How the One Big Beautiful Bill Act Affects Your Personal Taxes

While much attention has focused on the One Big Beautiful Bill Act (OBBBA) business tax provisions, the legislation also delivers significant individual tax changes that directly impact business owners and their families. From enhanced estate planning opportunities to new temporary deductions, these personal tax modifications create both immediate benefits and long-term planning considerations that should be addressed.

Permanent Extensions of TCJA Provisions

OBBBA permanently preserves many provisions of the Tax Cuts and Jobs Act that were set to expire. The existing tax brackets (ranging from 10% to 37%) now have permanent status, alongside the expanded standard deduction ($15,750 for single filers and $31,500 for joint filers in 2025).

The child tax credit rises to $2,200 with permanent status and inflation adjustments, providing long-term certainty for family tax planning.

State and Local Tax Relief in the One Big Beautiful Bill Act

A widely discussed change involves temporarily raising the state and local tax (SALT) deduction cap to $40,000, with an annual increase of 1% through 2029, before reverting to $10,000. This temporary relief is particularly relevant for business owners in high-tax states.

New Temporary Deductions Through 2028

Multiple new temporary deductions are in effect through 2028: up to $25,000 for tip income in qualifying industries, up to $25,000 for qualified overtime pay (for joint filers), and up to $10,000 for interest on American-made vehicle loans. Taxpayers 65 and older gain access to an additional $6,000 bonus deduction. These provisions require careful income timing and documentation strategies to ensure compliance.

Enhanced Estate Planning Opportunities

Estate planning benefits expanded with the federal gift and estate tax exemption climbing to $15 million per person ($30 million for couples) starting in 2026. This significant increase creates new opportunities for business owners to consider succession planning for transfers to the next generation.

Strategic Planning Considerations

The temporary nature of several individual deductions through 2028 creates timing opportunities that should be evaluated alongside cash flow projections. High-net-worth business owners should reassess their succession planning strategies in light of the expanded estate tax exemptions that will take effect in 2026.

Potential restrictions on deductions for high earners mean comprehensive tax planning is more critical than ever. Aligning business and individual tax planning becomes increasingly important as these provisions take effect.

The One Big Beautiful Bill Act provides significant opportunities for individuals and families, but maximizing these benefits requires strategic planning and careful timing. Consider scheduling a comprehensive tax planning review to ensure you capture all available advantages while positioning for future changes. Reach out to us today to get started.

Don’t miss the roundup of the OBBBA business tax implications on our blog.

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