Breaking Down the OBBBA: Tax Topics at a Glance

By Trevor M. Allen, Esq.

On July 4, after a narrow approval by the Senate, the “One Big Beautiful Bill Act” (“OBBBA”) was signed into law by President Trump.  The OBBBA extends many provisions of the Tax Cuts and Jobs Act (“TCJA”) originally set to expire on December 31, 2025, and introduces many significant new tax implications for individuals, businesses, and state and local governments.

Below is an overview of the key tax-related provisions. For additional information or help determining how these provisions apply to you, consult your tax attorney or reach out to our skilled team at Selzer Gurvitch.

Estate & Gift Taxes

• The 2025 Federal Gift and Estate Tax Exemption is $13,990,000 per individual and $27,980,000 per married couple. 
• The Federal exemption was scheduled to sunset beginning in 2026 to approximately $7 million. 
• The OBBBA permanently increased the exemption to $15 million per individual and $30 million per married couple beginning in 2026, adjusted annually for inflation. 

SALT Deduction Cap – Individuals

• The State and Local Tax (“SALT”) deduction allows taxpayers who itemize deductions to subtract certain state and local taxes (property taxes, income taxes, sales taxes) from their federal taxable income.
• The maximum SALT deduction (“SALT Cap”) was increased from $10,000 to $40,000 for 2025 (adjusted annually for inflation); if the taxpayer’s modified adjusted gross income (“MAGI”) exceeds $500,000, the SALT Cap is reduced by 30% of that excess, but not below $10,000.
• The SALT Cap reverts back to $10,000 in 2030.

SALT Deduction Cap – Pass Through Entities

• Thirty-six states, including Maryland and Viriginia, adopted pass through entity taxes (“PTETs”) to allow pass-through entities (S-corporations, partnerships, single member LLCs) and specified service trades or businesses (“SSTBs”) to pay state taxes at the entity level.
• SSTBs include professional services firms such as law firms, accounting firms, medical practices, consultants, and financial advisors; businesses whose income is primarily tied to the reputation or skill of their owners/employees.
• Under IRS Notice 2020-75, state taxes paid by a pass-through entity at the entity level are fully deductible at the federal level. This effectively bypasses the $10,000 SALT Cap applicable to individuals and allows pass-through entity owners to receive a tax credit or deduction on their individual state tax returns, depending on the state.
• The OBBBA preserves full access to the PTET SALT deduction for all PTEs, with no carveouts for SSTBs. 

Business Tax Provisions

• The Qualified Business Income (“QBI”) deduction permits taxpayers to take a tax deduction of up to 20% of qualified income from pass-through entities. The QBI deduction is now permanently at 20%, and the phase-out range for a deduction of qualified income from SSTBs is increased to $75,000 for single taxpayers, and to $150,000 for joint filers. 
• Taxpayers are eligible for an exclusion from gross income of gain from the sale of Qualified Small Business Stock (“QSBS”) held for more than 5 years, subject to certain limitations.
  • Now, exclusions are available in the following percentages, depending on the date the stock was issued:
    • Stock held for more than three, but less than four years: 50%
    • Stock held for more than four, but less than five years: 75%
    • Stock held for more than five years: 100%
  • QSBS gain exclusions remain exempt from the Alternative Minimum Tax (AMT).
  • The maximum gain exclusion for Qualified Small Business Stock increases to $15 million per taxpayer (adjusted annually for inflation). Taxpayers who have already used the full exclusion amount in a prior year are not eligible to claim additional exclusions based on the inflation-based increases.
  • The gross asset threshold—used to determine whether a corporation qualifies as a small business for QSBS purposes—increases from $50 million to $75 million (adjusted annually for inflation).

Individual Tax Provisions 

• Individual income tax brackets (10% – 37%) under TCJA are permanently extended beyond 2025. 
• Standard deduction –
  • During 2025 through 2028, the standard deduction increased:
    • To $31,500 for married couples filing jointly,
    • To $23,625 for heads of households, and
    • To $15,750 for single filers.
  • Taxpayers aged 65 or older benefit from an additional standard deduction of $6,000.  This is gradually phased out for MAGI exceeding $75,000 for individuals, and $150,000 for married couples filing jointly. 
• The Child Tax Credit is increased to $2,200 per child (adjusted annually for inflation) and phased out when a single taxpayer exceeds $200,000 or a married couple filing jointly exceeds $400,000.
• Alternative Minimum Tax (“AMT”) –
  • The following AMT exemptions are extended:
    • $137,000 for married filing jointly, 
    • $88,100 for unmarried individuals, 
    • $68,500 for married filing separately, and
    • $30,700 for estates or trusts.
  • The following phase outs are established, equal to 50% of the taxpayer’s AMT Income that exceeds:
    • $1,252,700 for married filing jointly,
    • $626,350 for unmarried individuals and married filing separately, and
    • $102,500 for estates or trusts.
• The miscellaneous itemized deduction is eliminated, which included unreimbursed employee business expenses, tax preparation costs, etc.
• 529 Plans –
  • 529 plans are expanded to cover tuition and materials for elementary and secondary schooling, certificate programs, trade schools, and vocational training recognized under federal law.
  • The definition of qualified education expenses is expanded to include: tuition, curriculum materials, textbooks and instructional materials, online education resources, tutoring services and educational classes outside the home, standardized test fees (e.g., SAT, ACT), dual-enrollment fees for college courses taken in high school, educational therapies for students with disabilities.
• Trump Accounts for Children –
  • A new federal savings account provides for a government funded account for each qualifying child born between January 1, 2025, and January 1, 2028. 
  • Each eligible child may receive a $1,000 one-time federal contribution into a 529-style account.
  • Contributions can be made until the child reaches age 18 and are limited to $5,000 per year (adjusted for inflation). 
  • Distributions from the account can be made after the beneficiary reaches age 18, and up to 50% of the balance may be distributed to the child between ages 18-25.
  • Employers can make contributions up to $2,500 (adjusted for inflation) through the Trump Account Contribution Program to an employee or dependent of an employee.  The program must be established through a written plan and must meet certain requirements similar to those under the Dependent Care Assistance Programs under Section 129. These contributions are excluded from the employee’s gross income.
• The home mortgage interest deduction limitation is extended – taxpayers are eligible for a deduction of interest paid on the first $750,000 of qualified residence mortgage acquisition debt. As under prior law, interest paid on a home-equity loan or a mortgage obtained after a home is purchased in cash is not eligible for this deduction.
• Qualified Opportunity Zones (QOZ) benefits are made permanent; this is a tax incentive created to stimulate investments in economically distressed communities. Taxpayers may defer tax on capital gains that are reinvested into Qualified Opportunity Funds (QOFs) until the sale of the QOF investment. If the QOF investment is held for at least 7 years, 10% of the original deferred gain is tax-free; if held for 10 years, any post-investment gains from a sale of the QOF are entirely tax-free.

If you have questions about how the tax provisions in the One Big Beautiful Bill Act may impact your estate plan, business, or personal finances—and you would like to speak with one of our attorneys—please contact Trevor Allen at tallen@sgrwlaw.com. We are here to help you navigate the changes with clarity and confidence.