The tax landscape shifted significantly in July 2025 with the passage of what has come to be known as the One Big Beautiful Bill Act (OBBBA). For individuals, families, and business owners, the new law reshapes deductions, income thresholds, charitable giving rules, business incentives, and long-term planning considerations.
During a recent Halbert Hargrove webinar, Senior Wealth Advisor Nick Strain and Windes’ tax partner Guy Nicio walked through the most meaningful components of the bill and how taxpayers can help prepare themselves for year-end and beyond. Their discussion emphasized the importance of understanding which provisions are now permanent, which phase out, and how these changes interact with your broader wealth strategy.
Below is an educational overview of the key themes to help support planning conversations heading into 2026.
Stability in Individual Tax Rates and Deductions
One of the most impactful elements of the new bill is the permanent extension of the individual tax brackets introduced under the 2017 Tax Cuts and Jobs Act.
The seven-bracket structure, topping out at 37%, will now remain in place unless future legislation changes it. This provides meaningful certainty for long-term planning and helps allow individuals to more reliably model multi-year tax projections.
The standard deduction is also permanently increased, while personal exemptions remain eliminated. As Guy noted during the webinar, this means fewer taxpayers will benefit from itemizing unless they have significant deductible expenses. For higher-income households, the focus shifts to intentionally planning mortgage interest, charitable contributions, and state and local taxes to determine whether itemizing still makes sense in any given year.
SALT Deduction Expansion — With Limits
For those living in high-tax states, the expanded State and Local Tax (SALT) deduction may be one of the most relevant changes. From 2025 through 2029, the limit increases from $10,000 to $40,000 for eligible taxpayers.
However, this expanded benefit phases down for households with adjusted gross income (AGI) between $500,000 and $600,000. Once AGI exceeds $600,000, the cap reverts to $10,000. At that point, advanced planning such as timing state tax payments or strategically shifting income may be important.
It’s also important to remember that beginning in 2030, the cap returns to $10,000 unless future legislation extends it.
Opportunities With Pass-Through Entity (PTE) Tax Elections
One area Guy emphasized repeatedly is the value of the Pass-Through Entity (PTE) tax election, a strategy that remains available under the new law. Eligible business owners—those with income reported through partnerships, S corporations, or multi-member LLCs—can elect to pay state income tax at the entity level.
This creates a federal deduction for the full amount of state tax paid, bypassing the SALT cap entirely. Because California taxes owners of pass-through entities at rates up to 13.3%, this election can help reduce federal taxable income.
However, taxpayers with single-member LLCs cannot take the deduction unless they add a partner and convert to a multi-member entity. For S corporation owners, compensation planning matters as well. W-2 wages do not qualify for the PTE deduction, but K-1 income does.
The deadline for the annual election is typically June 15th, though Guy noted temporary extensions for Los Angeles County due to disaster relief.
Charitable Giving: New Opportunities and New Floors
Beginning in 2026, charitable contributions will be subject to a new 0.5% AGI floor. This means the first 0.5% of AGI donated in a year will not be deductible. Donors may want to consider “bunching” contributions—making multiple years’ worth of gifts in a single year—to exceed the floor and maximize deductions.
Additionally, non-itemizers will be allowed to take an above-the-line charitable deduction of up to $1,000 starting in 2026.
Guy suggested that strategies such as donor-advised funds and qualified charitable distributions (QCDs) from IRAs can play a valuable role, especially for those age 70½ and older. QCDs are not subject to the AGI floor and can help satisfy required minimum distributions (RMDs), giving them unique value in retirement planning.
Key Updates Affecting Families and Wage Earners
Several new provisions apply from 2025 through 2028, including:
- Tax-free treatment of certain tip income, subject to AGI limits
- Deductions for overtime pay, capped at $12,500 for single filers and $25,000 for married couples
- A new deduction for interest on auto loans for U.S.-assembled vehicles
While these provisions may not directly impact everyone, they may be relevant for adult children or family members. Guy noted that structuring legitimate wages through family businesses can allow younger workers to potentially benefit from these deductions within their lower income thresholds.
Estate, Gift, and Trust Planning: A Positive for Families
High-net-worth families will find welcome news in OBBBA’s permanency of the federal estate and gift tax exemption. Beginning in 2026, the exemption rises to $15 million per spouse, adjusted for inflation—far higher than the previously scheduled reversion to roughly $5 million.
This stability offers families clarity as they consider wealth transfers, irrevocable trusts, and multi-year gifting strategies.
Guy emphasized that even couples whose estates fall below the exemption today should consider filing a portability election upon the death of the first spouse. This preserves unused exemption amounts and can help reduce estate taxes decades later, especially as assets appreciate.
Business Owners Benefit From Bonus Depreciation and Section 179
For business owners, OBBBA restores and permanently extends 100% bonus depreciation for qualified assets beginning in 2025. Instead of depreciating equipment or improvements over multiple years, owners can fully deduct costs in year one.
In addition:
- Section 179 limits increase to $2.5 million, with phase-outs beginning at $4 million
- Manufacturing investments and certain real property may qualify for expanded deduction rules
- Interest expense limitations loosen as depreciation no longer reduces the adjusted taxable income base
Together, these changes provide meaningful flexibility for managing taxable income and timing acquisitions around year-end.
Planning Implications for 2025 and Beyond
Nick and Guy concluded with several key planning themes for individuals and business owners:
- Model forward: Prepare multi-year projections that reflect the new law, AGI thresholds, and phase-outs.
- Review itemizing vs. standard deduction
- Assess PTE elections early, especially for California taxpayers.
- Revisit estate strategies while exemption levels remain high.
- Consider timing capital expenditures to help benefit from bonus depreciation.
- Coordinate business planning and personal planning, since many provisions interact.
Across all topics, the message was clear: 2025 is a pivotal year, and proactive planning, rather than reacting at filing time, is an effective path to managing taxes under the new law.
Have Questions About How the New Law May Affect You?
Halbert Hargrove’s advisory team is ready to help you navigate the 2025 tax law changes and incorporate these updates into your personalized financial plan. Reach out to discuss how these provisions may affect your income, business structure, charitable giving, or estate planning strategy. Want to learn more—watch the recording from the event here.
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