By Vincent R. Birardi, CFP®, AIF®, Senior Wealth Advisor at Halbert Hargrove
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The legislation itself is rather extensive – over 870 pages in fact. It enacts significant changes to both domestic and international tax policies and carried forward elements of recently enacted tax policies.
Here are five key tax and investment related elements of OBBBA you should be aware of.
1) TCJA marginal tax rates made permanent
The Tax Cuts and Jobs Act (TCJA) of 2017 lowered most individual income tax rates and updated income thresholds across several tax brackets. It also reduced the top marginal income tax rate from 39.6% to 37%. These rates were initially set to expire at the end of 2025 and revert to levels in place before TCJA’s passage.
However, OBBBA extends indefinitely the individual income tax rates and brackets established by the TCJA.
OBBBA also makes permanent the increases in both the standard deduction as well as the elimination of the personal exemption that were part of the TCJA.
The solidification of personal marginal tax rates should make future tax planning a bit easier by removing the element of uncertainty on whether they would change over the next few years.
2) Federal estate and gift tax exemptions are also made permanent…and increased
The TCJA temporarily doubled the federal estate and gift tax exemption from $5 million to $10 million per individual, indexed for inflation, for the years 2018 through 2025. Without further legislative action, the exemption was slated to revert to its pre-TCJA level (approximately $5 million plus inflation) in 2026.
OBBBA not only preserved the TCJA exemption amounts; it also increased them. Starting in 2026, the federal estate and gift tax exemption is set at $15 million per individual, with future annual adjustments for inflation expected. This means a married couple can effectively transfer $30 million without incurring federal estate or gift tax.
As with marginal tax rate permanence, the new federal estate and gift tax exemption amounts should provide greater stability for long-term estate planning strategies. However, it is important to remember that state-level estate tax exemptions may be lower than federal levels and OBBBA’s changes don’t affect them.
Individuals should still consult with an estate planning attorney to ensure their plans align with their financial goals and account for both federal and state tax implications.
3) SALT relief
For those that live in high property tax states like California, New York and New Jersey, OBBBA provides measurable tax relief. As a refresher, TCJA implemented a $10,000 annual cap on the amount of State and Local Taxes (SALT) that individuals can deduct from their federal taxable income. Before TCJA, there was no cap on the amount of state and local taxes that could be deducted.
OBBBA temporarily obviates some of the impact of the TCJA’s SALT deduction limitation by temporarily raising the SALT deduction cap to $40,000 ($20,000 for married filing separately) for tax years 2025-2029.
This increased cap applies to taxpayers with modified adjusted gross income (MAGI) at or below $500,000 for married couples filing jointly and single taxpayers, and at or below $250,000 for married individuals filing separately. (Both income limits are subject to an annual inflation adjustment.)
This increased annual deduction is subject to an income phase-out, beginning for taxpayers with MAGI above $500,000 for married couples filing jointly and single taxpayers, and $250,000 for married individuals filing separately. Specifically, the cap is reduced by 30% of a taxpayer’s MAGI exceeding the threshold amount, though it cannot be reduced below $10,000 (or $5,000 for married filing separately). The cap and phase-out thresholds increase by 1% each year through 2029.
After 2029, the SALT deduction cap reverts to $10,000 ($5,000 for married filing separately), unless new legislation is passed.
4) Rollback of Clean Energy Credits
Better act fast if you’ve been thinking of buying an electric vehicle or installing residential clean energy equipment like rooftop solar panels, battery storage or geothermal heat pumps.
OBBBA promptly brings to a halt the available clean energy tax credits in these areas.
It eliminates the $7,500 new EV tax credit after September 30th of this year. It also abolishes at the end of this year both the $4,000 used EV tax credit as well as the up to $1,000 credit for installing a home EV charging station.
It also reverses a provision in the Inflation Reduction Act (IRA) of 2022 which had extended the federal Residential Clean Energy Credit at 30% through 2032 and included a phase-down through 2034. Homeowners who have installed qualifying clean energy systems which are operational by December 31, 2025 are still able to claim the 30% credit for their installation costs. Those who installed systems after this date will no longer be eligible for the credit.
5) Trump Baby Accounts
OBBBA introduces a new tax-advantaged investment program that creates a new investment account for every new American baby.
The accounts aim to provide a financial head start for children, encouraging early saving and investing for future goals. Children under 18 who are U.S. citizens with Social Security numbers are eligible.
Children born between January 1, 2025, and January 1, 2029, will receive a one-time government contribution of $1,000. Parents can open accounts for children born before 2025, but they won’t receive the government contribution.
Annual contributions are capped at $5,000. Employers can contribute up to $2,500 annually, which counts towards this limit and is tax-free for the employee.
Account earnings grow tax-deferred. Funds can be accessed at age 18, with restrictions on the amount and purpose of withdrawals until age 30. Qualified withdrawals for specific expenses like college or buying a home are taxed at the long-term capital gains rate. Non-qualified withdrawals are taxed as ordinary income and may incur a penalty if the beneficiary is under 30.
Lastly, they can be used alongside similarly designed accounts like 529 plans or Roth IRAs.
The One Big Beautiful Bill Act and Your Financial Future
Regardless of where you live or how much money you have, the One Big Beautiful Bill Act will have significant implications for individuals and families. From making TCJA tax rates and estate exemptions permanent to providing temporary SALT relief and rolling back clean energy credits, the changes will have a lasting impact.
The biggest takeaway? It’s critical to stay informed and consult a financial professional you trust to help you navigate its impact accordingly. To discuss how you’ll be impacted by OBBBA, please reach out to a wealth advisor today.
Disclosure:
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser with its principal place of business in Long Beach, California. HH may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of HH, please contact HH or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com.
This blog is provided for general information purposes only. No portion of the content serves as the receipt of, or as a substitute for, personalized investment advice from HH or any other investment professional of your choosing. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant. All opinions or views reflect the judgment of the author as of the publication date and are subject to change without notice. All information presented herein is considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.
