New Rules, Fresh Opportunities: A Look at OBBBA Changes
The One Big Beautiful Act brings changes that could shape how families, business owners, and investors approach their finances. Some provisions are permanent and create long-term clarity, while others are temporary, offering windows of opportunity that may close within just a few years. Understanding these shifts and planning proactively can make a meaningful difference.
Below, we’ll highlight some of the most noteworthy provisions and share where thoughtful planning could help you take advantage of them.
Permanent Changes
Tax brackets Remain, but the Alternative Minimum Tax Changes: The seven federal income tax brackets established by the Tax Cuts and Jobs Act are still in place. The Alternative Minimum Tax (AMT)—a parallel tax system designed to limit certain tax deductions—also remains in effect. Starting in 2026, however, its thresholds reset: Exemption amounts remain higher and are indexed for inflation, but the income level at which the exemption begins to phase out is lower. This means that more households could be caught by the AMT if they have large one-time gains, exercise incentive stock options, or reside in high-tax states. Timing income and deductions, such as charitable gifts, can help minimize surprises.
Mortgage Interest and PMI Deductions: Mortgage interest remains deductible on up to $750,000 of acquisition debt for married couples ($375,000 for single individuals). Beginning in 2026, private mortgage insurance (PMI) will also become deductible. If you are considering refinancing, buying a home, or paying down debt, the timing of these decisions could affect the value of your deductions.
A Higher Standard Deduction Is Here to Stay: The expanded deduction introduced several years ago is now permanent: $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers in 2025. Married couples who don’t itemize can deduct up to $2,000 in charitable gifts ($1,000 for single taxpayers). For those who do itemize, charitable gifts now face a 0.5% AGI floor, and high-income filers will see the value of their itemized deductions capped at 35%. This can make strategies like “bunching” charitable gifts into certain years particularly valuable.
Estate and Gift Tax Exemption Permanently Increased: Beginning in 2026, the estate and gift exemption is set at $15 million per person, indexed for inflation annually. This creates opportunities for updating wills, trusts, and beneficiary designations, as well as for lifetime gifting strategies. Families may want to weigh potential estate-tax savings against the benefits of a step-up in basis for inherited assets.
Relief for Business Owners Continues: The 20% qualified business income (QBI) deduction, often called the Section 199A deduction, is now permanent. Business owners should review their structures, compensation, and retirement contributions to ensure they are maximizing this benefit. Research and development expenses remain fully deductible, and 100% bonus depreciation will be available for qualified property purchased after January 19, 2025.
Opportunity Zones Extended: Qualified Opportunity Zones are now permanent, with zones set to be re-designated every 10 years, beginning in 2026. Deferred gains from post-2026 investments must generally be recognized within five years or upon sale, whichever comes first. However, the 10-year tax-free appreciation benefit remains, along with a 10% basis step-up for investments held at least five years.
Temporary Provisions Worth Watching
A Larger SALT Deduction—for Now: The deduction for state and local taxes (SALT) increases to $40,000, but this is temporary and will revert back to $10,000 in 2030. For households with significant property or state income taxes, carefully timing payments may enhance deductions.
Special Breaks for Seniors, Tipped Workers, and Overtime: Between 2025 and 2028, taxpayers aged 65 and older can claim an additional $6,000 deduction, although it phases out at higher income levels. Workers can deduct up to $25,000 of tips, and overtime pay may also be deductible (income thresholds apply to both). These provisions may offer meaningful relief to groups whose income patterns often make planning more complex.
New Car Loan Interest Deduction: Through 2028, taxpayers can deduct up to $10,000 of interest on new vehicles assembled in the United States, subject to income limits. For those considering financing, this could be a timely opportunity.
Other Notable Shifts
Children’s Savings Accounts: “Trump Accounts” debut in 2025, allowing families to contribute up to $5,000 annually per child, with the government adding $1,000 for children born between 2025 and 2028. Rules and tax treatment are still being finalized, so it’s wise to keep an eye on updates.
529 Plan Expansions: Starting in 2026, the annual withdrawal limit for K–12 expenses doubles to $20,000 per student. Eligible 529 plan expenses for K-12 now include tutoring, online materials, standardized test fees, and certain therapies. State-level conformity may vary, so it’s important to confirm your state and plan rules before making withdrawals.
Clean Energy Credits Winding Down: Federal credits for electric vehicles end after September 30, 2025, and several home energy credits expire by December 31, 2025. Families considering clean-energy purchases may want to accelerate plans to capture these incentives while they last.
From Knowledge to Action
The variety of changes—some permanent, some fleeting—creates both opportunities and complexity. Aligning deductions, managing income, and coordinating gifts or investments all require foresight. For families, business owners, and investors alike, the most effective strategy often hinges on timing and integration.
Speaking with a fee-only, fiduciary advisor can help ensure these changes are incorporated into your overall wealth plan in a way that reflects your unique goals and circumstances. At Parkshore Wealth Management, we help clients integrate updates like these into their ongoing wealth strategies, balancing today’s opportunities with tomorrow’s goals. If you’d like to explore how these changes may affect you, scheduling a conversation could be a helpful next step.
Schedule a complimentary, 15-minute chat with a fee-only, fiduciary financial advisor today to discuss your personal situation.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor with offices in Granite Bay and Folsom, CA, and Lehi and Logan, UT. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.