The passage of the One Big Beautiful Bill Act (OBBB) ushers in sweeping changes to taxes that will frame legacy planning and wealth strategy for years to come. Signed into law on July 4, 2025, the OBBB not only makes permanent many of the provisions of the Tax Cuts and Jobs Act (TCJA) from 2017, but it also introduces new nuances and strategic opportunities that may help preserve and grow your wealth.
Will the changes in the new tax law work in your favor? Is there more you could be doing to enhance your wealth strategy?
Below is our analysis of what we think may be most consequential for you and your family.
Permanent Individual Rate Structure and Standard Deduction
- Income tax rates: Rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% are now permanent and will be adjusted for inflation annually. This move averts the reversion to higher, pre-TCJA rates that was scheduled to hit after 2025.
- Standard deduction: This is permanently increased and indexed for inflation, with 2025 deductions set at $15,750 (single), $31,500 (joint) and $23,625 (head of household). Personal exemptions are gone for good.
- Alternative minimum tax (AMT): Exemption amounts and phase-outs are extended permanently, with key thresholds adjusted upward for higher earners.
State and Local Tax (SALT) Deduction Expansion With a Catch
Deduction cap: The SALT deduction cap rises from $10,000 to $40,000 per household beginning in 2025. This cap increases 1% annually through 2029, then reverts to $10,000 in 2030.
Income phaseouts: The $40,000 cap begins phasing down once modified adjusted gross income (MAGI) exceeds $500,000, reducing by 30% of the excess, but it does not phase down below the original $10,000 limit; $600,000 is where it fully phases down to $10,000.
Planning nuances:
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- Deduction includes state income, real estate and personal property taxes.
- There are no changes to pass-through entity tax workarounds.
- High-income taxpayers in states like California, New York and Massachusetts stand to benefit most.
Strategic Shifts in Credits and Charitable Giving
- Child tax credit: This is permanently increased to $2,200 per qualifying child, indexed to inflation, with unchanged phaseout thresholds: $200,000 (single) and $400,000 (joint).
- Child and dependent care credit: This limit is raised from 35% to 50% of qualifying costs, with phaseouts ensuring no credit falls below 35%.
- Above-the-line charitable deduction: From 2026, this is available for non-itemizers at $1,000 (single) or $2,000 (joint). For itemizers, only charitable donations above 0.5% of AGI are deductible, and the value of itemized deductions is limited to 35% for those in the 37% bracket.
Senior and Family-Focused Opportunities
Senior deduction: This is a temporary (2025–2028) additional $6,000 (single) or $12,000 (joint) deduction for taxpayers 65 and older. It phases out at $75,000 (single) and $150,000 (joint) MAGI. 
529 plan enhancements:
- Starting in 2026, qualified education expenses expand to include K–12 tutoring, homeschooling, workforce training and special needs therapies.
- K–12 tuition limit climbs from $10,000 to $20,000 per year.
Trump child savings accounts:
- For children under 18 (or under 8, depending on the provision), parents and family may contribute up to $5,000 post-tax per year, indexed for inflation.
- No distributions are allowed until the calendar year in which the child turns 18.
- Investment is limited to broad U.S. stock index funds; withdrawals follow graduated age milestones, with tax treatment varying by use and timing.
Estate, Gift and Business Owner Tax Provisions
- Estate and gift tax exemption: From 2026 onward, this will be permanently set at $15 million (single) and $30 million (joint), indexed for inflation. This will prevent a sharp drop-off after 2025 and support multigenerational transfer strategies.
- Qualified business income (QBI) deduction: The 20% deduction for pass-through entities is now permanent, with phaseouts for professional service income at $75,000 (single) and $150,000 (joint).
- Miscellaneous deductions: Many itemized deductions previously subject to the 2% AGI limitation (e.g., investment management, tax preparation, unreimbursed business expenses) remain disallowed.
Specialized Deductions and Phaseouts
- No tax on tips and overtime: For 2025–2028, above-the-line deductions for up to $25,000 in tips and $12,500 ($25,000 joint) in overtime will apply, phasing out for high earners.
- Car loan interest: This is deductible up to $10,000 per year (2025–2028) for new vehicles assembled in the U.S., with strict income phaseouts.
- Mortgage interest: The $750,000 principal cap for deductible interest is made permanent. Home equity loan interest generally remains deductible for home improvement expenses.
Other Key Changes Impacting Wealth Planning
- Qualified Opportunity Zone (QOZ) program: This is indefinitely extended, with new tranches of QOZs to be designated every 10 years, creating planning opportunities for capital gains management.
- Clean energy and electric vehicle credits: Most residential clean energy credits, including those for solar, heat pumps and EVs, sunset in 2025. The EV credit expires on Sept. 30 and the home energy credit expires on Dec. 31. A few commercial clean energy incentives remain.
- Pease limitation removal, but new cap: While the Pease limitation (AGI-based reduction of itemized deductions) is gone for good, high earners face a 35% cap on the marginal tax benefit of itemizations.
- 529 plan and QOZ expansion: This permits additional uses and higher contribution limits for future-facing educational and impact investments.
Five Key Planning Imperatives
Just as transformative reforms like the SECURE Acts have changed the landscape of financial and retirement strategy, the OBBB challenges high-net-worth families to think differently and act intentionally.
Our team at RWA brings you these priority action items, each crafted to align with your goals, maximize opportunity and help steward wealth across generations. These are the steps we’re taking to protect and enhance the wealth of our clients right now.
1. Gather Tax Returns and Run Scenario Modeling
It helps to start with clarity. Let us analyze your most recent tax filings–ideally your 2024 return–and we can show you a scenario analysis of your plan updated for the OBBB. Here is our advice:
- Take advantage of new law features for 2025 and beyond, adjusting inputs for the latest rates, deductions and credits.
- Evaluate the changing SALT landscape, senior deduction eligibility, and the impact of overtime and tip tax exclusions and family credits.
- Test strategies for income smoothing, such as Roth conversions or timing large capital gains.
2. Elevate Family-Centric Planning
The OBBB’s provisions for families create new possibilities for optimizing outcomes across generations. We can help you take advantage of this opportunity. Here’s what to do:
- Update your eligibility for expanded child tax and dependent care credits as family circumstances change.
- Identify senior deduction candidates and optimize income levels to maximize benefits.
- Weigh the merits of Trump child retirement accounts versus enhanced 529 plans, factoring in flexibility, timing and family objectives.
3. Enhance Planning for Business Owners
For entrepreneurs and business families, permanent QBI rules and phaseout thresholds demand a tailored approach. This is what we recommend:
- Review QBI status and SSTB classifications to lock in qualified business income deductions.
- Time large purchases, incorporating accelerated depreciation or bonus depreciation strategies wherever advantageous.
- Integrate planning that considers SALT adjustments, business deductions and their combined effects on after-tax results.
4. Strengthen Estate and Gift Plans
With higher and inflation-adjusted exemptions now permanent, it’s time to reexamine legacy strategies. Here’s how we can help:
- We’ll help evaluate estate plan alignment by verifying that trusts, entities and gifting strategies reflect the new $15M/$30M exemption levels.
- We can facilitate dialogue across generations on wealth transfer, helping your family prepare for responsible stewardship and philanthropic aspirations.
- We’ll design bespoke solutions attuned to both opportunity and risk if your wealth is growing.
5. Maximize 529 Plan Utility in Educational Planning
The newly expanded scope for 529 plans increases their relevance in comprehensive family educational planning. This is what we suggest:
- Update withdrawal strategies for K–12 expenses. Families can now access up to $20,000 annually per beneficiary.
- Take advantage of new eligibility rules including homeschooling, therapies, credentialing and more.
- Integrate funding plans, balancing enhanced 529 flexibility with the new Trump child accounts to coordinate benefits and tax treatments.
Start the Conversation Now
The complexity and runway offered by these reforms means the most successful outcomes will result from intentional, early engagement. We are ready to walk you through simulations, recommend personalized strategies, and ensure that every move serves to reinforce your financial legacy. And it’s all anchored by the values and goals that matter most to you and your family.
As always, your RWA team is here to help steward you through these new legislative contours, working to support your wealth as a potential source of opportunity and resilience for generations to come.
This material is for informational purposes only. All investments carry risk of loss. Our statements and opinions are subject to change without notice. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Always consult with a qualified professional regarding your specific situation.
Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.
