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Tax Planning

The One Big Beautiful Bill Act: What Changed for High Earners

The July 4, 2025 tax law made TCJA rates permanent, raised the SALT cap, expanded QSBS, set a $15M estate exemption, and tightened AMT from 2026.

The One Big Beautiful Bill Act: What Changed for High Earners

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What is the One Big Beautiful Bill Act?

  • It is the budget reconciliation law signed July 4, 2025 (Public Law 119-21) that made most 2017 TCJA individual provisions permanent.
  • The seven brackets from 10% to 37% remain; in 2026 the 37% rate starts above $640,600 single and $768,700 married filing jointly.
  • The standard deduction is $15,750 single and $31,500 joint for 2025, and $16,100 and $32,200 for 2026.
  • Many new breaks are temporary or phase out with income, so dates and thresholds matter.
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What is the One Big Beautiful Bill Act?

  • It is the budget reconciliation law signed July 4, 2025 (Public Law 119-21) that made most 2017 TCJA individual provisions permanent.
  • The seven brackets from 10% to 37% remain; in 2026 the 37% rate starts above $640,600 single and $768,700 married filing jointly.
  • The standard deduction is $15,750 single and $31,500 joint for 2025, and $16,100 and $32,200 for 2026.
  • Many new breaks are temporary or phase out with income, so dates and thresholds matter.

How did the SALT deduction change?

  • The cap on state and local tax deductions rose to $40,000 for 2025 and $40,400 for 2026, then grows 1% a year through 2029.
  • It shrinks by 30% of modified AGI above $500,000 (2025) or $505,000 (2026), but never below $10,000.
  • The cap is scheduled to return to $10,000 in 2030.
  • State pass-through entity tax elections for business owners were left in place.

What changed for itemizers and charitable giving starting in 2026?

  • For taxpayers in the 37% bracket, itemized deductions are trimmed so each dollar saves roughly 35 cents at most.
  • Itemizers can deduct charitable gifts only above a floor of 0.5% of AGI.
  • Non-itemizers can deduct up to $1,000 ($2,000 joint) of cash gifts to operating charities, not donor-advised funds.
  • The 60%-of-AGI limit for cash gifts to public charities is now permanent.

What changed for startup equity and the AMT?

  • QSBS issued after July 4, 2025 can earn a 50% exclusion after three years, 75% after four, and 100% after five.
  • The per-issuer QSBS cap rose to $15 million or 10 times basis, and the company asset limit to $75 million.
  • AMT exemptions stay at TCJA levels, but in 2026 the phase-out starts at $500,000 single and $1,000,000 joint and runs twice as fast.
  • Large ISO exercises can therefore trigger AMT at lower incomes than in 2025; California does not follow the QSBS changes.

What changed for estates and business owners?

  • The estate, gift, and GST exemption is $15 million per person in 2026, indexed for inflation, with no scheduled sunset.
  • The 20% qualified business income deduction for pass-through owners is permanent.
  • 100% bonus depreciation is permanent for qualifying property acquired after January 19, 2025.
  • Domestic research costs can again be deducted immediately, starting with 2025 tax years.

Which newer breaks have income limits or end dates?

  • A $6,000 deduction per person age 65+ applies for 2025 through 2028, phasing out above $75,000 of MAGI ($150,000 joint).
  • Deductions for qualified tips and overtime run 2025 through 2028 and phase out above $150,000 of MAGI ($300,000 joint).
  • EV credits ended for vehicles acquired after September 30, 2025, and residential clean-energy credits ended after 2025.
  • New "Trump accounts" for children include a $1,000 federal contribution for U.S. citizens born 2025 through 2028.

Key takeaways

  • Permanent rates and a $15 million exemption give more certainty for long-range planning, though future Congresses can change law.
  • High earners face new limits on itemized and charitable deductions starting in 2026.
  • The faster AMT phase-out makes ISO exercise planning more important.
  • Effects vary by household; confirm with a CPA, since Rubric does not prepare tax returns.
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