By Lisa Hostetler Brown, Certified Elder Law Attorney, LawyerLisa-Upstate Elder LawNick Martin, AAMS, MBA, Financial Planner, Bluffton Financial PlanningWhat is OBBBA?The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, making tax provisions that were scheduled to expire at the conclusion of 2025 (Tax Cuts and Jobs Act TCJA) permanent under the law.The OBBBA directly impacts your tax situation, your retirement, funding and paying for education, and your estate planning.It is packed with 800 pages of tax updates that impact the way you plan, save, and protect what matters most.
Lets cut to the chase and hit on a few key provisions that might have the biggest impact on your bottom line.What Might Affect Me? Tax Brackets & Standard Deduction: Tax brackets will still have an inflation feature that causes the brackets to adjust as inflation adjusts.The standard deduction for 2025 is $15,750 or $31,500 for single or joint filers.For 2026, it is $16,100 or $32,200 for single or joint filers.
Estate & Gift Tax: Federal lifetime estate and gift tax exemption will remain the same rather than sunsetting at the end of 2025.Beginning in 2026, the federal estate, gift, and generation-skipping (GST) tax exemption is set at $15 million per individual, with married couples eligible to combine their exemptions for a total of $30 million.The excess will remain 40%.
Wealth transferability below the thresholds presents fewer hurdles to those desiring to transfer wealth to future generations.If you previously did taxable estate planning and are below these new thresholds, you may consider revisiting your previous trust planning for updates.NEW Senior Deduction: If you are 65 or older from 2025-2028, you can deduct $6,000 or $12,000 for single or married taxpayers.
This is in addition to the standard deduction.There is a phase out starting at $75,000 or $150,000 Modified Adjusted Gross Income (MAGI) for single or joint filers.There are more implications for additional income, so consult with your tax professional for guidance.
If you turn 65 during the year, you are eligible for the deduction.SALT Deduction: The State and Local Tax (SALT) deduction cap increases to $40,000 in 2025, with a 1% annual increase until 2029, reverting to $10,000 in 2030.Individuals or married filing jointly with income over $500,000 will be subject to a phaseout.
At $600,000, the SALT deduction will be reduced to $10,000.If youre paying lots of state taxes, there may be a benefit to itemizing deductions.Work with your advisors to maximize this opportunity.
NEW Trump Account: Newborns born between 2025 and 2028 can receive an initial $1,000 government contribution to start their savings journey.These funds are not accessible until age 18, but annual contributions of $5,000 are permitted without income requirements or phase out limitations.Funds can be used without limitations.
Family contributions are after-tax.Child Tax Credit: The higher child tax credit was made permanent and will index with inflation.529 Plan and ABLE-Account Enhancements: OBBBA now includes more features that encourage saving in a 529: tutoring, testing fees, educational therapy for disabled students, and dual enrollment.
The annual withdrawal cap has increased from $10,000 to $20,000.Tax-free rollovers from 529 plans to ABLE accounts are now permanent.ABLE account owners who contribute to their own account may be eligible for a tax credit of up to $2,000.
Charitable Giving: Cash gifts are deductible up to $1,000 if a single filer, $2,000 if joint, even if you dont itemize.Save those receipts! Other OBBBA Considerations Include: Qualified Opportunity Zones, Qualified Business Income Deduction, Qualified Business Stock, No Tax on Tips and Overtime (2025-2028), Student Loan changes, and Auto Loan Interest Deductions (2025-2028).Why Planning Matters: Do It Now.To take advantage of the law, versus it taking advantage of you, you must be proactive.Its time to check in with qualified professionals who have a thorough understanding of the implications of new laws and can guide you toward a thoughtful plan of execution.
Waiting or ignoring the reality of the new laws may result in missing out on benefits that directly impact your financial situation.For more detailed information regarding the OBBBA, please consult the IRS website and your tax professional: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisionsThis article is for informational purposes only and does not constitute legal, financial, or tax advice.
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