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What the One Big Beautiful Bill Act Means for Individual Taxes, Families & Wealth Planning

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Permanent Lower Rates & Standard Deduction

The individual tax cuts first introduced in 2017 are now permanent. This includes maintaining the lower tax brackets and keeping the expanded standard deduction in place—$15,750 for single filers and $31,500 for joint filers in 2025 (indexed for inflation).

Support for Families & Seniors

Starting in 2025:

  • The Child Tax Credit increases to $2,200 per child, with the refundable portion ($1,400) and expanded income thresholds made permanent.
  • A new $6,000 “senior deduction” is available for taxpayers aged 65 and older (2025–2028), phasing out at $75,000 for single filers or $150,000 for joint filers.

Temporary Income Exclusions

From 2025 to 2028, certain types of income are temporarily excluded from federal taxation:

  • Up to $25,000 in tips for service workers
  • Up to $12,500 in overtime pay (or $25,000 for joint filers)

Estate & Wealth Planning Enhancements

The lifetime estate and gift tax exemption increases to $15 million per person starting in 2026, with annual inflation adjustments. This provides high-net-worth individuals with expanded flexibility for estate planning and wealth transfers.

New Charitable Giving Floor

A new 0.5% floor applies to charitable contributions, meaning taxpayers must give more than 0.5% of their adjusted gross income before charitable donations are deductible. Traditional income percentage limits (e.g., 60% for cash gifts) remain unchanged.

Limitations on High-Income Deductions

For taxpayers in the top 37% tax bracket, the value of all itemized deductions is capped at 35%, reducing the tax benefit for high earners.

Expanded Benefits for Founders and Investors

The Qualified Small Business Stock (QSBS) gain exclusion under Section 1202 is expanded:

  • New partial exclusions at 3- and 4-year holding periods (50% and 75% respectively) for stock issuances after the date of enactment.
  • The lifetime gain exclusion increases from $10 million to $15 million, increased for inflation.

These updates provide significant tax benefits for founders, early investors and entrepreneurs operating as C corporations.

New Savings Accounts for Children

For children born between 2024 and 2028, new federally sponsored savings accounts are available, seeded with $1,000 and eligible for annual family contributions up to $5,000. The accounts grow tax-free and up to 50% of the balance can be used for education, first-time home purchases or starting a business after age 18.

EV Tax Credit Sunset

The $7,500 federal electric vehicle credit remains available through September 2025 but will be discontinued for purchases made after this date, subject to vehicle and income qualifications.

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Our Speaker:

LeighAnn Costley, Partner, Frazier & Deeter Advisory, LLC

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