Signed into law on July 4, 2025, the "One Big Beautiful Bill Act" is the largest tax reform since 2017. It locks in key provisions from the Trump-era tax cuts, introduces new deductions and benefits for individuals and businesses, and reshapes wealth and estate planning for years to come.

If you're a high-net-worth individual, business owner, or investor, this bill changes your planning environment in real ways — some permanent, others temporary.

TL;DR

• Estate tax exemption permanently increased to $15 million per person

• 2017 tax brackets and deductions are now permanent

• SALT deduction cap raised to $40,000 temporarily, but phases out for high earners

• Business owners benefit from larger deductions and expanded expensing

• Traditional energy and real estate investing gain new advantages

• Long-term care planning becomes more important as Medicaid is cut

• For the first time in decades, there's real tax planning certainty — but several benefits expire in just a few years

Major Permanent Changes (Effective Immediately)

1. Estate & Gift Tax Relief

• Estate tax exemption increases permanently to $15 million per person (or $30 million per couple) in 2026

• Prevents the scheduled drop to ~$7 million

• Generation-skipping transfer tax exemption also increases to $15 million

Why it matters: Long-term estate planning can now be done without racing against legislative sunset deadlines.

Example: A couple with $28 million in net worth can transfer their entire estate with no estate tax — and still retain flexibility for charitable and dynastic strategies.

2. Individual Tax Cuts Made Permanent

• Tax brackets from the 2017 Tax Cuts and Jobs Act are locked in (10%, 12%, 22%, 24%, 32%, 35%, 37%)

• Standard deduction permanently increased: $15,750 for singles / $31,500 for couples (2025 level)

• Child Tax Credit set permanently at $2,200 — up from $2,000, and more than double the pre-2017 level of $1,000

Why it matters: Clients can now build Roth conversion ladders, gifting strategies, and income planning around stable federal brackets and deductions.

Example: A married couple earning $580,000 can confidently project Roth conversions across multiple years while avoiding bracket creep.

3. Business Tax Enhancements

• 20% Section 199A pass-through deduction made permanent and expanded

• Immediate expensing of R&D expenses (vs. previous 5-year capitalization requirement)

• Business interest deductions are calculated more favorably using EBITDA (not EBIT)

• Section 179 expensing limit doubled to $2.5 million

Why it matters: These changes offer more tools for business owners to reduce taxable income and reinvest in growth.

Example: An S-corp owner can expense $2.5 million in new equipment in a single year and also claim the 20% QBI deduction on business income.

4. Investment & Real Estate Provisions

• 100% bonus depreciation extended through 2030

• REITs can now hold 25% in taxable subsidiaries (up from 20%)

• International tax rules locked in at favorable current levels

Why it matters: Investors benefit from more write-offs, flexibility in REIT structuring, and stability in global tax exposure.

Example: A real estate investor purchasing a $3.5 million property in 2025 can write off the full value over several years using bonus depreciation — while benefiting from enhanced REIT rules.

Key Temporary Provisions (Expiring Soon)

2025–2028 Opportunities

• No federal tax on tips for service industry workers

• No federal tax on overtime pay

• Car loan interest deduction of up to $10,000/year, but only for U.S.-made vehicles

• $6,000 senior deduction for taxpayers age 65+ (phases out at higher incomes)

Why it matters: Temporary benefits can create short-term savings — especially for retirees, high earners with side income, or service-based employers.

Example: A retiree with moderate investment income may be able to deduct $6,000 from their adjusted gross income and reduce tax liability by $1,500 or more annually.

2026–2030: SALT Deduction Expansion

• SALT (state and local tax) deduction cap raised to $40,000 (up from $10,000)

• Begins phasing out at $500,000 modified AGI

• Cap reverts to $10,000 in 2031

Why it matters: High earners in states like CA, NY, NJ, and MD will see short-term relief — but those with very high incomes may see no benefit.

Example: A household earning $400,000 with $35,000 in state income and property taxes can now fully deduct their SALT payments — potentially saving $10,000 in federal taxes each year through 2030.

Provisions That Reduce Benefits

1. Cuts to Medicaid and SNAP

• Medicaid funding reduced, especially for long-term care programs

• SNAP (food assistance) benefits reduced — projected to affect 4.7 million Americans over 10 years

Why it matters: High-net-worth retirees and their families may need to self-fund more of their health care and long-term care needs.

Example: A 72-year-old planning to rely on Medicaid for future nursing care should revisit their retirement plan and consider a hybrid long-term care policy or self-funding strategy.

2. Professional Services PTET Restrictions

• PTET (pass-through entity tax) deductions are now disallowed for specified service businesses

• Includes financial advisors, asset managers, consultants, attorneys, and other professional firms

Why it matters: Business owners in service fields may lose out on major state tax deductions they previously accessed through entity-level elections.

Example: A financial advisor with $1 million in income in California may lose $30,000–$50,000 in state tax deductions they previously captured via PTET strategies.

Emerging Provisions to Watch

"Trump Accounts" Pilot Program

• The legislation includes language for a new contribution pilot program called "Trump Accounts"

• Details remain limited, but this appears to be a new type of tax-advantaged account structure

• Implementation timeline and contribution limits are still being developed by Treasury

Why it matters: New account types could provide additional tax-sheltered savings opportunities beyond traditional IRAs and 401(k)s.

Example: If structured similar to Roth accounts, these could offer another vehicle for tax-free growth — particularly valuable for high earners who are phased out of other programs.

Note: We're monitoring Treasury guidance closely as this program develops. Early positioning could be advantageous once details are released.

What This Means for Your Planning

Estate Planning

• Less urgency around "use it or lose it" strategies

• More time to implement advanced wealth transfer strategies — including SLATs, GST trusts, and family limited partnerships

Example: A couple using a spousal lifetime access trust (SLAT) now has room to transfer $30 million in assets tax-free — without rushing before a law change.

Tax Planning

• Long-term certainty allows multi-year income smoothing and Roth conversions

• Business structure optimization becomes even more important

• Professionals in restricted industries may need to rethink compensation or entity structure

Example: A professional service firm might restructure from an LLC to an S-corp to explore new deduction options and optimize compensation splits.

Investment Strategy

• Real estate and traditional energy sectors now have tax tailwinds

• Clean energy incentives rolled back

• Bonus depreciation and REIT rule changes increase cash flow for asset-based portfolios

Example: An investor reallocates from clean energy ETFs to high-dividend REITs and energy companies, optimizing for cash flow and tax benefits.

Long-Term Care Planning

• With Medicaid cuts on the table, private LTC insurance and asset-based solutions become essential

• Retirees need more contingency in their financial plans for extended health care costs

Example: A couple in their 60s earmarks $300,000 for a hybrid annuity that covers long-term care while protecting heirs if unused.

The Bottom Line

• The Congressional Budget Office estimates this law will add $3.4 trillion to the deficit over 10 years.

• That level of deficit spending could influence future tax policy and inflation expectations, making current planning even more critical.

• Winners include wealthy individuals, business owners, real estate investors, and families with large estates.

• The permanent provisions provide long-term planning certainty — for the first time in over 20 years.

• The temporary benefits (2025–2028) open short windows for additional savings.

• Complexity is higher than ever — and smart planning makes all the difference.

What to Ask Your Advisor Now

• Should I gift more to heirs now or wait?

• Am I structured correctly to take full advantage of business deductions?

• Are my Roth conversion or income smoothing strategies still optimal?

• What temporary provisions do I need to act on before 2028?

• Do I need to revisit my long-term care plan or insurance strategy?

• How should I position for emerging opportunities like "Trump Accounts"?

For the first time in over 20 years, wealthy families have true tax planning certainty. The question is: are you optimizing for it?

Let's build a plan that compounds your wealth, reduces your taxes, and protects your future. → Schedule your complimentary wealth optimization review with Compound Advisory today.