Passing in early July 2025, the One Big Beautiful Bill Act (OBBBA) implements sweeping changes to the current tax landscape, as well as federal funding, clean energy initiative rollbacks, and more.
Extending and expanding on previous tax law changes from the first Trump administration, the OBBBA introduces a mix of both permanent policy updates and time-limited tax advantages—all of which will impact the majority of high-earning taxpayers in some way.
Below is an in-depth breakdown of what’s changing, what’s staying, and what you may need to adjust moving forward.
TCJA Provisions Made Permanent
During his first term, President Trump signed into law the 2017 Tax Cuts and Jobs Act. This major piece of tax reform went into effect between 2018 and 2025. While provisions were set to end in 2026, the OBBBA makes permanent some of the previously established changes regarding tax brackets, standard deductions, and more.
Prior to the OBBBA passing, the provisions below would have reset to their pre-TCJA levels (adjusted for inflation) on January 1, 2026. Let’s take a look at what taxpayers can now expect moving forward.
Tax Brackets
The current tax brackets, which were created as part of the TCJA, will remain in place, rather than reverting to their higher pre-2018 levels. Income ranges will continue to be adjusted annually for inflation, though the tax rate structure will stay the same.
Tax Rates and Income Brackets for 2025 (Filed in 2026)
| Pre-TCJA Brackets | OBBBA Brackets | Income Range (Single) | Income Range (Joint) |
| 10% | 10% | Up to $11,925 | Up to $23,850 |
| 15% | 12% | $11,926 to
$48,475 |
$23,851 to
$96,950 |
| 25% | 22% | $48,476 to
$103,350 |
$96,951 to
$206,700 |
| 28% | 24% | $103,351 to
$197,300 |
$206,701 to
$394,600 |
| 33% | 32% | $197,301 to
$250,525 |
$394,601 to
$501,050 |
| 35% | 35% | $250,526 to
$626,350 |
$501,051 to
$751,600 |
| 39.6% | 37% | $626,351
or more |
$751,601
or more |
Standard Deduction
The standard deduction, which roughly doubled under the TCJA, is also preserved. In 2026, it will rise to:
- $16,300 for single filers
- $32,600 for joint filers
- $24,500 for heads of household
When the TCJA was established, there was a sharp increase in taxpayers opting for the standard deduction. For the 2018 tax year, 87.3% of returns claimed the standard deduction, compared to around 69% the previous year (before TCJA changes went into effect).
With this higher standard deduction made permanent, the percentage of returns with itemized deductions will likely stay low. However, for high earners, certain deductions, including state and local taxes (SALT), charitable gifts, and mortgage interest (more on these below) may still justify the need to itemize in certain years.
It’s also worth mentioning that certain incentives for itemizing, like the miscellaneous deductions and charitable deductions, have been altered as well.
The miscellaneous itemized deductions were suspended as part of the TCJA (but were set to come back in 2026, prior to the OBBBA). Previously, those who itemized deductions could deduct certain fees and expenses, as long as they exceeded 2% of the taxpayer’s adjusted gross income. These included:
- Investment fees or advisory fees
- Tax preparation fees
- Unreimbursed employee expenses (union dues, professional organization dues, uniforms, etc.)
The OBBBA has also eliminated taxpayers’ ability to deduct small charitable contributions. Now, only contributions exceeding 0.5% of their AGI will be allowed to be deducted moving forward. You may, however, be able to carry forward unclaimed charitable deductions for future tax years.
Alternative Minimum Tax (AMT)
Alternative minimum tax is a particular concern for those with incentive stock options (ISOs).
The OBBBA maintains the increased AMT exemption limits, which are:
- $137,000 for married couples filing jointly
- $88,100 for single filers
The AMT exemption limit does start to phase out at $1 million for joint filers and $500,000 for single filers. But for those with ISOs, the increased AMT exemption limit may provide some future tax liability relief.
Child Tax Credit
For families, the expanded child tax credit—originally set to revert to $1,000—will instead increase slightly from $2,000 to $2,200 per child from 2025 through 2028. The tax credit will be subject to inflation adjustments each year.
Estate Tax and Lifetime Gifting Exemption Limit
In 2017, the TCJA doubled the estate tax exemption limit, creating immense tax-advantaged wealth transfer opportunities for families. The OBBBA has made this increase permanent. In 2026, estates under $15 million for single filers or $30 million for joint filers will not be subject to federal estate tax—though state-level estate and inheritance taxes may still apply. The federal exemption limit is adjusted annually for inflation.
As a reminder, any gifts you give during your lifetime that exceed the annual gifting limit ($19,000 in 2025 per beneficiary) will be reported on your tax return and deducted from that lifetime exemption limit.
Mortgage Interest
Prior to the TCJA, homeowners could deduct mortgage interest on loans up to $1 million. The TCJA dropped the deduction to a $750,000 debt limit, which will remain in effect moving forward.
New Provisions and Changes
In addition to extending TCJA-era tax provisions, some additional deductions, incentives, and changes have been implemented.
Senior “Super” Deduction
Between 2025 and 2028, taxpayers aged 65 and older can claim an additional $6,000 deduction if their AGI is below $75,000 ($150,000 for couples). The deduction phases out above these limits, capping at $175,000 (single) or $250,000 (joint filers).
How the Increased Senior Deduction Works
| Filer Status | Normal Deduction | Senior Deduction Increase | MAGI Phase-Out Range | MAGI Income Cap (Not eligible for senior deduction) |
| Single | $16,300 | $22,300 (+$6,000) | $75,000 – $175,000 | $175,000+ |
| Married, one spouse is 65+ | $32,600 | $38,600 (+$6,000) | $150,000 – $250,000 | $250,000+ |
| Married, both spouses are 65+ | $32,600 | $44,600 (+$12,000) | $150,000 – $250,000 | $250,000+ |
Keep in mind, this is an additional deduction, not a tax credit. The actual dollar value of the senior deduction will depend on your tax rate and income. Assuming both spouses are over 65 with $150,000 in taxable income, the additional deduction would be worth $1,320 (22% of $6,000).
Trump Accounts for Children
Parents of children born between 2024 and 2028 will soon be able to open “Trump Accounts,” which come with a one-time $1,000 federal contribution.
Parents can make after-tax contributions of up to $5,000 annually, and funds grow tax-deferred. Once the child turns 18, no more contributions can be made to the account.
At age 18, your child will be allowed to withdraw up to 50% of the value of the account tax and penalty-free, as long as the funds are used for qualifying expenses. At age 25, they can withdraw up to the full account balance to use on qualifying expenses—again without tax or penalties. Then, at age 30, they can access the funds in the account for any reason, without penalty.
Qualifying expenses include:
- Higher education
- Training programs
- Small business loans
- First-time home purchase
State and Local Tax (SALT) Deduction Increase
You’re allowed to deduct a certain amount of money put towards your state and local taxes (SALT), but you must itemize your deductions to take advantage of this SALT deduction.
The good news for itemizers? The OBBBA significantly increases the SALT deduction limit starting this year (at least temporarily). For the next five years, the SALT deduction cap will rise from $10,000 to $40,000. Each year, between 2026 and 2029, the cap will rise by another 1% per year.
Like many deductions and credits, there is a phase-out limit for high earners. If your MAGI is $500,000 or more, your deduction cap will be less—though it won’t drop below $10,000. Over the next five years, this income limit will also rise by 1% per year.
Auto Loan Deduction
New this year, taxpayers earning up to $100,000 (or $200,000 if married filing jointly) may now deduct up to $10,000 of qualifying auto loan interest for U.S.-assembled vehicles. This deduction does, again, phase out entirely for taxpayers with a MAGI above $150,000 (or $250,000 for joint filers). It’s also important to note that this tax deduction is not applicable to vehicles purchased for commercial purposes.
OBBBA Cuts
In addition to an increase in various deductions, the OBBBA has implemented some widespread cuts to federal funding, which will go into effect in the coming years.
These include:
- $700 billion in Medicaid cuts over the next decade, starting in October 2026.
- $267 billion in cuts over the next decade to the Supplemental Nutrition Assistance Program (SNAP). In 2028, more SNAP costs (5% benefits and 75% administrative) will become the states’ responsibilities as well.
- Premium subsidies will expire, and automatic reenrollment will end for the Affordable Care Act (ACA).
- Income-driven student loan repayment plans will be phased out by 2028, and future student loans will have lifetime caps.
Energy-related tax credits for home and vehicle purchases are also coming to an end. Some common examples include:
- The energy efficient home improvement tax credit (up to $3,200 for eligible purchases and installations)
- Residential clean energy tax credit
- Energy-efficient home tax credit (a business tax credit for contractors constructing energy-efficient homes)
- Electric vehicle (EV) tax credit (originally worth up to $7,500 for applicable vehicle purchases)
Should Your Tax Strategy Be Adjusted?
Many provisions in the OBBBA simply extend existing tax thresholds and limits. But with a piece of legislation measuring over 1,000 pages long, the changes are extensive and far-reaching. While we’ve scratched the surface here, there’s certainly more to discuss—especially as you start to prepare for the upcoming tax season.
At Zajac Group, we help executives and high-net-worth families integrate tax strategy into their broader financial plans. Whether you’re managing ISOs, optimizing deductions, or reassessing your estate plan in light of these changes, we’re here to help. If you have more specific questions about how the OBBBA may impact your tax strategy for 2025 and beyond, schedule time to talk with our team.
0 Comments