low-basis securities, offering additional tax planning opportunities. This provision encourages charitable giving while expanding educational access.

Employer-provided education assistance made permanent
Employers may continue to offer up to $5,250 per year in tax-free education assistance, including student loan repayment. Participation varies by employer, so employees should confirm availability.

What hasn't changed

• The structure of 529 and ABLE accounts remains intact, preserving their familiar rules and tax advantages.
• Income tax rates affecting education-related deductions and credits are unchanged.

Planning tip

Families should review their eligibility for newly expanded programs and update their education savings, charitable contributions, and tax strategies accordingly. Taking advantage of these provisions where eligible can help build a more efficient, multi-layered approach to funding both current and future educational needs.

Considerations for business owners and investors

The OBBBA delivers long-sought certainty for entrepreneurs, investors, and closely held businesses by making key tax incentives permanent and expanding others. These changes create a more predictable environment for long-term planning, investment, and growth.

Key provisions

Section 199A deduction made permanent
The popular 20% deduction for qualified business income (QBI) from pass-through entities, including sole proprietorships, partnerships, and S corporations, is now permanent. This provides ongoing tax relief for small and mid-sized business owners and reinforces the value of pass-through structures.

Expanded QSBS (qualified small business stock) gain exclusion
For QSBS acquired after the OBBBA's enactment, a new tiered exclusion applies based on holding period:

• 3 years: 50% of gains excluded
• 4 years: 75% excluded
• 5+ years: 100% excluded

The gain exclusion cap has also increased from $10 million to $15 million, with inflation indexing beginning in 2027. Additionally, the definition of a "small business" has expanded to include companies with up to $75 million in gross assets (up from $50 million), broadening eligibility.

100% bonus depreciation for domestic capital expenditures and R&D
Businesses can continue to fully deduct domestic capital investments and R&D expenses through 2029. Alternatively, they may elect to amortize these costs over 5 or 10 years. Foreign R&D remains subject to a 15-year amortization schedule.

Opportunity zone enhancements
The OBBBA permanently extends and strengthens tax incentives for investments in Opportunity Zones. Enhancements include:

• Expanded eligibility for projects
• Increased transparency and reporting requirements
• Greater emphasis on impactful community development

These changes aim to attract more capital to underserved areas while improving accountability.

What hasn't changed

• Federal income tax brackets and rates remain unchanged.
• The structure of Opportunity Zones and the Section 199A deduction is preserved, so business owners can continue leveraging these tools without disruption or redesign.
• The municipal bond interest exemption, which allows interest from most municipal bonds to be excluded from federal income tax, remains unchanged under the OBBBA.

Planning tip

With the permanence and expansion of key incentives under the OBBBA, now is an ideal time to reassess how your business and investment strategies align with the updated tax policies. Reviewing holding periods, capital deployment strategies, and the long-term tax implications of current structures can help ensure you're positioned to fully leverage the law's most favorable provisions

Considerations for retirement and estate planning

The OBBBA introduces meaningful updates for retirees, high-net-worth individuals, and families focused on legacy planning. With key provisions made permanent and others temporarily enhanced, the law offers a window of opportunity to simplify wealth transfer strategies and reduce long-term tax exposure.

Key provisions

Estate and gift tax exemption permanently increased
The unified federal exemption for estate, gift and generation-skipping transfer taxes has been permanently increased to $15 million per individual starting in 2026, up from the 2025 level of $13.99 million. Made permanent under the OBBBA, this change provides long-term certainty for families engaging in wealth transfer planning, particularly those utilizing trusts, lifetime gifting and multigenerational strategies.

Trust and estate AMT adjustments
The Alternative Minimum Tax (AMT) thresholds and exemptions for trusts and estates have been adjusted for inflation, reducing the likelihood of unexpected AMT exposure. However, trusts and estates may still be subject to AMT depending on income levels and deductions claimed.

Senior deduction (2025–2028)
Taxpayers aged 65 and older are eligible for an additional standard deduction of up to $6,000 per person during a four-year window from 2025 through 2028. This temporary benefit, which phases out for incomes between $75,000–$175,000 (single) and $150,000–$250,000 (joint), provides modest relief for retirees on fixed incomes and may influence timing decisions around retirement or income recognition.

What hasn't changed

• Social Security taxation remains unchanged, and no new surtaxes or rate increases were introduced.
• The step-up in basis at death provision is unchanged, preserving an important tool for minimizing tax liability across generations, as beneficiaries can often sell inherited assets with little or no capital gains tax.
• Core trust planning principles and AMT treatment for trusts and estates remain intact.

Considerations for federal and state tax planning

While the OBBBA delivers long-awaited certainty at the federal level, it also brings renewed attention to state and local taxes (SALT). With expanded federal deductions and persistent state-level complexities, thoughtful coordination between federal and state planning is more important than ever.

Key considerations

Expanded SALT deduction cap
The OBBBA temporarily raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for tax years 2025 through 2029, with a 1% annual inflation adjustment. However, this expanded cap is phased out for taxpayers with modified AGI over $500,000, also indexed. Beginning in 2030, the cap reverts to $10,000. This temporary relief offers planning opportunities for taxpayers in high-tax states, particularly in the near term.

Extension of AMT exemption amounts
The OBBBA permanently extends the higher Alternative Minimum Tax (AMT) exemption amounts introduced by the Tax Cuts and Jobs Act, with amounts indexed for inflation. However, the phaseout thresholds revert to their 2018 levels: $500,000 for single filers and $1,000,000 for joint filers, also indexed for inflation. Starting in 2026, the phaseout rate increases from 25% to 50%, meaning high earners will lose the benefit of the exemption more quickly.

Greater emphasis on state-level estate tax exposure
While the OBBBA permanently extends the high federal estate and gift tax exemption, many states continue to impose estate or inheritance taxes with significantly lower thresholds. This creates a growing disparity between federal and state-level exposure, particularly for families with moderate to high net worth. As a result, state-specific estate planning remains essential.

Domicile and relocation strategies
States vary widely in how they tax both income and estates. Some impose no estate tax at all, while others have aggressive thresholds and rates. Changing legal domicile, especially in retirement, can be a powerful strategy to reduce or eliminate state-level tax liability, but it must be done carefully and documented thoroughly.

What hasn't changed

• State estate and inheritance tax laws remain independent of federal law.
• Several states continue to impose estate or inheritance taxes with no alignment to federal thresholds.

Planning tip

For those in high-tax states, there is an opportunity to reassess SALT deduction potential under the newly expanded cap and evaluate their exposure to state-level estate taxes. In many cases, state-specific planning tools such as gifting strategies, trusts or charitable vehicles can help mitigate liability.

Keeping the bigger picture in mind: Final thoughts on the OBBBA

As the OBBBA makes many tax provisions permanent, while extending others, the law delivers a rare moment of legislative clarity and opens up a wide range of opportunities for individuals, families and business owners.

But while tax policies have shifted, your personal goals have likely stayed the same. It's easy to get caught up in headlines or chase the latest deduction, but as always, don't let the tax tail wag the dog. The most effective strategies are those that align with your broader financial plan, not just the latest tax deduction or credit.

This is where thoughtful, proactive planning makes a difference. Consider scheduling a mid-year review with your advisor to ensure your tax, estate and investment strategies reflect both the permanent and time-limited provisions of the OBBBA while staying true to your personal financial goals.