Winston Churchill summarized the concepts of change and perfection with the simple words “to improve is to change, so to be perfect is to change often.”
As such, it seems there is a push for perfection in the tax code, and administration thereof, with the sweeping changes made with the One Big Beautiful Bill Act (“OBBBA”) in July 2025.
While it may not seem change has occurred frequently, most of the provisions within the OBBBA are tied to the extension of legislation laid out in the Tax Cuts and Jobs Act (“TCJA”) just eight years ago in 2017. With an unmistakably clear agenda, the OBBBA is full of changes across the entire wealth management landscape, with industries and individuals having varying degrees of benefits and drawbacks from the legislation.
The majority of what the OBBBA accomplished was an extension or permanent implementation of the TCJA. We aim to identify and provide details for some of the most meaningful changes from the OBBBA, as we believe planning for such changes is not just inevitable for holistic wealth management; it is imperative to maintain a clear path to your lifelong goals.
Tax Brackets
While there were seven tax brackets before 2017, the TCJA re-defined the brackets, and the OBBBA made those modifications permanent. In 2018 the highest rate decreased from 39.6% to 37%, and the gap for middle-income brackets decreased from 28% to 24%, and 25% to 22%.
Inflation will continue to be a determinant for any income range adjustments in the future.
Alternative Minimum Tax (AMT)
The TCJA made an aggressive move for the AMT exemptions and phaseout thresholds for all filers. For example, the pre-TCJA exemption for joint filers was $84,500, and $54,330 for single filers, which increased almost 30% in the TCJA to $109,400 and $70,300, respectively.
OBBBA’s Permanent Changes
Similarly, the TCJA increased the AMT exemption phaseout thresholds for joint filers from $160,900 to $1M, and $120,700 to $500,000 for single filers. Since then, the values have adjusted for inflation, and the OBBBA has made some permanent modifications (with a couple of caveats).
While the OBBBA preserved the inflation-adjusted values through 2025, there will be a reset in 2026 of phaseout thresholds and the phaseout rate. In 2025 the exemption phaseout threshold for joint filers is $1,252,700 and $626,350 for single filers. However, in 2026 these values will be reset to $1M and $500M, respectively. Also, the exemption will be reduced twice as quickly beginning in 2026, as the phaseout rate increased from 25% to 50%.
Standard Deduction
The OBBBA continued the trend of increasing standard deduction rates, similar to the TCJA. Joint filers saw an increase from $13,000 to $24,000 in 2018, and the 2025 rate is set at $31,500. Single filers have undergone an increase from $6,500 in 2017 to $15,750 in 2025.
With the OBBBA, these rates will continue to index for inflation moving forward. There is an additional provision within the OBBBA covered later about the additional deductions awarded to individuals that have reached a certain age.
Estate and Gift Tax Exemption
For individuals with a substantial portion of wealth subject to estate and gift taxes, the OBBBA brought a welcome reprieve from the potential sunset of the TCJA at the end of 2025.
How the Exemption Has Evolved
Estate tax is imposed on bequests at death, while gift tax is attributable to gifts made while living. The taxable portion of an estate is subject to a 40% tax rate, and the exemption applies to both bequests and gifts. The American Taxpayer Relief Act (ATRA) of 2013 set the initial permanent rules for estate and gift tax exemptions, while the TCJA in 2017 and the OBBBA in 2025 extended the rules with a slight modification – an increase to $15M per decedent in 2026 for the exemption, indexed for inflation.
To quantify the change, the lifetime exemption amount was $5.49M in 2017, and by 2025 the exemption has risen to $13.99M – an almost 155% increase. The beginning of 2026 will mark a 173% increase since 2017.
Trump Accounts
While this piece of the Act still has details that need refinement, it is a benefit for the next generation of Americans. For individuals born before January 1st, 2025, and who are still under age 18, a “Trump Account” can be established for the benefit of the child. A maximum of $5,000 can be contributed per year to the account, and that limit will increase based on inflation from year to year beginning in 2027.
Employer Deferrals and Government Contributions
It is worth noting that each parent can defer $2,500 per year from their paycheck into a “Trump Account” with an employer, thereby shielding those funds from income taxes for the year and saving money for the child. For children born between December 31, 2024, and January 1, 2029, the government will make a one-time deposit of $1,000 into an account for the benefit of the child.
If a child is eligible to contribute to a Trump Account and an IRA (either traditional or Roth), contributions into one do not reduce the amount that can be contributed into the other. Once deposits are made in the account, the investment options are restricted to mutual funds or exchange traded funds (ETFs) that track a domestic stock index (i.e., S&P 500 Index) until age 18.
Rules for Withdrawals and Tax Treatment
Once the individual reaches age 18, investments can be made independently. The account is similar to a pre-tax IRA as it relates to the tax and distribution rules. Growth of assets within the account are tax-deferred until the account owner withdrawals funds, which is restricted until after attaining age 18.
Withdrawals of direct contributions between age 18 and 59 ½ are tax-free, while any growth or excluded contributions are subject to regular income tax. Aside from the exemptions outlined for IRA accounts, a 10% penalty will apply to all distributions between age 18 and 59 ½.
Retiree Additional Standard Deduction
As noted earlier, the standard deduction was set to be cut in half by the end of 2025, but the OBBBA preserved the deduction and expanded provisions for retirees.
For tax years 2025-2028, individuals aged 65 and older (on the last day of the specific year) may claim an additional $6,000 deduction, or $12,000 total for married couples when both spouses qualify.
This equates to a total deduction of $21,750 for single filers and $43,500 for joint filers. Once Modified Adjusted Gross Income (MAGI) reaches a certain level, the deduction will phaseout at a 6% rate until the deduction is fully phased out.
| Joint Filers | Single Filers | |
| MAGI Low Threshold | $150,000 | $75,000 |
| MAGI High Threshold | $250,000 | $175,000 |
Expanded 529 Usage
Over the past decade 529 plans have risen to the top as the premier education savings vehicle for minors. The OBBBA continued to enhance the attractiveness of 529 plans by expanding the tax-free withdrawal opportunities for professional licensing and by expanding the uses for K-12 expenses.
For professionals in the workplace that require ongoing licensing and/or continuing education, 529 funds can now be withdrawn tax-exempt to pay for those qualified postsecondary credentialing expenses. While this is usually an expense covered by an employer, self-employed individuals should consider what makes most sense – utilizing a 529 or taking the deduction as a business expense.
Additionally, $10,000 can now be withdrawn each year tax-free to pay for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.
Your Next Move
The One Big Beautiful Bill Act has reshaped the financial landscape, but legislation alone doesn’t dictate your success—how you plan for it does.
Whether it’s maximizing new deductions, preparing for shifting estate thresholds, or making the most of education and retirement savings opportunities, thoughtful wealth planning today can mean fewer surprises and more confidence tomorrow. The rules may change, but your goals remain, and the right strategy bridges that gap.
To learn more, contact one of our trusted advisors.
