On July 4th, 2025, the One Big Beautiful Bill Act (OBBBA) became law, bringing significant changes to the tax landscape that will impact our clients’ wealth management and legacy planning strategies. This legislation extends several key provisions from the Tax Cuts and Jobs Act while introducing new opportunities for tax optimization and wealth preservation.
At Certuity, we understand that navigating complex tax legislation requires thoughtful analysis and strategic planning. This summary outlines the major provisions of the OBBBA and their potential implications for high-net-worth families and business owners. Our team remains committed to helping you pursue life with certainty by adapting your financial strategies to maximize these new opportunities.
Individual Income Tax Provisions
Rate Structure and AMT Provisions
Permanent Rate Extensions
The OBBBA permanently extends the individual income tax rates established under the TCJA (10%, 12%, 22%, 24%, 32%, 35%, and 37%). This provides long-term certainty for tax planning strategies and eliminates the uncertainty that would have accompanied the scheduled expiration of these rates.
Alternative Minimum Tax Relief
The enhanced AMT exemption amounts and phase-out thresholds from the TCJA are now permanent, providing continued relief for high-income taxpayers who might otherwise face AMT liability.
Enhanced Deduction Opportunities
Standard Deduction Expansion
The increased standard deduction remains permanent, with 2025 amounts set at $15,750 for single filers and $31,500 for married filing jointly, with inflation adjustments thereafter. This provides a solid foundation for basic tax planning while maintaining simplicity for many taxpayers.
New Deduction for Senior Taxpayers
A notable addition is the $6,000 enhanced deduction for taxpayers age 65 or older, available through 2028. This benefit phases out at modified adjusted gross income levels of $75,000 for single filers and $150,000 for married filing jointly, providing targeted relief for qualifying senior clients.
Tax-Free Tips and Overtime Provisions
The legislation introduces two significant workforce-related deductions:
- Tips Deduction: Up to $25,000 in qualified tips may be deducted (2025-2028)
- Overtime Deduction: Up to $12,500 ($25,000 joint) in qualified overtime compensation may be deducted (2025-2028)
Both deductions phase out for taxpayers with modified AGI exceeding $150,000 ($300,000 joint), making these provisions particularly relevant for moderate-income earners.
State and Local Tax (SALT) Deduction Enhancement
The SALT deduction cap increases from $10,000 to $40,000 for tax years 2025-2029, with a phase-out for taxpayers with modified AGI between $500,000 and $600,000. Importantly, the pass-through entity tax (PTET) workaround remains available, providing continued planning opportunities for business owners.
Vehicle Loan Interest Deduction
A new deduction allows up to $10,000 in interest on loans for new vehicles with final assembly in the United States (2025-2028). This deduction is available regardless of whether taxpayers itemize and phases out at $100,000 MAGI ($200,000 joint).
Charitable Giving Enhancements
Beginning in 2026, non-itemizers may deduct up to $1,000 ($2,000 joint) in charitable contributions. The legislation also introduces AGI floors for charitable deductions: 0.5% for individuals and 1% for corporations. The 60% AGI limit for cash contributions to public charities becomes permanent.
Tax Credit Modifications
Child Tax Credit Enhancement
The child tax credit increases to $2,200 for 2025, with inflation adjustments thereafter, providing enhanced benefits for families with children.
Clean Vehicle Credit Elimination
Both new and previously-owned clean vehicle credits terminate for vehicles acquired after September 30, 2025, representing a significant shift in federal incentives for electric vehicle adoption.
Residential Energy Credit Termination
The Section 25D residential clean energy credit and Section 25C energy efficient home improvement credit both terminate by the end of 2025, eliminating these renewable energy incentives.
New Scholarship Credit
A new 100% nonrefundable credit for donations to qualified scholarship-granting organizations begins in 2027, capped at $1,700 per taxpayer annually.
Investment and Business Incentives
Opportunity Zones Enhancement
Qualified Opportunity Zones become permanent with rolling 10-year periods beginning in 2027. Key improvements include:
- Enhanced basis increases (10% standard, 30% for rural zones) after five years
- Appreciation exclusion available for 10-30 year holding periods
- Streamlined recognition timeline for new investments
Qualified Small Business Stock (QSBS) Improvements
For stock acquired after July 4, 2025:
- Graduated exclusion percentages: 50% after 3 years, 75% after 4 years, 100% after 5 years
- Increased per-issue limit from $10 million to $15 million (inflation-adjusted)
- Raised gross asset limit from $50 million to $75 million (inflation-adjusted)
Estate and Gift Tax Enhancements
The estate, gift, and GST tax exemptions increase to $15 million per person for 2026 and beyond, with inflation adjustments starting in 2027. This represents a significant opportunity for wealth transfer planning.
Business Tax Provisions
Section 199A QBI Deduction
The 20% qualified business income deduction becomes permanent with enhanced provisions:
- Income thresholds for limitations increase to $75,000 ($150,000 joint)
- Minimum $400 deduction for material participation (effective 2026)
- Enhanced opportunities for business owners and entrepreneurs
Depreciation and Expensing Benefits
- Bonus Depreciation: 100% bonus depreciation is reinstated permanently for property acquired after January 19, 2025
- Section 179 Expensing: Annual limit increases to $2.5 million with phase-out threshold at $4 million
Business Loss Limitation
The excess business loss limitation for individuals becomes permanent, providing certainty for business planning while maintaining the NOL conversion for disallowed losses.
Health and Welfare Provisions
Health Savings Account Expansions
Several HSA enhancements become permanent:
- HDHP telehealth safe harbor provisions
- Direct primary care service arrangements qualification
- Expanded HDHP options through exchange bronze and catastrophic plans
Student Loan Assistance
The $5,250 annual limit for employer-provided student loan repayment assistance becomes permanent, providing continued value for employee benefits programs.
Dependent Care FSA Enhancement
The Dependent Care FSA limit increases to $7,500 for plan years beginning after January 1, 2026.
Tax-Favored Account Innovations
529 Account Expansion
Qualified expenses expand to include:
- Postsecondary credentialing expenses
- K-12 and homeschooling expenses
ABLE Account Enhancements
Temporary enhancements to ABLE accounts are extended or made permanent, providing continued benefits for individuals with disabilities.
Trump Account Introduction
A new IRA structure called a “Trump Account” launches 12 months after enactment:
- $5,000 annual contribution limit (inflation-adjusted)
- Potential Treasury and charitable contributions
- Employer contributions up to $2,500 for dependents under 18
- Restricted investment options and distribution limitations until age 18
Strategic Planning Implications
Immediate Actions to Consider
1. Review SALT planning strategies given the increased cap and phase-out provisions
2. Evaluate estate planning opportunities with the enhanced exemption amounts
3. Assess QSBS positions for potential accelerated recognition under new rules
4. Consider Opportunity Zone investments under the enhanced permanent structure
Long-term Strategic Considerations
1. Business structure optimization to maximize Section 199A benefits
2. Multi-generational wealth transfer planning utilizing increased exemptions
3. Alternative investment allocation leveraging enhanced depreciation benefits
4. Charitable giving strategy refinement incorporating new deduction limitations
Projected Effects on Debt and Deficit
- Increased Federal Deficit: The permanent extension of lower individual and business tax rates, along with new and expanded deductions, will reduce federal tax revenues over the coming years. While some provisions may stimulate economic activity, most independent analyses suggest that the net effect will be a substantial increase in the annual federal deficit.
- Rising National Debt: As deficits accumulate, the national debt is expected to grow at a faster pace. The Congressional Budget Office and other fiscal watchdogs have previously estimated that making temporary tax cuts permanent could add trillions to the national debt over the next decade, absent significant offsetting spending reductions or new revenue sources.
- Interest Costs and Fiscal Flexibility: Higher debt levels will likely increase the government’s interest payments, potentially crowding out other spending priorities and reducing fiscal flexibility in future economic downturns or emergencies.
- Potential for Future Policy Changes: Elevated deficits and debt may prompt future policymakers to revisit tax and spending policies, which could introduce additional uncertainty for long-term planning.
Conclusion
The One Big Beautiful Bill Act represents a significant evolution in federal tax policy, providing both opportunities and challenges for high-net-worth families and business owners. At Certuity, we believe that thoughtful tax planning is essential to preserving and growing wealth across generations.
Our commitment remains unchanged: to provide you with the guidance, knowledge, and access to solutions that empower your family to approach life with certainty. We recommend reviewing your current tax strategies with our team to ensure optimal positioning under this new legislation.
*This analysis is provided for educational purposes and represents our understanding of the legislation as enacted. Tax planning strategies should be evaluated based on individual circumstances and in consultation with qualified tax professionals.*
About Certuity
Certuity is a nationally recognized multifamily office and registered investment advisor providing comprehensive wealth management, legacy planning, and family office services to high-net-worth families, entrepreneurs, and business owners. Our independent structure, objective platform, and fiduciary commitment differentiate us in delivering custom financial strategies that empower your legacy and provide peace of mind.
For more information about how these changes may impact your specific situation, please contact your Certuity advisor or visit us at www.certuity.com.
*Advisory services provided by Certuity, LLC, a registered investment adviser. This material is intended for informational purposes only and should not be construed as personalized investment advice. Please consult with your tax advisor regarding the implementation of any tax strategies discussed herein.*