What the One Big Beautiful Bill Act Means for You
In July of 2025, the federal government signed into law the One Big Beautiful Bill Act—a sweeping piece of legislation that reshapes the tax landscape for individuals, families, and business owners alike. Whether you're an investor, a retiree, or a business owner, this new law carries implications for your financial strategy.
At Extraco Wealth & Trust, our team is here to help you understand exactly how these changes impact your personal wealth and trust portfolio—and how you can take full advantage of them.
Key Tax Law Highlights
Permanent Extension of TCJA Tax Cuts
The 2017 Tax Cuts and Jobs Act (TCJA) is now permanent. That means:
- Individual income tax rates remain lower
- The standard deduction remains around twice previous amounts
- Alternative Minimum Tax (AMT) thresholds stay high
Higher State and Local Tax (SALT) Deduction
Joint filers earning under $500,000 can now deduct up to $40,000 in state and local taxes—quadruple the previous cap. This benefit phases out after 2029.
New Deductions for 2025–2028
Temporary but impactful deductions include:
- Tipped and overtime income (tax-free for lower/middle-income workers)
- Auto loan interest (up to $10,000/year for new U.S.-built vehicles)
- An additional $6,000 standard deduction for seniors 65 years and older
Estate Taxes
The Estate Tax Exemption has permanently increased to $15 million for single filers and $30 million for couples that are married filing jointly. These new amounts will be indexed for inflation after 2026.
Accounts for Newborns
For children born between 2025–2028, parents can open new tax-deferred savings accounts with:
- $1,000 government seed funding
- $5,000 annual contribution limit
Business Changes
Small Business Boosts
- The 20% pass-through deduction is now permanent
- Full expensing and bonus depreciation are back for equipment and R&D
Startup & Investment Incentives
- Enhanced tax treatment for Qualified Small Business Stock (QSBS): Gains may be 50–100% tax-free after 3–5 years
Shifting Priorities: Cuts & Reallocations
- Medicaid, SNAP and food assistance programs face significant reductions
- Clean energy credits for EVs and renewables are being phased out after 2026–2027
- University endowments face new investment income taxes (1.4–8%)
- Border security and defense spending receive a multibillion-dollar boost
What This Means for You
At Extraco Wealth & Trust, we are actively reviewing our clients’ portfolios to align with the new legal landscape. Here’s how it may affect you:
- High net worth clients may benefit from the extended TCJA rates, higher SALT deduction and enhanced QSBS gains. Now’s the time to evaluate trust structures and gift strategies to lock in long-term tax efficiency.
- Seniors & retirees can significantly lower taxable income through the additional $6,000 standard deduction. We recommend revisiting your income sources and considering adjustments to your required minimum distributions (RMDs).
- Families & young parents will gain access to the expanded child tax credit and new accounts offer fresh savings tools. Schedule a review to plan contributions and optimize tax benefits.
- Small business owners & entrepreneurs can take advantage of the renewed pass-through and expensing provisions. If you’re thinking of launching a venture, QSBS incentives could enhance your exit strategy.
Let’s Talk—One-on-One
We understand that these changes can be complex, and their impact varies widely based on your personal financial situation. Our expert advisors are ready to help.
Stay Informed. Stay Ahead.
We’ll continue to monitor developments and provide guidance as further IRS regulations are released. This is your opportunity to re-evaluate your tax strategy and make informed adjustments that will benefit you for years to come.
