One Big Beautiful Bill Act (OBBBA)

What You and Your Clients Should Know

August 28, 2025

The lead up to and eventual passing of the One Big Beautiful Bill Act (OBBBA) has garnered significant attention in the industry. Now that the dust has begun to settle, many advisors are eager to understand the impact this will have on their clients. Below, we outline the high-level details of six key provisions of particular relevance to advisors and their clients. As with any new legislation, it is possible that some of the finer details may be further clarified over time.

EXTENSION OF TAX BRACKET THRESHOLDS – STARTING IN 2026

The individual tax brackets established under the 2017 Tax Cuts and Jobs Act (10%, 12%, 22%, 24%, 32%, 35%, 37%) will be made permanent, canceling the scheduled post-2025 reversion to higher pre-TCJA rates.
The bill also provides for a special one-time inflation adjustment (equal to an extra year of inflation) for the 10% and 12% tax bracket thresholds.
- This will result in the affected brackets having a more favorable baseline, to which the regular annual inflation adjustments will apply.

INCREASED STANDARD DEDUCTIONS – STARTING IN 2025

The TCJA increases are also made permanent to the standard deduction, with regular indexing for inflation afterwards.
- Single Filers: $15,750
- Head of Household: $23,625
- Married Filing Jointly: $31,500
In addition, a temporary deduction of $6,000 has been written into the bill for individuals 65 and older. This bonus deduction has phaseouts starting at MAGI of $75,000 for single filers and $150,000 for joint filers. This provision will sunset after 2028 barring further legislation.
- (MAGI in this context = AGI + Foreign Earned Income Exclusion + Puerto Rico and American Samoa Residents’ Excluded Income)

STATE AND LOCAL TAX (SALT) DEDUCTION LIMIT INCREASE – STARTING IN 2025

The new bill temporarily increases the SALT tax deduction cap from $10,000 to $40,000 for qualifying taxpayers.
The increased $40,000 SALT deduction begins phasing out for those with over $500,000 MAGI (both single and married filing jointly), the deduction being reduced by 30 cents for every dollar of income above that threshold. However, all taxpayers may still claim the base $10,000 SALT deduction regardless of income.
The SALT deduction cap and phaseout threshold will both be increased by 1% annually through 2029. In 2030, the deduction cap will revert to $10,000 under current law.

FLEXIBILITY FOR 529 PLANS – EFFECTIVE 7/5/2025

$20,000 is now the annual cap on the amount that can be withdrawn from a 529 plan tax-free for K-12 private education expenses. This is double the previous cap amount.
Additionally, tax-free 529 withdrawals can now be used to cover post-secondary credentialing and professional certification programs (e.g., CPA, CFP, CDL), increasing 529 plans’ utility as “career savings accounts”.

PERMANENT QUALIFIED BUSINESS INCOME (QBI) DEDUCTION FOR PASS-THROUGH ENTITIES – STARTING IN 2026

The QBI deduction will be permanent. Originally part of the TCJA of 2017, this deduction helps self-employed individuals and owners of pass-through entities such as Partnerships and S-Corporations re-invest in their companies, while being more on par with the more favorable tax rates of C-Corporations. Along with the permanent implementation, the rate of up to 20% of QBI able to be deducted is also set to continue.
The width of the complete phaseout range for owners of Specified Service Trades or Businesses (SSTBs) and partial phaseout for non-SSTB owners will increase.
- For single filers, currently, the phaseout range begins at $197,300 of taxable income and ends at $247,300.
  - Under the new law, the $50,000 range between these thresholds will become $75,000.
- For Married Filing Jointly (MFJ) filers, currently, the phaseout range begins at $394,600 of taxable income and ends at $494,600.
  - The $100,000 range between these thresholds will become $150,000.

LIFETIME EXCLUSION FOR ESTATE TRANSFERS – STARTING IN 2026

The estate tax exclusion and lifetime gift tax exclusion will be permanently increased to $15,000,000 for single filers ($30million for joint), indexed for inflation.
This provision locks in a key piece from the TCJA of 2017. There was much speculation for this provision (which effectively doubled the estate tax and lifetime gift tax exclusion) being “sunset” at the end of 2025 (reverting to the original exclusion, roughly half of the current level). However, this figure will now be the basis of estate planning for the foreseeable future.

Vicus Capital is neither a law firm nor a certified public accounting firm and no portion of the content should be construed as offering or disseminating specific legal or accounting/tax advice.

For Use with the General Public. Financial Planning and Advisory Services offered through Vicus Capital, Inc., a federally Registered Investment Advisor.

Categories: Financial Planning

Tags: 529 Plans, Congress, Estate Planning, Estate Transfers, Legislation, OBBB, OBBBA, One Big Beautiful Bill, One Big Beautiful Bill Act, Qualified Business Income (QBI), Standard Deductions, State and Local Tax (SALT), Tax Brackets, Taxes