The One Big Beautiful Bill (OBBB) Act, signed into law on July 4, 2025, brings sweeping changes to the U.S. tax code. While the headlines have heavily focused on tip income and overtime pay, the law has far-reaching implications in estate, tax, and business planning. Here's what you need to know:

Estate Planning Highlights:

• Estate Tax Exemption Increased: The federal estate and gift tax exemption is now permanently $15M per individual and $30M per couple, indexed for inflation starting in 2026. "Permanently" means until Congress changes it, so proactive planning is still essential.
• Trust Planning Should Adapt:
  • Consider non-grantor trusts to help with income tax efficiency.
  • Explore the use of hybrid DAPTs or lifetime powers of appointment to increase flexibility.
  • Trust protector powers may be expanded to allow for future adjustments in the event that laws change.
• Review Old Trusts: Existing irrevocable trusts may be merged or updated (via decanting) to gain flexibility and improve income tax or asset protection outcomes.

Tax Planning Takeaways:

• Tax Cuts from 2017 Are Now Permanent:
  • Top tax rate remains at 37% (instead of reverting to 39.6%).
  • The standard deduction is permanently increased to $15,750 (single) and $31,500 (married).
• Charitable Giving:
  • Non-itemizers can deduct up to $1,000 (single) and $2,000 (married).
  • Non-grantor trusts are not subject to the standard deduction rules in the same way as individuals are. For high-income individuals who lose the benefit of itemizing charitable donations by taking the standard deduction, using a non-grantor trust may be a strategy to deduct the donation.
• SALT Deduction Temporarily Expanded: The State and Local Tax (SALT) Deduction has been temporarily increased to $40,000 until 2030, with income-based phase-outs. This could affect the value of certain business structures.
• No More Personal Exemption: Eliminated permanently, but a temporary $6,000 senior deduction is available through 2028 (phased out by income).
• Child Tax Credit Increased: Now $2,200 per child, with higher income thresholds before phase-out.
• Trump Accounts: New savings vehicles for children under 18, with tax-favored treatment for distributions used for education, home buying, or starting a small business. Contributions are limited, and the account must be fully distributed by age 31. A $1,000 credit is available for accounts opened for children born between 2025 and 2028.
• 529 Plans Enhanced: The OBBB expands 529 Plan use to include elementary and secondary schooling, as well as qualified postsecondary credentialing expenses. Larger contribution limits and long-term control make them a strong option compared to newer alternatives.
• More Complex Phase-Outs: Many benefits phase out at different income levels. Planning your income, deductions, and trust distributions year by year can help retain eligibility for deductions or credits.

For Business Owners:

• Bonus Depreciation Made Permanent: 100% write-off in the first year for qualifying assets placed in service after January 19, 2025.
• Section 179 Expensing Expanded: The limit has been raised to $2.5M, with a phase-out starting at $4M. Great for capital investments and smaller businesses that spend less than $4M on new assets.
• Qualified Small Business Stock (QSBS): QSBS offers a powerful tax break for investors in certain early-stage C corporations. Stock must be acquired directly from a domestic C corporation. If held 5+ years, up to $15M in gains can be fully excluded from tax, subject to conditions. The OBBB raised the asset threshold for eligibility from $50M to $75M, opening access to more companies.
• QBI Deduction Provisions: The QBI provides self-employed and small-business owners a tax deduction of up to 20% of qualified income from pass-through entities. Some trusts and estates may also be able to take the deduction. The OBBB has made the deduction provisions permanent and maintains the 20% deduction rate. The OBBB increases income thresholds for specified service trades (like law and medicine), expanding access to this benefit. 

While the OBBB brings long-term clarity to some areas of tax and estate law, it's important not to become complacent. The increased estate tax exemption is labeled "permanent," but in reality, it is only permanent until a future Congress changes it. That means even individuals and families well below the new $15M/$30M exemption thresholds should still continue planning, especially in today's unpredictable political climate. Not long ago, serious proposals were introduced to eliminate popular estate planning tools and introduce a wealth tax. Those could easily return.

At the same time, the OBBB adds a significant layer of complexity to the tax code, with numerous phase-outs, sunset provisions, and inconsistent income thresholds across deductions and credits. This makes ongoing tax planning and income management more critical than ever. And while the estate tax may now affect fewer people, asset protection remains essential for all wealth levels. Given the complexity and breadth of available strategies, it is crucial to seek the advice of professionals. In light of all the changes the OBBB introduced, now is a good time to contact our office to review your estate plan and discuss strategies to maximize your protections and safeguard your wealth for you and your family.

^Sources:

^{https://www.forbes.com/sites/martinshenkman/2025/07/05/big-beautiful-estate-plan-impact-of-the-big-beautiful-bill-obbba/
https://www.forbes.com/sites/martinshenkman/2025/07/06/big-beautiful-bill-estate-planning-ideas/}