Hitting the High Note: Financial Planning & OBBB – Friday, July 25, 2025

5 minute read | July 28th, 2025

The budget reconciliation bill, unofficially dubbed the ‘One Big Beautiful Bill’ (OBBB), has officially been signed into law. If you’re like me and picturing Schoolhouse Rock’s ‘I’m Just a Bill’ sitting on Capitol Hill – imagine that little guy, but super-sized. It’s truly big, clocking in at over 1,100 pages and covering a wide range of topics including tax regulations, energy and the environment, immigration, the deficit, healthcare, national security, education, infrastructure, and much more.

But don’t worry, we are not going to have you read the whole thing, nor will we be able to cover everything in one post. Instead, we’ll narrow the focus to what we see as the most impactful pieces from a financial planning perspective and explain what they mean to you.

If you’ve got things to do on a nice summer day and reading an analysis on government legislation isn’t high on your list, this is your off-ramp before we head down that road. Rest assured, if anything specifically pertains to you, we’ll flag it for discussion at your next review.

Here we go…..

INCOME TAXES & NEW OPPORTUNITIES FOR SAVINGS

The Tax Cuts and Jobs Act of 2017 (TCJA) tax bracket structure is now permanent.
Permanent deductions:
- Higher standard deduction:
  - $31,500 MFJ, $23,625 HOH, and $15,750 Single.
- Child and adoption credits expanded:
  - Up to $2,200 deduction per qualifying child and adoption credit is now partially refundable (up to $5k).
- Non-itemizer charitable giving deduction:
  - Those taking the standard deduction can now also claim a limited deduction of $2,000 MFJ / $1,000 single for charitable contributions.
Temporary deductions effective 2025–2028:
- Social Security is still taxable, but a new senior deduction offers help:
  - $6,000 deduction per taxpayer age 65+ but phases out above $150k MFJ / $75k Single MAGI.
  - Does not require that you receive social security benefits.
- State and local tax (SALT) deduction:
  - Up to $40,000 but begins phasing out at $500,000 MAGI for married filing jointly and $250,000 MAGI for married filing separately.
  - Sunsets and reverts to $10,000 after 2029.

What does this mean for you?

The bill avoids the TCJA sunset, so your tax rates aren’t jumping up (for now).
Deductions galore…. kind of. There are lots of deductions out there, but many are temporary and most start to fade away as your income rises so the benefits are likely to be minimal for higher earners.
This gives us all a little better visibility for managing tax brackets, planning Roth conversions, and organizing retirement distributions so your long-term strategy can be more intentional.

EDUCATION & FAMILY PLANNING

Expanded qualified expenses for 529 accounts:
- K–12 annual limit increases from $10,000 to $20,000 starting in 2026. Qualified expenses now include tutoring, textbooks, online materials, standardized tests, educational therapies, and homeschooling curriculum/tools.
- Funds can now be used for postsecondary credentialing programs approved by the Workforce Innovation and Opportunity Act (WIOA), the military, or state and federal agencies.
Introduction of the “Trump Account” for newborns:
- $5k annual contributions are allowed before a child turns 18.
- IRA-like tax treatment (no upfront deduction).
- Employers can contribute $2,500 tax-free for dependents.
- IRS pilot program contributes $1,000 for 2025–2028 births

What does this mean for you?

529s just got a major upgrade and should no longer be used just for college. Smart planning here can help manage overfunded balances and support long‑term multigenerational wealth transfer strategies.
Families with dependents born between 2025 and 2028 should watch for updates on the pilot program for Trump Accounts, while others with kids under 18 might consider opening an account. These accounts can offer a financial boost early in your child’s life.
We’re still waiting for the fine print. The IRS and Treasury are working on the details, so we are keeping an eye out for how these new Trump Accounts and 529 changes will actually work in practice.

ESTATE & GIFT TAX EXEMPTION INCREASE

Starting in 2026, the federal estate, gift, and generation skipping transfer (GST) tax exemptions will reach historically high levels, creating unprecedented opportunities for wealth transfers.
- $15 million per person and $30 million per married couple (with portability).
- Indexed for inflation.

What does this mean for you?

If you’re part of a high-net-worth family, this is great news because it gives you more breathing room to transfer wealth without triggering federal taxes.
Even with historically high estate and gift tax exemptions expected, it’s still important to prioritize estate and legacy planning because these favorable conditions may not last forever. There is always a risk that the pendulum could swing back in the opposite direction.

The next step for the new legislation will be implementation. Action will now shift to the rulemaking process, where the Department of the Treasury and IRS will propose and finalize regulations related to each of the OBBB provisions. While the OBBB introduces both temporary and ‘permanent’ reforms, it’s worth remembering that even the most beautiful bills are only permanent until the next one makes its way through Capitol Hill.

We will continue to monitor the implementation of the OBBB and provide personalized guidance to help you navigate the complexities as they relate to your financial situation. Please don’t hesitate to reach out if you’d like to discuss this in more detail.

Disclosures

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All opinions expressed by the participants are solely opinions and should not be relied upon as potential or actual results. Any third-party information contained herein was prepared by sources deemed to be reliable but is not guaranteed. This message is presented for informational purposes only and it is not a solicitation to purchase or sell any securities or advisory services. Any potential tax and legal information contained in this document is general in nature. It should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. Past and projected performance does not guarantee future results. Investing involves risk and possible loss of principal capital.

Definitions:

MFJ – Married Filing Jointly

HOH – Head of Household

MAGI – Modified Adjusted Gross Income