Breaking Down Trump’s ‘One Big Beautiful Bill’: 2025 Tax Cuts, Deductions, and Wealth Planning Moves
On July 4th Trump's One Big Beautiful Bill passed.
Is it big?
Yes.
Is it beautiful?
Depends who you ask.
Let’s dissect the bill, discuss planning opportunities and review what this could mean for you for the remainder of 2025, and into 2026 and beyond.
To start - this bill did extend the existing larger tax brackets and smaller tax rates that Trump originally passed in 2017.
The good news here is that this is a win for essentially all taxpayers, who, if these rates and brackets weren’t extended, would be facing higher taxes into 2026 & beyond.
Some other items of the tax code that got extended, that were supposed to be temporary were:
The increased standard deduction
Section 199A deduction for qualified business income (QBI)
Increased gift limits
Increased estate tax exemption threshold
For individuals aged 65+, starting in 2025, there will be an increase in the standard deduction amount.
Under the TCJA, the 2025 gift tax exclusion amounts will increase due to inflation adjustments: from $15,000 to $15,750 for single filers, $22,500 to $23,625 for heads of household, and $30,000 to $31,500 for joint filers. These inflation-indexed thresholds will become permanent moving forward.
Further, for years 2025 -2028, there is a temporary increase at $6,000 for single filers and $12,000 for married filers who are 65+. This increase in deduction does phase out at $75k - $175k single and $150k - $200k joint.
For those who are able to itemize their taxes, all of the items on Schedule A have been adjusted in some way (except for the deduction for qualified medical expenses above 7.5% of AGI).
The state and local property tax (SALT) deduction has been temporarily increased to $40,000 growing at 1%/yr until 2030, at which point the SALT deduction will fall back down to $10,000. This increase in deduction does come with a MAGI phaseout from $500,000 - $600,000.
A planning opportunity could exist here where if you’re someone who gifts to charity & will benefit from a higher SALT deduction amount, your charitable contributions will stretch further until 2030.
Also - the bill doesn’t say anything about owners of pass-through entities restricting their ability to circumvent the SALT cap deduction by structuring their state tax payments as a business expense.
For those who owe PMI on your mortgage, this bill allows for that to be included in the mortgage interest calculation on Schedule A.
There also is a 0.5% of AGI floor for charitable contributions starting in 2026.
Meaning that if 0.5% * AGI of your charitable contribution won’t be counted as a deduction on Schedule A (note, there are respective AGI-based limits & percentages tied to the deductible amount here depending on the type of charity and how you gifted to the charity).
Section 199A or the qualified business income (QBI) deduction survived and kept the 20% deduction (in the house’s bill, it was 23% but that did not make the final draft).
The QBI deduction does include a minimum $400 deduction for taxpayers with at least $1,000 of active qualified business income starting in 2026.
There are a few below-the-line deductions as defined as:
A charitable contribution deduction available to taxpayers who claim the standard deduction (this is $1,000, which is a big win considering you don’t get any charitable benefit for charitable contributions if you don’t itemize and because the standard deduction increased, few individuals are actually able to itemize)
A deduction for employees who receive income through tips (this is a $25,000 deduction of "qualified tips” from 2025-2028 which gets phased out at $150k for single filers and $300k for joint filers).
A deduction for workers earning overtime pay (this another deduction of $12,500 for single filers and $25,000 for joint filers who have overtime compensation above base wages which phases out at $150k single filers and $300k joint filers, reducing by $100 for every $1,000 of MAGI above this level).
A deduction for qualified interest paid on auto loans (for personal vehicles less than 14,000 pounds assembled in the U.S. purchased AFTER 12/31/2024 allows for total deductible interest of $10,000 to be deductible. This benefit phases out at $100k for single filers and $200k for joint filers and phases out fully by $200 for every $1,000 of MAGI of income over the limit. Note: if you refinanced a car loan in 2025 for a vehicle purchased prior to 12/31/2025, you’d qualify for the deduction - assuming you’re below the income phaseouts).
The child tax credit increased from $2,000 to $2,200 beginning in 2025 and will be adjusted for inflation starting in 2026.
The Alternative Minimum Tax (AMT) exemptions are permanently extended starting in 2026 but once the exemption threshold is hit, the AMT exemption phaseout rate is 50%, not 25% like prior.
This means, once your income is over the AMT exemption, your exemption disappears faster than before.
The planning opportunity that exists here is primarily for individuals who are subject to AMT, specifically those with incentive stock options, to exercise their vested options to take advantage of the current higher AMT exemption thresholds and a more gradual phaseout calculation.
The estate exemption will be elevated to $15,000,000 per person, which is great news for those with net worths reaching this level (as a gross estate above this amount upon passing is taxed at 40%).
Notably, there are some additions to the eligible 529 expenses which include tutoring, curriculum materials, standardized testing, and educational therapy for students with disabilities.
There are some health savings account changes, prior tax law only allowed the creation of a health savings account with an eligible high deductible medical health plan - as not all high deductible medical health plans are health savings account eligible.
Now you can have a health savings account on ANY bronze or catastrophic plan - big win!
There’s a new account created for children, dubbed, a Trump account which allows parents to save for their children in a more tax advantaged way than what’s been available to this point.
Let’s consider how this account works and what its benefit are:
Prior to a child turning 18, and starting in July of 2026, contributions up to $5,000 per year can be made to a Trump account on behalf of the beneficiary. Contributions are not tax deductible by the contributor but grow tax deferred.
Other entities, federal, state, and local governments and 501c3 organizations can contribute on behalf of the beneficiary and they don’t count towards the $5,000 contribution limit.
Employers can also contribute $2,500 to the employee - but this does appear to be subject to the $2,500 annual cap (but do look to be excluded from the employee’s taxable income).
No distributions from the account are allowed until the beneficiary turns 18 & cannot be rolled into an IRA (or so it appears now).
After the child reaches age 18, it appears that the funds within the account will have to be distributed.
It remains unclear at this point, what ultimately that could mean - such as, over what timeline and can we convert those dollars to a Roth IRA for the child?
It also appears to be the case that there’s a pilot program being created for $1,000 of contribution but the logistics of this are unclear.
The law allows for qualified opportunity zones and qualified opportunity funds (aggregating qualified opportunity zones) to continue and allows for states to designate a new round of qualified opportunity zones every 10 years starting in 2026.
Benefits of qualified opportunity zones were provided for investors based on longer holding periods:
A 10% increase in basis on deferred gains after holding the investment for five years
An additional 5% basis increase for investments held over seven years, allowing up to 15% of the original deferred gain to be permanently excluded from taxation
Full exclusion of any post-investment appreciation if the Qualified Opportunity Fund (QOF) investment was held for more than 10 years
Interestly, or not (provided Musk & Elon’s X debacle), there is a repeal of the clean energy credits.
Clean Vehicle Credit: Offers up to $7,500 for the purchase of a new electric vehicle and $4,000 for a used one. This credit will expire for vehicles acquired after September 30, 2025.
Alternative Fuel Vehicle Refueling Property Credit: Removes a up to $1,000 deduction for electric vehicle charging equipment installed at a taxpayer’s primary residence placed in service after June 30, 2026.
Energy Efficient Home Improvement Credit: Ends what was up to $1,200 in tax credits for qualifying home improvements, such as windows, doors, insulation, heating/cooling systems, and energy audits by December 31, 2025.
Residential Clean Energy Credit: Ends what was covering 30% of the cost for installing eligible systems such as solar panels, wind turbines, geothermal heat pumps, and fuel cells for expenditures made after December 31, 2025, regardless of the service start date.
Bonus deprecation is permanently restored at 100% after 1/1/25.
Student loan being discharged tax-free upon death are made permanent.
For NEW student loan borrowers, there are considerable changes.
The big headline here is that the government is retreating from student loan lending by instituting caps of what they’re willing to lend.
For July 1, 2026 this is as follows:
Graduate degrees capped at $100k
Professional degrees capped at $200k
Parent PLUS loans capped at $20k annually and $65k total per child.
Graduate PLUS loans which allowed parents to borrow up to the full cost of attendance for undergraduate education is being eliminated.
So what does this mean?
Borrowers who request more than this will have to either go to private lenders or extend their education to get through college.
In my opinion, this will result in more students thinking twice about borrowing, or going to college in the first place without more favorable ways to pay for school.
Trump’s “One Big Beautiful Bill” is undeniably sweeping—extending major tax provisions from the 2017 TCJA, reshaping deductions, repealing clean energy incentives, and introducing entirely new planning vehicles like the Trump account. Whether you view it as bold progress or political overreach, one thing is clear: this bill creates both opportunity and complexity.
For small business owners, high earners, and families alike, the next 18 months are a critical window to reassess strategies around:
Entity structure and QBI optimization
Charitable giving and SALT deductions
Estate planning under the new exemption thresholds
Student loan planning in light of federal lending restrictions
Tax-advantaged savings for kids and healthcare
Many of these provisions are time-sensitive—some phasing out as early as 2025—while others open new doors that require proactive planning to fully capitalize on.