The recently passed One Big Beautiful Bill Act of 2025 introduces a range of tax and planning updates that could impact your finances – whether you’re raising a family, nearing retirement, or looking to maximize deductions.
Some provisions, like income tax brackets and small business deductions, are now permanent. Others, including the expanded standard deduction, child tax credit, and SALT cap relief, are temporary and scheduled to sunset.
This summary highlights the most relevant updates from a financial planning perspective and how we incorporate them into each client’s personalized strategy.
Tax Brackets and Higher Standard Deduction Mean Lower Taxable Income
The tax brackets first introduced in 2017 are now set as permanent under the new law and expected to remain in place under current legislation, locking in lower rates across income levels for the foreseeable future.
Beginning in 2025, the standard deduction will increase to $15,750 for single filers and $31,500 for married couples filing jointly. This reduces taxable income and may make itemizing less necessary for some households.
Increased Tax Breaks for Families and Expanded 529 Flexibility
Child Tax Credit: The credit rises from $2,000 to $2,200 per child starting in 2025. Phaseouts begin at $400,000 of MAGI for joint filers and $200,000 for single filers.
529 Plan Use: These accounts can now be used for a wider range of K–12 expenses, including books and standardized testing fees, offering added flexibility for families.
Charitable Giving Deduction Returns for Non-Itemizers
Beginning in 2026, taxpayers who take the standard deduction can still deduct up to $1,000 (single) or $2,000 (married filing jointly) in charitable gifts—a benefit last seen during COVID-era tax relief.
Note: Proposed reforms to donor-advised funds (DAFs) and private foundations were excluded from the final bill. The longstanding tax treatment remains intact, including immediate deductions (up to 60% of AGI for cash gifts and 30% for appreciated securities) with no new restrictions on timing or donor control. Clients with significant charitable assets may want to revisit giving strategies while current rules remain favorable.
Additional Deduction for Retirees
Taxpayers age 65 and older with income under $75,000 (single) or $150,000 (married filing jointly) can now claim an additional $6,000 deduction starting in 2025.
Estate and Gift Planning Opportunities
The estate and gift tax exemption increases to $13.99 million per person in 2025, with a projected rise to $15 million in 2026. This could create expanded opportunities for tax-efficient legacy and gifting strategies, particularly for high-net-worth individuals and families.
SALT Deduction Cap Increase
The cap on state and local tax deductions increases from $10,000 to $40,000 for tax years 2025 through 2029. Phaseouts begin at $500,000 of income.
Planning Insight: Bunching deductions like charitable gifts and property taxes into specific years may yield greater benefit under the new cap.
Energy and Home Efficiency Credits Now Time-Limited
The window to claim credits for energy-efficient home improvements and clean vehicles now ends in 2025 (previously 2032–2034).
Planning Insight: If these upgrades are already on your radar, consider accelerating the timeline to take advantage of the credits.
Additional Updates to Consider
- Capital Gains Bracket Shifts: While the long-term capital gains rates remain the same, the income thresholds for the 15% and 20% brackets are shifting downward.
Planning Insight: This may warrant a fresh look at your gain/loss harvesting strategy and asset location.
- Roth Conversions May Be Time-Sensitive: While not yet law, there’s increasing speculation that backdoor Roth conversions for high earners could be restricted starting in 2027.
Planning Insight: Continue to revisit Roth strategies while the opportunity remains available.
- Pass-Through Business Deduction Made Permanent: The 199A deduction for pass-through entities is now permanent and modestly increased to up to 23%, offering long-term tax savings for business owners.
- Alternative Minimum Tax (AMT) Relief: Increased exemption and phaseout thresholds may reduce AMT exposure, particularly for those with incentive stock options or large deductions.
Planning Insight: This may offer more flexibility in timing income or exercising options.
Final Thoughts
The Big Beautiful Bill brings changes across many areas of personal finance – from income taxes and deductions to charitable giving, retirement planning, and business ownership. While some updates offer immediate benefits, others create planning opportunities in the years ahead.
We’re actively reviewing these changes and incorporating them into each client’s financial plan, with recommendations tailored to your goals, income level, and long-term priorities. Whether that means optimizing your tax strategy, accelerating charitable gifts, or planning ahead for future estate law changes, thoughtful adjustments today may help support your long-term goals in a meaningful way.
If any of these updates feel particularly relevant to your situation – or if you’re just wondering what they might mean for you – let’s talk. We’re here to help you navigate what’s new and stay aligned with your vision.
Nadine Thibault | Director, Advice Team, Private Wealth Advisor | CFP®, BFA™ | It is our mission to help you think differently about your wealth so you can LIVE WELLthy™ today and tomorrow.