2025 OBBBA Tax Law Changes: What They Mean for You

A Historic Update to the Tax Code

In July 2025, Congress passed and the President signed the One Big Beautiful Bill Act (OBBBA)  a sweeping piece of legislation that makes permanent some of the most impactful provisions of the 2017 Tax Cuts & Jobs Act while introducing a range of new deductions, thresholds, and incentives.

For individuals, families, and business owners, these changes will influence how you plan, save, and invest not just this year, but for decades to come.

At Vance Wealth, we believe clarity is key. Here’s what’s changed and how strategic planning can help you navigate both the opportunities and  the limitations in the new law.

🎥 Watch the Full Breakdown here!
Prefer to watch? In this short video, John Vance explains the key changes in the OBBBA and what they could mean for your tax strategy in 2025 and beyond.

Key Changes for Individuals & Families

1. 2017 Tax Cuts & Jobs Act Made Permanent
The income tax brackets and standard deduction levels established in 2017 will no longer sunset in 2026. This stability allows for longer-term tax strategies — including Roth conversion planning, bracket management, and capital gains harvesting — without worrying about imminent rate hikes.

2. SALT Cap Increase for Many Taxpayers
The State and Local Tax (SALT) deduction cap has increased from $10,000 to $40,000 for most taxpayers with income below $500,000. This is especially meaningful for California homeowners.

For those with AGI above $600,000, the $10,000 cap still applies. While this change may feel limiting, it’s a reminder that high-income households often have the most to gain from proactive tax strategy — shifting income, structuring deductions, and leveraging other planning opportunities beyond SALT.

3. Senior Deductions
If you’re over age 65, you may qualify for an additional $6,000 deduction if single or $12,000 if married filing jointly and both spouses are 65+. While modest in dollar terms for higher-net-worth retirees, it’s still one more layer in an integrated plan to keep more of what you’ve earned.

4. New Rules for Tips & Overtime
Up to $25,000 of tips and overtime pay can now be excluded from federal income tax for certain filers — a temporary benefit available from 2025 through 2028. While this provision primarily benefits wage earners in certain industries, it’s a useful reminder to review all sources of income for potential optimization.

5. “Trump Accounts” for Children’s Savings
A new tax-advantaged savings vehicle offers $1,000 funded at birth (for children born 2025–2028), with families and employers able to contribute up to $5,000 after tax annually. Similar to an IRA, the account grows tax-deferred. For high-income families, these accounts can be part of a multi-generational wealth and gifting strategy.

6. Auto Loan Interest Deduction
Up to $10,000 in auto loan interest on qualifying U.S.-assembled vehicles may be deductible, subject to income limits. While phaseouts exclude many higher earners, this incentive can still factor into cash flow and asset purchase decisions.

Key Changes for Business Owners

1. Expanded Qualified Business Income (QBI) Deduction Phaseouts
Beginning in 2026, the income phaseout ranges for QBI deductions will widen, creating more room for strategic planning to capture the 20% deduction on qualified business income. For high-income business owners, the real opportunity is in entity structuring and expense timing to keep income within the most favorable ranges.

2. Bonus Depreciation Restored to 100%
The ability to fully expense certain capital investments in the year of purchase is now permanent. This creates powerful opportunities for managing taxable income in growth years — particularly when paired with a long-term capital expenditure plan.

3. Section 179 Deduction Limit Increased
The limit has risen to $2.5 million with a phaseout beginning at $4 million, expanding the ability to expense significant purchases immediately. This is particularly impactful for companies scaling operations or replacing large equipment.

Estate & Gift Tax Planning

• Lifetime Exemption Made Permanent:
  $15 million for individuals and $30 million for married couples, indexed for inflation.
• Annual Gift Tax Exclusion:
  $19,000 per recipient (or $38,000 for married couples) without triggering gift tax reporting.

For larger estates, these permanent thresholds bring stability — and an opening to implement strategic gifting, trust structures, and legacy planning while market and legislative conditions are favorable.

Planning Opportunities

Every household’s opportunities will differ and in some cases, you may not qualify for a new deduction or credit. But that doesn’t mean the law has no benefit for you. In fact, for higher earners, tax strategy becomes even more valuable when fewer automatic breaks are available.

Here are some common considerations:

• Consider itemizing if the new SALT cap or charitable giving thresholds make it advantageous.
• Review your business entity structure to maximize QBI benefits.
• Act on green incentives like residential solar or EV credits before they expire.
• Update your estate plan to reflect the permanent exemption amounts.
• Schedule year-end tax planning to leverage bonus depreciation, Section 179, and other deductions strategically.
• Explore advanced planning strategies such as income shifting, charitable remainder trusts, or Roth conversions to manage long-term tax exposure.

From John Vance, President & Founder of Vance Wealth:
“Every time tax laws change, there’s a tendency to focus on who wins and who loses. The reality is, high-income families and business owners can almost always find ways to turn the rules in their favor if they plan ahead. That’s where we spend our energy: looking beyond the headlines to find the opportunities that fit your bigger financial picture.”

Why This Matters Now

The OBBBA provides both clarity and complexity. While some households will see immediate tax relief, others — particularly high-income earners and business owners — may need to rely more heavily on intentional, proactive planning to achieve meaningful savings.

At Vance Wealth, we coordinate with your CPA and other advisors to design strategies that align your tax, investment, and estate decisions — so each supports your bigger financial picture.

Let’s Talk About Your Plan

If you’re unsure how the OBBBA impacts your tax strategy, investments, or estate plan, we offer a complimentary consultation. We’ll review your current approach, identify opportunities, and provide a clear path forward.

📅 Schedule now: https://vancewealth.com
📞 Or call us at (661) 775-9500.

Disclosures:

Vance Wealth, LLC. (“Vance Wealth”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Vance Wealth and its representatives are properly licensed or exempt from licensure. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

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