After months of debate, President Trump signed the One Big Beautiful Bill Act (the OBBBA) into law on July 4, 2025. We previously outlined key proposals from the U.S. House of Representatives version (found here). The OBBBA brings extensions of the provisions of the 2017 Tax Cuts and Jobs Act, the expansion and/or repeal of certain existing incentives, and specific new tax provisions – all intended to spur economic growth.
In our One Big Beautiful Bill Act Analysis Series, we will release several focused alerts to provide guided analysis and strategic insights on various aspects of the expansive legislation. This first alert in the series details various noteworthy provisions in the OBBBA affecting individuals, as well as estate and income tax planning.
Gift and Estate Tax Exemption
The OBBBA retains the increased estate and gift tax exemptions established under the 2017 Tax Cuts and Jobs Act. The exemption remains at $13.99 million per person in 2025 and increases to $15 million ($30 million for married couples) in 2026, with inflation adjustments going forward.
Revision of Trump Accounts
The OBBBA adopts the House's proposal for tax-advantaged "Trump Accounts" for minors, with several key modifications:
- Tax Treatment: Trump Accounts will be treated like IRAs, except the taxpayer will not receive tax deductions for contributions. This means contributions are made with after-tax dollars, earnings grow tax-deferred and withdrawals in excess of taxpayer contributions are taxed as ordinary income.
- Age Restrictions: Funds cannot be withdrawn before age 18, but there is no longer a required age by which funds must be used.
- Government Contribution: A one-time $1,000 government contribution is available for each eligible child born after 2025 but before 2029.
- Annual Contributions: Parents can contribute up to $5,000 annually per child (indexed for inflation after 2027). Accounts can be opened for any child under age 18.
- Employer Contributions: Employers may contribute up to $2,500 per year (indexed for inflation after 2027) to a Trump Account for an employee or their dependent, with no impact on the employee's taxable income.
State and Local Tax (SALT) Deduction
The OBBBA maintains the temporary increase to the federal SALT deduction cap to $40,000 in 2025, up from $10,000. For 2026, the SALT cap increases slightly to $40,400, then rises 1 percent annually through 2029 (reverting back to $10,000 in 2030).
For taxpayers with modified adjusted gross income (MAGI) over $500,000 in 2025 (as adjusted for inflation through 2029), the deduction is reduced by 30 percent of the amount by which the taxpayer's MAGI exceeds the threshold. However, the SALT deduction cannot fall below $10,000.
A Few Other Notable Provisions Affecting Individuals
- Individual Tax Rates: The OBBBA permanently extends the reduced individual income tax rates enacted under the Tax Cuts and Jobs Act of 2017 (TCJA) and adds an extra inflation adjustment to the bottom six brackets.
- Standard Deduction: The OBBBA permanently increases the standard deduction. For 2025, the deductions are $15,750 (single filers), $23,265 (heads of household) and $31,500 (joint filers). These amounts will be adjusted for inflation after 2025. The OBBBA permanently eliminates the personal exemption deduction.
- Child Tax Credit (CTC): The OBBBA increases the nonrefundable child tax credit to $2,200 in 2025 (as indexed for inflation), makes the $1,400 refundable child tax credit permanent (as indexed for inflation) and retains the higher income phaseout threshold of $200,000 ($400,000 for joint filers).
- Charitable Contribution Deduction: The OBBBA permanently allows non-itemizers to take a charitable deduction of up to $1,000 ($2,000 for joint filers) beginning in 2026. For itemizers, the act adds a 0.5 percent floor on charitable contributions (i.e., the charitable contribution deduction is allowed only if, and to the extent that, aggregate contributions exceed 0.5 percent of adjusted gross income).
- Gambling Losses: The OBBBA limits gambling losses to 90 percent of winnings beginning in 2026.
Estate Planning Outlook
Although many provisions are now "permanent," future political shifts could change the landscape. As such, clients are encouraged to:
- Consider leveraging today's high estate and gift tax exemptions;
- Review wealth transfer strategies to reduce long-term estate tax exposure; and
- Reassess income tax planning in light of changes to individual tax brackets.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
