The One Big Beautiful Bill Act (OBBBA) has brought sweeping changes to federal tax law. Some are permanent, others temporary. The changes affect both individuals and business owners. This article breaks down what you need to know and, more importantly, what you should consider doing before year end to take advantage (or avoid surprises)

For clients we have begun to do year-end tax planning with, we see taxes reduced 3% – 15% compared to last year’s taxes.

Below are the most important changes under OBBBA, explained in straightforward terms.

The Good News: More Predictability & Permanence

• The individual tax rates and brackets introduced under the Tax Cuts and Jobs Act (TCJA) are now made permanent.
• The standard deduction stays at higher Tax Cuts and Jobs Act (TCJA) levels, adjusted for inflation.
• Many business deductions—including bonus depreciation and certain expensing rules—are extended or restored
  in favorable form.

In short, you have more certainty as you plan forward. That reduces the worry about drastic tax increases suddenly coming back.

SALT Deduction Cap: Relief, with Limits
Under the old law, state and local taxes (SALT) you pay could only be deducted up to $10,000. That hit many taxpayers in high‑tax states hard. With OBBBA:

• The SALT cap rises to $40,000 for 2025–2029, adjusted annually for inflation.
• However, this increased deduction phases out for taxpayers with income above $500,000 (joint filers).
• The deduction will never go below $10,000 in the phaseout formula.
• In 2030, unless Congress acts, the SALT cap is scheduled to revert to $10,000.

What this means for you: If you live in a high‑tax state, you may be able to deduct more of those taxes in 2025. But if your income is high, the benefit begins to phase out. This is also temporary.

Qualified Business Income (QBI) Deduction: Here to Stay
The 20% QBI deduction (Section 199A) is now permanent, with expanded income thresholds and a small minimum deduction for eligible taxpayers. However, service businesses and high earners still face phaseouts. This change provides reliability for many small business owners, but planning around structure and compensation remains important.

New or Expanded Deductions & Credits for Individuals

• Tip and overtime deductions (2025–2028): up to $25,000 in qualifying tips and up to $12,500/$25,000 in overtime
  wages.
• Enhanced Senior Deduction: taxpayers 65+ can claim an additional deduction of up to $6,000 (2025–2028). If the
• taxpayer is above certain AGI (adjusted gross income) limits, they may only be eligible for a partial Enhanced Senior
• Deduction or be completely phased out of the Enhanced Senior Deduction.
• Child tax credit: increases to $2,200 per qualifying child for 2025.
• Charitable contributions: a new above-the-line deduction up to $2,000 for joint filers.
• Clean energy and EV credits: many phase out after December 31, 2025.

Estate, Gift & AMT Changes

• The higher estate and gift tax exemption ($15 million per person, indexed) is now permanent.
• The Alternative Minimum Tax (AMT) exemption and phaseout levels are also made permanent.

These changes provide stability for estate and long-term wealth planning.

Pros & Cons: Who Gains, Who Gets Squeezed

Pros / Winners

• More certainty for long-term planning
• Higher SALT deduction (up to $40K)
• QBI deduction is permanent
• Better interest deductibility
• New deductions for tips, overtime, seniors
• Increased child tax credit
• Permanent estate/gift exemption

Cons / Challenges / Watchouts

• Many benefits are temporary (i.e., SALT cap resets 2030)
• Phaseouts for high earners reduce benefit
• Still complex; service businesses may lose benefits at higher income
• Cross-border limitations may apply
• Phaseouts may eliminate benefits for higher earners
• Reduced or eliminated green energy credits
• Potential reversion in future years without extension

What You Should Do Before December 31

1. Run a ‘standard vs. itemized’ projection to see which benefits you more.
2. Accelerate deductible expenses (state taxes, property taxes, charitable gifts).
3. Given the lower projected taxes this year it is a good time to take capital gains and rebalance portfolios given lower
   taxes for most and current market conditions
4. Review business investments for bonus depreciation or expensing opportunities.
5. Reevaluate your entity structure for QBI optimization.
6. Track tips, overtime, and qualifying wages carefully.
7. Check income phaseouts and plan accordingly.
8. Complete clean energy or EV purchases before credits expire.
9. Revisit estate and gifting strategies under new limits.
10. Model 2026 and forward for tax exposure planning.
11. Schedule a year-end meeting with your CPA to finalize your strategy

Final Thoughts
The OBBBA brings welcome relief and stability in many areas—especially for taxpayers in high-tax states, business owners, and families. However, because several provisions are temporary or phased, strategic year-end planning is essential. Reach out to us or your CPA to review your personal situation and ensure you’re making the most of these opportunities before December 31.