One Big Beautiful Bill Act: Key Tax Changes for Individuals, Businesses, and Estates
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (H.R.1) into law. The legislation introduces significant changes to the tax code for individuals, businesses, and estates. With nearly a thousand pages of reforms, the bill can feel overwhelming. To help you focus on what matters most, we’ve broken down the highlights into three key areas: individual, business, and estate.
Individual Income Tax Changes
Leading up to the bill’s passage, many financial planning conversations focused on the potential return of pre-2017 Tax Cuts and Jobs Act (TCJA) tax brackets. Investors expressed concern about rising tax liabilities. The One Big Beautiful Bill Act (OBBBA) aims to reduce uncertainty by making the current tax brackets permanent. It also adds annual inflation adjustments for certain tax brackets.
Starting in 2025, the state and local tax (SALT) cap will increase from $10,000 to $40,000. A new 0.5% adjusted gross income (AGI) floor will apply to charitable contributions. The standard deduction will increase and adjust annually for inflation. In addition, taxpayers age 65 and older will receive a temporary bonus deduction of up to $6,000, available for tax years 2025 through 2028. And beginning in 2026, a new 0.5% adjusted gross income (AGI) floor will apply to charitable contributions.
Several temporary provisions may offer additional deductions for eligible taxpayers. For example, those who qualify could deduct up to $25,000 in reported tips and up to $12,500 in overtime pay. These deductions are subject to income phaseouts and may not apply in all situations.
The bill also includes changes related to auto loan interest, Trump accounts, child tax credits, and 529 plans. Depending on your situation, these updates could affect your current strategy and long-term financial plan.
Business Tax Changes
Bonus depreciation became a valuable tax strategy for many business owners under the TCJA. However, the benefit was being phased out, dropping to 40% in 2025. The OBBBA reverses that trend by reinstating the 100% bonus depreciation. This provision is now permanent for property acquired and placed in service after January 19, 2025.
Section 179 expensing allows businesses to deduct the cost of certain equipment or software in the year it’s purchased. Under the new law, the deduction limit increases from $1.25 million to $2.5 million, along with a higher income phaseout threshold. This change may affect businesses planning large capital investments, depending on their specific tax position.
The bill also expands or makes permanent several other business-related deductions. These include incentives for production property, research and development, qualified business income, and corporate charitable contributions. With so many updates, business owners may wish to take time to evaluate their strategy and consider whether new opportunities exist to lower their tax liability.
Estate Tax Changes
For individuals with sizable estates, the OBBBA makes it easier to transfer wealth tax efficiently. The bill increases the lifetime estate and gift tax exemption from $13.99 million to $15 million starting in 2026, adds an annual inflation adjustment, and makes the higher exemption permanent under current law.
These changes may significantly affect your estate plan. Strategies that worked in the past may no longer be optimal. Because many new provisions include income limits, even a modest increase in capital gains could phase you out of certain benefits. It may be appropriate to review your estate strategy in light of these updates.
Time to Revisit Your Financial Plan
Given these recent changes, now is the time to review your financial plan and update your tax strategies. More than ever, having a trusted team of professionals to guide you through these updates can make all the difference. Contact us at Savant Wealth Management if you have questions about how these provisions may affect your situation.
Co-Author: Joseph P. Marmorato, CFP®, CPA
Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois. This material is intended for informational purposes only and should not be construed as personalized tax, legal, or financial advice. Please consult your investment and financial professional(s) regarding your unique situation.
Anne M. Mank
Director of Financial Planning
CFP®, CPA