You may have heard whispers (or maybe fireworks) about the newly signed One Big Beautiful Bill Act (BBB) that went into effect on July 4, 2025. Whether you're a small business owner, a high-income earner, or someone focused on building generational wealth, this legislation brings sweeping changes that deserve your attention.
Here’s what I think you should know—without the political spin, just the practical insight.
1. Estate and Gift Tax Exemption Expanded
The federal estate and gift tax exemption jumps to $15 million per individual starting in 2026 (adjusted annually for inflation). That’s a big deal. The prior exemption of $13.99 million was set to be cut nearly in half next year—this change relieves that pressure.
But don’t hit pause on your planning. The core goal remains: get future growth out of your estate now. Life insurance, irrevocable trusts, and gifting strategies still play a critical role in long-term tax efficiency and wealth transfer.
2. Income Tax and Capital Gains: No Surprises
There were no increases to income or capital gains tax rates. The top individual rate stays at 37%, and capital gains remain untouched.
What did change? Income thresholds are now indexed for inflation, which helps soften bracket creep over time.
3. SALT Deduction Cap Raised
The State and Local Tax (SALT) deduction cap rises to $40,000 through 2028, though it phases out for individuals earning over $500,000. If you live in a high-tax state like New Jersey or Pennsylvania, this could offer some short-term breathing room.
For pass-through business owners, the state-level workaround (PTET regimes) remains in place—great news for S corp and partnership entities.
4. Charitable Giving Rules Tightened
Charitable contributions now face a 0.5% floor for itemizers, meaning only donations above that base count toward your deduction. Non-itemizers can deduct up to $1,000 (single) or $2,000 (joint).
Translation: Your giving should be both strategic and well-documented.
5. Section 199A: Permanently Extended
The popular 20% qualified business income deduction for pass-through businesses (S corps, partnerships, sole props) is now permanent. If you’re running a small business or professional practice, this deduction continues to offer a meaningful reduction in your taxable income.
6. Big Boost for Entrepreneurs: QSBS Gets Better
Investing in small businesses through Qualified Small Business Stock (QSBS) is now more attractive:
The gain exclusion grows to $15 million (up from $10 million),
The minimum holding period is reduced to 3 or 4 years, and
The definition of a “small business” now includes those with assets up to $75 million.
If you're an early-stage investor or founder, this is a game-changer for your exit strategy.
7. Qualified Opportunity Zones Get a New Life
The Opportunity Zone (QOZ) program is now permanent, with rolling 10-year reviews. Long-term investors looking to defer and potentially exclude gains may want to revisit this planning strategy—especially as new zones are designated in 2027.
Looking Ahead
Most of these provisions kick in on January 1, 2026, but some are retroactive. And yes—additional changes are likely as more reconciliation bills come down the pipeline.
What does this mean for you? Planning early puts you in control.
Whether you're growing a business, preparing to retire, or thinking about how to leave a lasting legacy, now is the time to review your tax strategies.
Let’s Talk Strategy
Have questions? Curious how the BBB changes might impact your family or your business? Let’s connect. Together, we can make sure you’re not just reacting to tax law—but using it to your advantage.
Peter Seelaus, CLU, ChFC, is a financial advisor serving West Chester, PA and the surrounding region. He specializes in helping business owners and families make confident, tax-efficient decisions about retirement and succession planning.