What the One Big Beautiful Bill Act (OBBBA) Means for You

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The Act extends many key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) while layering in new provisions that matter to high earners, retirees, business owners and multigenerational families. Here’s what passed—and how Summitry is helping clients adapt with confidence.

Key provisions under Tax Cuts and Jobs Act 2017 (TJCA) are extended, providing for a more predictable planning environment. 

What Passed: 

• The seven-bracket income tax structure, including the top marginal rate of 37%, is being extended indefinitely, with inflation adjustments. 

• The higher standard deduction levels introduced under the TCJA remain in place, maintaining simplified filing for many taxpayers. 

• The Alternative Minimum Tax (AMT) exemption and phaseout thresholds for individuals are extended, preserving higher limits. 

• Deduction for qualified residence interest is permanently reduced to $750K of home mortgage acquisition debt. 

• The Qualified Business Income (QBI) deduction is being extended, with no sunset provision, making this a lasting change 

Implications for Summitry Clients: 

A more predictable tax framework improves the accuracy of our planning models—whether we’re evaluating Roth conversions, choosing the right legal entities for business owners, timing capital gain realization, or advising on charitable strategies. For clients with variable income or concentrated equity exposure, this consistency enables more precise decisions around when and how to realize income, gift assets, or rebalance portfolios.

Increase State and Local Tax (SALT) Deduction Limit for tax years 2025-2029

What Passed: 

• The SALT cap increases to $40,000 per household ($20,000 if married filing separately) for tax years 2025–2029, indexed at 1% annually.  

• Phaseout begins at $500,000 (Joint/Head of Household/Single) modified adjusted gross income (MAGI) and $250,000 (Married Filing Separately), with a 30% reduction to the SALT deduction on the excess income above the phaseout limit. 

• $10,000 SALT deduction is maintained for households over $600,000 income.   

Implication for Summitry Clients: 

If your income falls under the phaseout thresholds, you may start itemizing your deduction again and see a reduction in your federal tax bill. For higher earners, advanced charitable strategies and PTET (Pass-Through Entity Tax) elections remain essential planning tools.

Estate & Gift Tax Exemption – A Bigger (and Longer) Opportunity

What Passed: 

• The federal lifetime exemption increased to $15 million per person ($30 million per couple) effective January 1, 2026, indexed to inflation, with no sunset in the current legislation. The current exemption for 2025 is $13.99 million per person. 

Implication for Summitry Clients: 

This change not only raises the ceiling on tax-free transfers but removes the urgency surrounding the previously scheduled 2026 reversion to pre-TCJA levels. 

Clients who previously raced to finalize large wealth transfers can now take a more deliberate approach. It may be time to revisit gifting plans, update trust documents, and review SLATs, GRATs, and other advanced techniques—especially if your estate includes illiquid or concentrated assets like pre-IPO equity.

Senior Deduction – 2025 through 2028

What Passed: 

• A new “Senior Bonus Deduction” offers an additional $6,000 (single) or $12,000 (joint) for taxpayers age 65+ from 2025 through 2028. 

• Phaseout begins at $75,000 MAGI (single) and $150,000 MAGI (joint); fully phased out at $175,000 / $250,000. 

• Social Security remains taxable, but this deduction helps offset the impact. 

Implications for Summitry Clients:
This deduction offers a planning opportunity to reduce taxable income in retirement. We’re helping clients time IRA withdrawals, Roth conversions, and charitable gifts to stay under phaseout thresholds.  

Charitable Gifting Deduction changes – effective after 2025 tax year

What Passed: 

• The 60% AGI limit for cash contributions to public charities is being extended. 

• A new 0.5% of AGI “floor” requirement applies to charitable deductions for itemizers  

• Non-itemizers may claim a charitable deduction, not in excess of $1,000 ($2,000 for a joint return). Contributions must be in cash, and they must be made to a public charity. 

Implications for Summitry Clients:
These updates reinforce the importance of strategic charitable planning. The new 0.5% AGI floor adds complexity to the large contribution during high income tax years while the non-itemizer’s deduction limit offers an opportunity for families with smaller gifting plan.  

529 Plan Enhancements

What Passed 

• K-12 distribution limit doubled: Tax-free 529 withdrawals for elementary and secondary schooling rise from $10,000 to $20,000 per student, per year starting in 2026 

• New “postsecondary credentialing” category: Tax-free 529 distributions may also fund tuition, fees, books, and supplies for approved credential programs (e.g., state-listed workforce certificates, VA-approved programs, exam prep for a recognized credential). 

Implications for Summitry Clients
These changes create additional flexibility when funding education goals. However, it is important to note that California currently doesn’t follow the K-12 distribution rule. Thus, distribution for K-12 expense will continue to be taxable, plus 2.5% penalty.  

Other Notable Provisions for families: 

Dependent Care FSA limit: Annual contribution cap increases to $7,500 (from $5,000) starting in 2025 

Personal car-loan interest deduction: you can deduct up to $10,000 of interest on a loan for a new U.S-assembled personal vehicle between 2025 through 2028. Phase-out starts at $100,000 MAGI (single) / $200,000 (joint).  

“Trump” tax-deferred investment account for children: Allow for $5,000 nondeductible annual contribution per child until the child reaches 18, fund will grow tax-deferred, subject to capital gain at withdrawal. Subject to some exception, Trump account holders may not take distribution until age 18.  

Conclusion  

OBBBA creates a more predictable tax landscape while opening new tactical windows. On Tuesday, August 12, we’ll host a live webinar that distills some of these changes into a more actionable playbook. Please use this link to register.