Tax Law Changes: What to Know
By Jessie Schlanderer, CDFA®, Wealth Advisor and Portfolio Implementation Lead
This Fourth of July brought some extra fireworks to American investors as President Donald Trump signed the “One Big Beautiful Bill” (OBBB) into law. In addition to making several parts of the 2017 Tax Cuts and Jobs Act (TCJA) permanent, the OBBB introduces new provisions affecting everything from income and investments to estate planning and charitable giving, making thoughtful planning as important as ever.
While not an exhaustive list, here are some key OBBB updates and what they could mean for you:
- With tax rates staying lower, this might be a great time to convert some pre-tax retirement dollars into Roth accounts—especially if you’re in a lower income year or expect higher taxes later in life.
- A SALTier deduction. Starting in the 2025 tax year, the cap on state and local tax (SALT) deductions increases to $40,000 for many families. If you’ve been taking the standard deduction, it might be time to revisit itemizing and “bunching” deductions, especially if you’re charitable or live in a high-tax state. For those who opt not to itemize, the higher standard deduction implemented by TCJA is now permanent.
- Be on the lookout for a few new deductions, too. Tips, overtime, charitable gifts and new car loans (between 2025 and 2028) offer new options to consider.
- Many clean energy credits are being phased out in 2025-2027, sooner than their original end date of 2032.
- An extra tax break for people 62 and older. Retirees may now qualify
for a new $6,000 deduction for tax years 2025-2028. This could reduce the amount your Social Security is taxed. - Estate and charitable planning tweaks. With higher gift and estate tax exemption amounts locked in at $15M + inflation, some complex estate strategies may be able to be simplified. We’re encouraging high net worth clients to review their wills, trusts, and charitable giving strategies. There will also now be a cap on charitable donation benefits to those in the top tax bracket.
📚 Expanded savings strategies for the next generation:
- There are new repayment options for student loans, along with new borrowing caps on Parent PLUS loans, through which parents can borrow money to help pay for
their child’s college education. - Expanded uses for 529 plans—including apprenticeships and job training.
- A slight increase in the Child Tax Credit for 2025 (to $2,200 from $2,000)
- A new investment account option for minors starting in 2026. These accounts will be treated similarly to Traditional IRAs, where the money grows tax-deferred and will be accessible once the beneficiary turns 18 (although withdrawals may incur penalties before age 59 ½, also like an IRA). The government will deposit $1,000 for children born between January 1, 2025 through 2028; however, parents can contribute up to $5,000 a year for children of any age.
For Business Owners:
- No change on corporate income tax rate (21%) and qualified business income deduction (20%), both from TCJA.
- Expanded eligibility and gain exclusion for Qualified Small Business Stock (QSBS) issued after July 4, 2025.
- Expanded incentives for family and medical leave, charitable giving, and childcare.
- Increased cap on Section 179 Deduction (option to expense business equipment immediately as opposed to depreciating overtime). Also, bonus depreciation is now permanent with no limit.
As always, planning is personal. Just because something has changed doesn’t mean you need to act—but we’re here, in collaboration with your CPA, to help you evaluate your options and find the right strategy. Please feel free to reach out to your Advisor if you want to talk about how the OBBB could impact your plan.
For more details on OBBB as it relates to planning, check out these great sources:
BlackRock’s “One Big Beautiful Article” and Pearl Planning’s One Big Beautiful Blog
Disclosure
*Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Stephens Consulting, LLC, doing business as Stephens Wealth Management Group (SWMG), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Stephens Consulting.
Please remember that if you are a SWMG client, it remains your responsibility to advise us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional advisor of his/her choosing.
SWMG is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of SWMG’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Links are being provided for information purposes only. SWMG is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors. SWMG is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Important Disclosure.
Please Note: Stephens Wealth Management Group does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to SWMG’s website or newsletter or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.