Decoding the “One Big Beautiful Bill Act”: What Investors, Advisors, and Families Need to Know
The Trump administration’s landmark tax and spending legislation—officially titled the “One Big Beautiful Bill Act”—has cleared a major hurdle in Congress, recently passing the House of Representatives in a strictly partisan vote. Not a single Democrat supported the bill; two Republicans opposed it, one voted “present,” and two abstained from voting. Despite this, the legislation passed its first crucial test and now advances to the Senate, where, if approved, it will proceed to President Trump for final signature.
It is important to note that the last major tax reform, the 2017 Tax Cuts and Jobs Act, included several key provisions scheduled to expire by the end of 2025. As a result, the fate of this bill is critical to the future of U.S. taxation. Given the high partisan stakes—particularly on the eve of the pivotal 2026 midterm elections—I see little room for Republican defections in the Senate. Should one or two senators oppose the measure, they would almost certainly face intense pressure from party leadership and the formidable Trump political apparatus—a career risk few would be willing to take. My expectation is that all Democrats will oppose the bill, and that, if needed, Vice President JD Vance will cast the tie-breaking vote in his constitutional capacity as President of the Senate.
With this context, clients and financial professionals alike are rightly asking: What are the practical implications of this sweeping legislation? At over 1,000 pages, the bill is complex. Here, I distill the key provisions most relevant to Wealthstone clients and to my network of estate planning attorneys, CPAs, bankers, and fellow advisors. Below is a section-by-section breakdown of the bill’s most consequential policy changes, followed by my summary.
Major Policy Changes in the “One Big Beautiful Bill Act”: A Section-by-Section Breakdown
Personal Income Taxes
Permanent Lower Tax Rates
The bill permanently enshrines the individual tax brackets introduced by the 2017 Tax Cuts and Jobs Act (TCJA). The lower rates—10%, 12%, 22%, 24%, 32%, 35%, and 37%—are here to stay, ensuring taxpayers will not see a reversion to the higher pre-2017 rates. This change provides greater after-tax income and enhanced predictability for financial planning.
Larger, Permanent Standard Deduction
The expanded standard deduction—currently $14,600 for individuals and $29,200 for married couples—becomes the new norm, with an additional temporary bonus of $1,500 for singles and $1,000 for couples from 2025 through 2028. This further reduces taxable income, particularly benefitting middle-income households and retirees.
No Return of Personal Exemptions
The bill formally abolishes the $4,050 per-person personal exemption, cementing the post-2017 regime.
Enhanced Child Tax Credit
The Child Tax Credit remains at $2,000 per child permanently, with a temporary boost to $2,500 per child for tax years 2025 through 2028—delivering extra support to families with children during those years.
Increased, Permanent Tax Break for Business Owners
Owners of pass-through businesses—S corporations, partnerships, sole proprietors—can now deduct 23% of qualified business income (up from 20%), with this provision made permanent. This creates a more favorable landscape for entrepreneurs.
High Estate & Gift Tax Exemption Maintained
The federal estate and gift tax exemption, previously set to drop to roughly $7 million in 2026, will instead remain at approximately $15 million per person (over $30 million per couple), indexed for inflation. This significant exemption facilitates the transfer of wealth across generations with minimal tax exposure.
AMT Exemption Remains High
The higher Alternative Minimum Tax (AMT) exemption is permanently extended, reducing exposure for upper-middle-income households.
Updated Limits on SALT
The state and local tax (SALT) deduction cap is increased to $40,000, subject to a phase-down for higher-income households, with a minimum cap of $10,000.
No Restoration of Minor Deductions
Deductions for bicycle commuting, most moving expenses, and unlimited gambling losses are not reinstated.
Greater Flexibility for ABLE Accounts
Enhanced contribution limits and the ability to roll 529 funds into ABLE accounts are retained, streamlining special needs planning.
Student Loan Forgiveness for Death or Disability Made Permanently Tax-Free
Federal student loan debt forgiven due to death or permanent disability will remain excluded from taxable income, providing permanent peace of mind for borrowers and their families.
Relief for Workers and Families
Tips and Overtime Pay Temporarily Tax-Free (2025–2028)
For four years, all cash tips reported to the IRS and the extra pay from overtime work are exempt from income tax. This delivers a substantial pay boost to service and hourly workers.
Increased Standard Deduction for Seniors (2025–2028)
Taxpayers aged 65 and older will receive an additional $4,000 standard deduction per person for four years, lowering taxable income for retirees.
Deductible Car Loan Interest
Interest paid on new car loans issued after 2024 will become tax-deductible, subject to several limitations. To qualify, the vehicle must have its final assembly in the United States, and the deduction is capped at $10,000 per loan. The benefit phases out for single filers with adjusted gross income above $100,000 and for joint filers above $200,000. This provision is available for tax years 2025 through 2028 and is designed to help ease the cost of vehicle ownership for many households.
Expanded Employer Child Care Tax Credit
Employers will now receive a 40% tax credit (up from 25%) on eligible child care expenses, with the annual limit increased from $150,000 to $500,000 (and up to $600,000 for certain small businesses). This is designed to incentivize greater employer support for working parents.
Permanent, Simplified Paid Family & Medical Leave Tax Credit
The tax credit for employers who offer paid family and medical leave is simplified and made permanent, promoting family-friendly workplace policies.
Broader Adoption Tax Credit, Especially for Tribal Adoptions
The adoption tax credit is expanded and made more accessible, including new provisions for Native American adoptions.
New Tax Credit for School-Choice Scholarships
Individuals can now claim a tax credit for donations to organizations that provide scholarships for private school students, strengthening private support for K-12 education.
Expanded 529 Plan Uses
529 savings plans are now permitted to cover K-12 homeschooling expenses, tutoring, and professional credentialing exams, in addition to higher education.
Above-the-Line Charitable Deduction Returns (2025–2028)
A $300 ($150 for singles) charitable deduction is available to all filers—even those who do not itemize—for tax years 2025 through 2028.
Tax-Free Employer Student Loan Payments Made Permanent
Employers can continue to contribute up to $5,250 annually toward employees’ student loan debt, with those payments excluded from the recipient’s taxable income.
Permanent Disaster Loss Tax Relief
Taxpayers affected by federally declared disasters may permanently deduct a greater share of their losses.
Introduction of “MAGA” Retirement Accounts and Starter Accounts
The bill creates a new Roth-style, after-tax retirement account and establishes a federally seeded $1,000 “starter” account pilot for eligible first-time or lower-income savers.
Health Plan and HSA Changes
CHOICE HRA: New Flexible Health Reimbursement Option
Employers are authorized to offer a “Custom Health Option & Individual Care Expense Arrangement” (CHOICE HRA), enabling employees to purchase individual health insurance with tax-free reimbursements, providing an alternative to traditional group plans.
Pre-Tax Exchange Premiums
Employees may use pre-tax payroll deductions to pay for ACA Marketplace health insurance, improving affordability for those not covered by employer health plans.
Small Employer Tax Credit for CHOICE HRA
Small businesses (with fewer than 50 employees) receive a substantial incentive for adopting CHOICE HRAs: a $100 per employee per month tax credit in the first year, and $50 per month in the second.
Medicare Enrollees Retain HSA Eligibility
Individuals enrolled in Medicare Part A may continue to contribute to Health Savings Accounts (HSAs), extending the ability of seniors to save tax-free for health expenses.
Expanded HSA Flexibility
HSAs are now permitted to cover gym memberships and direct primary care, and can accept rollovers from FSAs and HRAs, making them even more versatile for health expense planning.
Consumer and Transaction Taxes
Elimination of the Indoor Tanning Tax
The federal 10% excise tax on indoor tanning services is repealed.
Repeal of Personal Clean Energy Tax Credits
All federal tax incentives for electric vehicles, home energy improvements, solar panels, and charging stations are phased out or eliminated, raising the after-tax cost of pursuing green energy solutions.
New Federal Vehicle Registration Fee
A new federal annual registration fee is introduced for all vehicle owners, with proceeds earmarked for the Highway Trust Fund to support infrastructure projects.
Miscellaneous Excise Tax Adjustments
Includes lower taxes on gun silencers, a new fee on certain outbound remittances, and a higher investment income tax for certain private foundations.
Financial Advisors, Tax & Estate Planners
Ban on IRS-Run Free Tax Filing System
The IRS is prohibited from developing or operating a direct-to-taxpayer free e-filing system, thereby preserving the market for private-sector tax preparers and software providers.
Enhanced Penalties for Data Leaks
Penalties for unauthorized disclosure of taxpayer information are tripled, serving as a robust deterrent against privacy breaches.
Regulatory Agency Budget Rescissions
Unspent funds are clawed back from regulatory agencies such as the PCAOB and CFPB, which may result in lower oversight costs for advisory and financial firms.
Mandate for Medicare to Use AI in Fraud Detection
Medicare is now required to deploy artificial intelligence for the detection and recapture of improper payments, aiming to curb fraud and inefficiency.
Permanently Elevated Estate and Gift Tax Exemption
The federal estate and gift tax exemption is permanently set at approximately $15 million per individual (over $30 million per married couple), indexed for inflation. This extension of the historically high exemption removes the urgency around “use it or lose it” planning that was expected before the 2026 sunset. It enables ultra-high-net-worth families to continue leveraging aggressive gifting strategies, dynasty trusts, and other multi-generational planning tools without concern for a significant reduction in the exemption.
Generation-Skipping Transfer (GST) Tax Exemption Remains Aligned
The generation-skipping transfer (GST) tax exemption remains pegged to the unified estate and gift tax exemption. This alignment preserves the advantages of long-term, multi-generational trust structures, such as dynasty trusts, for clients seeking to maximize legacy and tax efficiency.
Portability and Step-Up in Basis Unchanged
Portability of the federal estate tax exemption between spouses remains intact, providing continued flexibility for married couples in estate planning. Importantly, the bill does not alter the step-up in basis at death—ensuring that appreciated assets included in a decedent’s estate will continue to receive a fair market value adjustment, thereby minimizing capital gains exposure for heirs.
No New Restrictions on Advanced Trust Techniques
The Act does not introduce new restrictions on grantor trusts, GRATs (Grantor Retained Annuity Trusts), SLATs (Spousal Lifetime Access Trusts), or other “defective trust” planning vehicles. Family limited partnerships (FLPs) and valuation discount strategies are likewise untouched. This means the full array of advanced estate planning techniques remains available, and practitioners can confidently recommend their continued use.
Annual Exclusion and Lifetime Gifting
No changes are made to the annual exclusion amount for gifts, which remains indexed for inflation. Lifetime gifting, both outright and through irrevocable trusts, continues to be a central pillar of effective estate tax mitigation.
New Excise Tax on ESOP Share Buybacks
A notable addition is the imposition of a 1% excise tax on share buybacks executed by S corporations with employee stock ownership plans (ESOPs). This provision may impact succession planning and liquidity strategies for family businesses with ESOP structures, requiring careful consideration in future transactions.
Charitable Planning and Foundations
The Act increases the excise tax rates on large private foundations and university endowments and expands the scope of the net investment income tax. Foundations with significant business holdings may see broader definitions of taxable income, requiring careful compliance and proactive review of charitable vehicles in estate plans.
State-Level Considerations Remain
While the federal exemption is dramatically increased, state-level estate and inheritance taxes are unchanged. Estate planners and trust officers must remain vigilant regarding state-specific thresholds and trust situs optimization.
Bigger Standard Deduction for Seniors
For tax years 2025–2028, taxpayers aged 65 and older enjoy an additional $4,000 standard deduction per person.
HSAs Remain Available for Seniors
Even after enrolling in Medicare Part A, seniors retain the ability to contribute to HSAs, preserving a critical avenue for tax-advantaged health savings.
Stricter Medicaid Asset Rules and Lower Federal Pension Formulas
Medicaid eligibility will now include a 10-year lookback for asset transfers (up from five years), complicating Medicaid planning for long-term care. Additionally, federal pensions will be calculated based on an employee’s highest five years of salary, rather than three, effectively lowering future benefits for new retirees.
Business Owners and Rural America
Full and Immediate Expensing for Business Investments
Businesses can immediately write off the entire cost of new equipment and research expenses, with the Section 179 immediate expensing cap raised to $5 million. This provision is particularly advantageous for small and growing enterprises.
Higher 1099-K Reporting Threshold
The threshold for third-party payment reporting via Form 1099-K is set at $5,000, reducing administrative burden and surprise tax forms for small businesses and part-time sellers.
Enhancements to the Farm Bill
The bill raises the reference price used for farm subsidies, expands disaster relief, and enhances crop insurance, all aimed at fortifying the financial stability of rural communities.
Opportunity Zones
Second Generation of Opportunity Zone Funds
A new round of Opportunity Zones is established for tax years 2027 through 2033, with similar—but in some cases enhanced—benefits relative to the first round set to expire in 2026. Notably, the new framework offers a higher basis step-up (up to 30%) for investments in qualified rural opportunity funds, versus the original 10-15% basis step-up. These incentives are designed to encourage capital flows into both urban and, for the first time in earnest, rural economic development projects.
Energy and Infrastructure
Streamlined Federal Pipeline Permitting with High Fees
Energy companies may now obtain a federal permit for oil, gas, hydrogen, and carbon pipelines via a single application, subject to a $10 million fee. This measure is intended to accelerate large-scale infrastructure deployment.
Accelerated LNG Exports
A new provision allows companies to fast-track a liquefied natural gas (LNG) export license by paying a $1 million fee, supporting U.S. energy export ambitions.
Major Rollback of Federal Green Energy Spending
Over $180 billion in previously allocated federal clean energy spending under the Inflation Reduction Act is rescinded, marking a substantial pivot away from renewable energy investment.
National Fiscal Policy
$4 Trillion Debt Ceiling Increase
The bill raises the federal debt ceiling by $4 trillion, providing room for additional borrowing. While this measure averts the immediate risk of a debt default, it does increase the nation’s long-term fiscal obligations.
Conclusion
The “One Big Beautiful Bill Act” represents the most consequential overhaul of the U.S. tax and fiscal framework in a generation. For clients and advisors alike, this legislation compels a thorough reassessment of tax, estate, and overall financial planning strategies to ensure optimal positioning for the years ahead.
It is evident that the bill will materially increase U.S. federal debt, while the ultimate impact of the administration’s trade policies remains uncertain. Should the administration succeed in its efforts to curb waste and fraud, and secure favorable trade agreements, a portion of the bill’s added expenditures could potentially be offset. Conversely, if these objectives are not achieved, the near-term fiscal picture will likely deteriorate. One critical variable is whether increased household and corporate wealth—driven by substantial tax savings—will generate enough economic activity to meaningfully offset higher deficits over the long run. This is, in large part, the administration’s bet.
If this administration—and its successors—can maintain a disciplined focus on rooting out inefficiency, driving GDP growth, and securing advantageous trade deals, some of the negative projections currently in circulation may ultimately prove exaggerated. Is this bill a model of fiscal restraint? No. Will it destabilize the nation’s financial foundations? Also no.
For high-net-worth families, business owners, and their advisors, the imperative is clear: seize the expanded planning opportunities afforded by the bill—particularly the historically high estate tax exemptions, Opportunity Zones 2.0, 100% bonus depreciation, charitable deductions, and other key provisions—and act proactively to secure lasting tax benefits for years to come.
For further analysis or personalized guidance on how these provisions may affect your specific situation, please feel free to reach out.
Disclaimer:
The information provided in this article is for general informational and educational purposes only and is not intended as, and should not be construed as, legal, tax, investment, or accounting advice. The content is based on current law and proposed legislation as of the date of publication, which may be subject to change. While every effort has been made to ensure the accuracy of the information provided, Wealthstone Private Wealth Management makes no guarantees and accepts no responsibility for any errors or omissions, or for any loss or damages arising from reliance on this content. Individual circumstances can vary widely, and the strategies discussed may not be appropriate for all readers. Before making any financial, tax, or legal decisions, you should consult with a qualified professional who can advise you based on your specific situation. Wealthstone Private Wealth Management is not a law firm, and no portion of this article should be interpreted as legal advice or the formation of an attorney-client relationship.
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