A couple months ago our newsletter focused on the tax bill that was working its way through congress. Congress recently passed this sweeping new piece of legislation dubbed by some as the “One Big Beautiful Tax Bill.”
While there have been a lot of media headlines surrounding the bill, we want to cut through the noise and highlight what actually matters for you.
Here’s a quick breakdown of the key provisions we believe will most impact high earners, business owners, and families we serve:
1) Tax Bracket Extensions & Standard Deduction Made Permanent
The individual tax brackets originally enacted under the 2017 Tax Cuts and Jobs Act (TCJA) are now permanent—meaning the lower tax rates and the enhanced standard deduction are here to stay. This adds long-term clarity to personal tax planning and reduces the risk of future tax hikes simply from legislative sunset provisions.
2) New Enhanced Standard Deduction for Seniors
Retirees get an extra boost: Individuals over 65 with Modified Adjusted Gross Income (MAGI) under $150,000 can now take an additional enhanced standard deduction. This phases out entirely once MAGI reaches $250,000, but it’s a meaningful benefit for many of our clients in the early years of retirement or those strategically managing distributions.
3) State and Local Tax (SALT) Cap Lifted—with a Catch
The infamous $10,000 SALT deduction cap has been lifted, but begins to phase out at $500,000 of income. This is a win for many of our clients, especially those in high-tax states, but we’ll want to carefully model this as income rises to see where the benefit begins to diminish.
4) Estate Tax Exemption Extended
The higher federal estate tax exemption amount which was set to expire after 2025, has now been extended. This gives affluent families more runway to make tax-efficient wealth transfers. We’ll continue to use tools like trusts, gifting strategies, and charitable planning to maximize this window.
5) Child Tax Credit Expanded to $2,200
The child tax credit is now $2,200 per qualifying child, up from $2,000. While this isn’t a game-changer for higher earners, it’s still helpful, particularly for clients in the phase-out range or those structuring their income intentionally to qualify.
6) QBI Deduction Extended + Bonus Depreciation Reinstated
Small business owners rejoice: the 20% Qualified Business Income (QBI) deduction has been extended, offering continued relief for pass-through entities. Additionally, bonus depreciation is back in full, allowing 100% expensing of qualifying assets in the year they’re placed in service. These two provisions are powerful tools to reduce taxable income and reinvest in growth.
7) New Charitable Deduction for Non-Itemizers + 0.5% Floor for Itemizers
Non-itemizers can now take a modest above-the-line charitable deduction, and for those who itemize, there’s a new 0.5% of income floor before deductions kick in. This change encourages continued giving while also rewarding generosity in a more consistent way across income levels.
8) Auto Loan Interest Deduction for Non-Itemizers (with Phaseouts)
A new and somewhat surprising benefit: non-itemizers can now deduct a portion of auto loan interest for US assembled vehicles, though this is phased out at higher incomes. This is for tax years 2025-2028.
What This Means for the Market
Beyond the tax benefits, this legislation also acts as a significant fiscal stimulus—putting more after-tax income in the hands of consumers and business owners. Combined with:
- Reduced tariff uncertainty
- Strong capital expenditures in AI and tech infrastructure
- Continued resilience in consumer spending
…we believe the market backdrop remains constructive heading into the second half of the year. Yes, valuations are elevated, but so are earnings expectations and productivity tailwinds, particularly from AI investments.
These changes open up new opportunities and potential pitfalls for tax, investment, and estate planning. Don’t hesitate to schedule a call or reach out with questions about how these changes might impact your plan.
