On Independence Day, while most of us were firing up the grill, Washington set off a different kind of fireworks. Surrounded by veterans and small‑business owners, President Trump signed the One Big Beautiful Bill (H.R. 1) into law during a sun‑splashed ceremony on the White House South Lawn.
At around 900 pages, the legislation makes many of the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent and sprinkles in more than two dozen new deductions and phase‑outs. Why should you care now? Because the very first tax year affected is 2025 – and some of the biggest opportunities expire as early as December 31.
Taking action over the next five months can translate into real dollars saved on April 15, 2026.
|
Change |
What’s New |
Who Benefits |
|
Permanent TCJA brackets |
Seven‑bracket structure stays, indexed for inflation |
All taxpayers; especially mid‑ to high‑income filers who considered income‑shifting moves |
|
SALT cap jumps to $40k (beginning 2025) |
Deduction limit quadruples, then phases out above $500k MAGI; reverts after 2029 |
Taxpayers in high‑tax states, grantor and non-grantor trusts |
|
“Senior bonus” $6k deduction |
New deduction for taxpayers ≥65; phases out at $75k/$150k MAGI (2025‑2028) |
Retirees, RMD‑age clients |
|
Estate exemption rises to $15m & made permanent |
$15m per person unified gift & estate exemption starting in 2025 and indexed thereafter |
HNW/UHNW families |
|
Bonus depreciation & qualified business income deduction (QBI) made permanent |
100 % first‑year write‑off and 20 % pass‑through deduction locked in |
Business owners, real‑estate investors |
What changed
With the TCJA brackets now locked in, the marginal rates you see today will remain the law of the land for the foreseeable future. Long‑term capital‑gains thresholds also hold steady.
Why it matters
Many taxpayers, especially those planning to accelerate income in case the TCJA sunsetted, may now be over‑withholding. Conversely, the new bill eliminates the uncertainty that underpinned Roth‑conversion strategies in recent years.
Next step
Ask your advisor to run a fresh 2025 projection. Double‑check paycheck withholding, estimate quarterly payments, and revisit any 2026 income‑deferral tactics now rendered moot.
What changed
For tax year 2025, the state‑and‑local‑tax deduction ceiling jumps from $10,000 to $40,000 – subject to a 30 % haircut once modified adjusted gross income (MAGI) exceeds $500,000. The cap climbs slightly to $40,400 in 2026 before tapering back to $10,000 in 2030.
Why it matters
If you pay high California or New York taxes, bunching 2026 estimated payments into December 2025 could unlock tens of thousands of federal deductions. Non‑grantor trusts may also capture more benefit by delaying distributions, while some grantor trusts might temporarily “turn off” grantor status to qualify.
Next step
Work with your CPA on MAGI management. Consider pushing income into 2026, front‑loading state tax payments, or adjusting trust distributions. If your MAGI is already well north of $500k, focus elsewhere; the phase‑out ensures you’ll see little extra benefit.
What changed
Taxpayers age 65+ receive a $6,000 “senior bonus” deduction ($12,000 for married couples both 65+) on top of either the regular standard deduction or your itemized deductions from 2025‑2028. The perk begins to phase out once MAGI tops $75,000 single / $150,000 MFJ, disappearing at higher levels.
Why it matters
The bonus can shift marginal brackets, making partial Roth conversions or first‑year required minimum distributions (RMDs) more attractive, or less. Fail to plan and you could inadvertently phase yourself out of the deduction.
Next step
Map out Roth conversion windows. If you’re on the cusp of the MAGI threshold, consider deferring part of your first RMD, harvesting capital losses and deferring Social Security benefits. Conversely, if you’re comfortably below the cutoff, a well‑timed conversion could fill up a lower bracket without losing the bonus.
What changed
Why it matters
A well‑timed vehicle purchase or equipment upgrade could deliver an immediate above‑the‑line or business write‑off. Meanwhile, the higher estate exemption and permanency eases the rush to complete complex gifting by year‑end – but should still inform your lifetime‑wealth‑transfer playbook.
Next step
What changed
From 2025‑2028, workers can claim above‑the‑line deductions up to $25,000 for reported tips and $12,500 for overtime pay ($25,000 MFJ). Both phase out starting at $150k/$300k MAGI. Separately, the bill launches “Trump Accounts,” Roth‑like savings vehicles for minors with a $5,000 annual contribution limit and a $1,000 federal credit for children born 2025‑2028.
Why it matters
Service‑industry professionals and dual‑income families with seasonal overtime can meaningfully trim taxable income. Meanwhile, parents and grandparents gain a new tool for early‑stage wealth transfer.
Next step.
The One Big Beautiful Bill opens a short window to optimize your 2025 return – and your long‑term plan. Our advisors are already modeling scenarios for clients across the tax‑bracket spectrum. Schedule your personalized tax planning check‑up now.