One Big Beautiful Bill: New Rules for Individuals, Trusts, and Estates
- pscdfw
- Jul 10
- 5 min read
Updated: Jul 21
On July 4th, the One Big Beautiful Bill was officially signed into law, ushering in one of the most substantial overhauls to the tax code in recent years. While much attention has been given to the business tax changes, this legislation also includes critical updates that impact individual taxpayers, trusts, and estates.
From expanded standard deductions and changes to the estate tax exemption, to the return of personal exemptions and adjustments to charitable giving rules, the bill reshapes key aspects of personal and estate tax planning—especially for high earners and those with significant assets or legacy goals.
In this article, we break down the most important provisions affecting individuals, trusts, and estates, and highlight tax planning strategies you should consider now to take full advantage of the new law.
1. Tax Rates and Bracket Extensions
Summary: The reduced marginal tax rates from the 2017 Tax Cuts and Jobs Act (TCJA) are now made permanent. The current brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) remain in place, with increased income thresholds indexed for inflation.
Planning Opportunities:
If you’re in a higher income bracket, the continued lower rates may reduce your effective tax burden.
Consider Roth conversions, capital gains harvesting, or deferral of large income events with confidence that rates will remain low.
2. Estate and Gift Tax Exemption
Summary: The unified estate and gift tax exemption is permanently increased to $15 million per individual (indexed for inflation), preventing the planned sunset after 2025.
Planning Opportunities:
High-net-worth individuals should consider gifting strategies, including SLATs, GRATs, or dynasty trusts.
Review existing estate plans to ensure full use of the increased exemption.
3. Itemized Deduction Limitation Repealed (Pease Limitation)
Summary: The Pease limitation, which phased out itemized deductions for high-income taxpayers, is permanently repealed.
Planning Opportunities:
Taxpayers with high mortgage interest, charitable donations, and SALT deductions benefit from full deductibility.
Consider bunching charitable gifts or accelerating deductible expenses into 2025 to maximize benefit.
4. Charitable Contribution Deduction Floor Added
Summary: The 60% AGI cap has been replaced with a new 0.5% AGI floor. This means charitable deductions are only allowed for amounts that exceed 0.5% of your AGI—encouraging more substantial giving.
Planning Opportunities:
Taxpayers with significant income in 2025 can still deduct large charitable gifts—just ensure they exceed the 0.5% AGI threshold.
Consider donor-advised funds or CRTs to bunch and time gifts strategically.
5. SALT Cap Raised Temporarily
Summary: The State and Local Tax (SALT) deduction cap increases to $40,000 for married couples ($20,000 single) from 2025–2029. The deduction phases out for MAGI above $500,000 and reverts to $10,000 in 2030.
Planning Opportunities:
Residents in high-tax states can now claim significantly more in property and state income taxes.
Consider timing estimated tax payments or property tax bills to align with high-income years before the cap reverts.
6. Enhanced Standard Deduction & Elimination of Personal Exemptions
Summary: The standard deduction is permanently increased to $31,500 (married filing jointly), $15,750 (single), and $23,625 (head of household), indexed for inflation. Personal exemptions remain eliminated.
Planning Opportunities:
Many taxpayers will benefit more from the standard deduction, simplifying tax filing.
If itemized deductions are close, consider alternating years for standard vs. itemizing using timing strategies.
7. Enhanced Senior Citizen Deduction
Summary: Taxpayers age 65 and older receive an additional $6,000 standard deduction per person, phased out at $75,000 (single) or $150,000 (married) MAGI.
Planning Opportunities:
Seniors with modest income may owe little to no federal income tax.
Combine with Qualified Charitable Distributions (QCDs) for tax-free giving from retirement accounts.
8. Enhanced Child Tax Credit (CTC)
Summary: The Child Tax Credit increases to $2,200 per qualifying child and is fully refundable up to $1,400, with inflation adjustments after 2025.
Planning Opportunities:
Low- and middle-income families may receive refunds even if no federal tax is due.
Ensure proper documentation of dependents and file even if you’re below the filing threshold.
9. Alternative Minimum Tax (AMT) Thresholds Increased
Summary: The AMT exemption and phase-out thresholds are significantly increased, reducing exposure for most taxpayers—especially those with high deductions or incentive stock options.
Planning Opportunities:
Greater ability to use deductions like SALT without triggering AMT.
Reassess exercise strategies for ISOs, as AMT liability will affect fewer filers.
10. Qualified Mortgage Interest Deduction Confirmed at $750K
Summary: The mortgage interest deduction remains capped at $750,000 of acquisition debt. It does not return to the $1 million pre-TCJA limit. However, mortgage insurance premiums become deductible starting in 2026.
Planning Opportunities:
Homeowners should review their mortgage balance and interest eligibility.
Evaluate whether a refinance, purchase, or home equity loan aligns with the current limits.
11. Deductible Car Loan Interest for Self-Employed
Summary: Car loan interest is now deductible for business-use vehicles, provided the vehicle was assembled in the U.S. and is used for self-employment purposes.
Planning Opportunities:
Keep detailed mileage logs and track the percentage of business use.
Evaluate the cost-effectiveness of purchasing vs. leasing a qualified vehicle.
12. Casualty Losses Restored for Declared Disasters
Summary: Personal casualty losses are now deductible again—but only for events that are state or federally declared disasters.
Planning Opportunities:
Maintain detailed records of damages, insurance claims, and unreimbursed losses.
Homeowners in disaster-prone areas should factor this into their financial contingency planning.
13. Miscellaneous 2% Itemized Deductions Not Reinstated
Summary: Contrary to rumors, the 2% miscellaneous itemized deductions for unreimbursed employee expenses, investment fees, and tax prep costs remain eliminated.
Planning Opportunities:
Shift eligible expenses to employer reimbursement plans if possible.
Consider negotiating tax-prep or advisory fee arrangements through business entities.
14. Above-the-Line Charitable Deduction for Non-Itemizers
Summary: Non-itemizers can deduct up to $2,000 (married) or $1,000 (single) in charitable contributions as an above-the-line deduction.
Planning Opportunities:
Encourage charitable giving, even if you take the standard deduction.
Good entry point for younger taxpayers or modest-income households to give and receive a tax benefit.
15. Scholarship Granting Organization (SGO) Credits
Summary: Federal tax credits are available for contributions to approved Scholarship Granting Organizations (SGOs), reducing your federal tax liability dollar-for-dollar.
Planning Opportunities:
Consider SGOs as an alternative to traditional charitable gifts for educational causes.
Useful for high-income donors seeking both federal and state-level tax benefits.
16. Carried Interest Holding Period Extended
Summary: The holding period for long-term capital gains treatment on carried interest increases from 3 years to 5 years.
Planning Opportunities:
Fund managers and investors should reevaluate fund exit strategies and profit allocation schedules.
Plan entity structures to account for longer qualification timelines.
17. New “Trump Child Accounts” Created
Summary: These new tax-advantaged accounts allow up to $5,000/year in contributions per child. Funds grow tax-free and can be used for education, health expenses, or first-time home purchases. The government may contribute a $1,000 pilot deposit in year one.
Planning Opportunities:
Combine with 529 plans or custodial accounts to diversify tax-free savings options.
Great tool for intergenerational wealth transfers with purpose-driven spending.
Final Thoughts and Next Steps
The individual tax changes in the One Big Beautiful Bill create major opportunities for tax savings—but proactive planning is key. Whether you’re a business owner, retiree, parent, or investor, these changes open the door to new deductions, credits, and strategies.
Here’s how we can help:
Update your 2025 tax projection
Maximize deductions based on your filing status and income
Implement estate and gifting strategies before thresholds shift again
Coordinate investment, charitable, and education planning under the new rules
Schedule your personalized tax planning session today. Let’s turn these legislative changes into financial opportunities.
Shifflett & Philips CPA - Your partner in proactive, year-round tax planning.
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