On July 4, 2025, congress signed H.R.1, the “One Big Beautiful Bill Act,” into law. It makes many of the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent, extends others, and introduces a handful of new rules.
Whether you’re retired, building a business, or planning a legacy, here’s what’s changing—and what’s worth a closer look.
Income Taxes
The bill locks in many core tax provisions that were set to expire, creating more predictability for income planning.
- Tax brackets introduced under TCJA (10% to 37%) are now permanent.
- Standard deduction increases to:
- $15,750 for single filers
- $23,625 for head of household
- $31,500 for married filing jointly (2025), inflation-adjusted after
- Child Tax Credit increases to $2,200 per child, inflation-adjusted after 2026.
- SALT (State and Local Tax) deduction cap increases to $40,000 in 2025; rises 1% annually through 2029, then reverts to $10,000 in 2030.
- Phased out above $250,000 AGI for single filers and $500,000 for joint filers.
- AMT exemption increases made permanent; phaseout thresholds revert to 2018 levels and are inflation-adjusted.
- Mortgage interest deduction for new debt remains capped at $750,000 principal.
These updates don’t change the playing field much. Your current income strategy likely still works well, but now’s a good time to confirm everything is aligned with your broader plan.
New or Temporary Deductions (2025–2028)
Several new deductions offer short-term opportunities for select taxpayers—especially retirees, workers, and non-itemizers.
- Senior deduction: Additional $6,000 for age 65+, phased out above $75,000 (single) or $150,000 (joint).
- Tip income: Up to $25,000 deductible; phases out above $150,000 (single) or $300,000 (joint).
- Overtime pay: Deduct up to $12,500 per taxpayer ($25,000 joint); phased out at the same income levels as above.
- Auto loan interest: Up to $10,000 deductible for U.S.-assembled vehicles; phased out above $100,000 (single) or $200,000 (joint).
- Charitable deduction for non-itemizers: $1,000 (single) / $2,000 (joint); permanent after 2025.
These deductions may not affect everyone, but they can create pockets of opportunity. We help identify if and when they apply, especially when coordinating income, charitable giving, or family support.
Estate and Gift Tax
One of the most anticipated changes in the bill is a higher, permanent exemption for estates and lifetime gifts.
- Exemption increases to $15 million (single) and $30 million (married filing jointly) beginning in 2026, indexed for inflation.
The added exemption offers breathing room and planning clarity. Now is a great time to revisit gifting strategies, especially if you’ve been waiting to see where the exemption would land.
Business Tax Provisions
Business owners benefit from greater certainty on deductions and incentives that were previously set to sunset.
- 100% bonus depreciation reinstated permanently for qualified property acquired and placed in service after January 19, 2025.
- Immediate expensing for R&D made permanent. Small businesses may retroactively deduct R&D back to 2022.
- Section 199A 20% QBI (Qualified Business Income) Deduction Made Permanent.
- New $400 minimum deduction for taxpayers with $1,000+ of qualified business income (QBI).
- 100% expensing for certain structures built between Jan 19, 2025 and Jan 19, 2029.
- Corporate charitable contributions limited to a 1% floor.
These changes reinforce familiar strategies rather than introduce new ones. If you’re preparing for a business sale or transition, this gives us a clearer path for timing investments, deductions, and distributions.
Qualified Small Business Stock (QSBS) Enhancements
The law expands an already valuable planning tool for business owners and investors in qualifying private companies.
- Applies to shares issued after July 4, 2025
- Asset cap for eligibility increases from $50 million to $75 million, inflation-adjusted starting in 2027.
- Gain exclusion cap increases from $10 million to $15 million, also inflation adjusted.
- New partial exclusion schedule:
- 50% exclusion after 3 years
- 75% exclusion after 4 years
- 100% exclusion after 5 years
QSBS allows owners of qualifying private companies to exclude a portion of capital gains from federal taxes when selling shares, subject to meeting holding period and eligibility requirements.
Trump Accounts for Children
A new savings vehicle aimed at early investing, with potential use in family gifting and education strategies.
- $1,000 refundable credit for children born between 2025 and 2028 (with account election).
- Annual non-deductible contributions of up to $5,000 per child allowed.
- Accounts convert to a traditional IRA at age 18.
We still have much to learn about how these accounts will work, but they may open a new door worth considering alongside 529s or trust strategies.
Green Energy Credits Ending
Many of the energy-related tax credits introduced in recent years are ending sooner than expected.
- Clean vehicle credits (new and used) end after September 30, 2025.
- Residential solar and energy-efficient home credits end December 31, 2025.
- Most other green energy credits are phased out or eliminated between 2026 and 2028.
If these credits were part of your near-term plans, 2025 is your window to act. We’ll help weigh the timing and financial impact if solar or electric vehicles are on your radar.
What This Means for You
If You’re a Business Owner
- Permanent 100% bonus depreciation and QBI deduction support long-term income and tax efficiency.
- Higher estate and gift tax exemption adds flexibility to succession and gifting strategies.
- Expanded QSBS exclusions can reduce or eliminate capital gains on the future sale of a qualifying business.
If You’re Focused on Legacy and Estate Planning
- A higher estate tax exemption means more wealth can be transferred without triggering federal estate tax.
- Trump Accounts may offer a new vehicle for gifting to children and grandchildren—especially helpful for families funding education or early career opportunities.
- Child Tax Credit changes may benefit younger generations in your family; part of legacy planning is understanding what tools they now have available.
If You’re Retired or Nearing Retirement
- Permanently lower tax brackets and a larger standard deduction help maintain income stability in retirement.
- New senior deduction (2025–2028) may offer modest tax relief depending on your income.
- If you’ve considered solar or energy-efficient upgrades, credits are ending soon—2025 may be your last year to claim them.
Next Steps
This bill doesn’t overhaul the system—it affirms much of what’s already in place. That’s good news for planning. But with some deductions phasing out and others just beginning, now is the time to review your strategy.
We treat planning as an ongoing process—not a one-time decision. Tax laws change. So do opportunities to reduce risk, optimize income, and strengthen your legacy. Our job is to help you adjust with clarity and stay aligned with what matters most.
Whether you’re planning your retirement income, gifting to family, or preparing for a business transition, we’re here to help you navigate what’s next—confidently and proactively.
Let’s talk about what these changes mean for you.
Josh Whelan
CFP®, CLU®, ChFC®
Partner, Financial Advisor
About the Author
Josh sees his profession as a calling, not just a career. His motive for pursing financial planning was very personal. While working on a degree in marriage and family counseling, Josh’s father was diagnosed with multiple sclerosis. Josh decided then and there to change career paths to help his family prepare for an uncertain financial future. Financial planning became his path to serving others.
The “Alterra” name was coined by joining the Latin roots “alter”, the origin of the word “altruism” with “terra” meaning earth or land. This name reflects the company philosophy of “clients before profits” and providing firmly grounded advice.
