Signed into law on July 4, 2025, the One Big Beautiful Bill Act, OB3 for short, offers comprehensive tax reform that will take effect on January 1, 2026. To help BIP Wealth clients better understand the new laws, our in-house Estate Planning Attorney, Sarah Watchko, and Tax Advisor, CPA, Allie Powell, teamed up to present a recent webinar. In this recap, we’ll review the key points of their presentation, breaking down what changed and what remained unchanged in our tax laws.
The webinar started with an iconic quote from Benjamin Franklin: “Our new Constitution is now established and has an appearance that promises permanency; but in this world nothing can be said to be certain except death and taxes.” Simply put, while these new tax laws come with changes for now, reforms in the future are to be expected, as tax laws are inherently political. So, what do you need to know about the One Big Beautiful Bill Act? In this blog, we’ll break it down for you.
While we could analyze the entire bill word-for-word, we decided to break our webinar into two main categories: Gift & Estate Taxes and Personal Income Taxes. In each section, we discussed what changed vs. what remained the same, compared to the significant reforms passed in the 2017 Tax Cuts & Jobs Reforms Act.
To start, let’s break down what remained the same. Overall, most of the laws surrounding gift & estate taxes remained the same on the federal level. While specific states may have their own estate taxes, portability, annual exclusions, and the basic framework of the 2017 reforms have all been left untouched.
The one big change comes with transfer tax exemptions. Now permanently set at $15 million ($30 million for a married couple), this allows you to transfer assets to a loved one without any taxes being imposed on your estate. For example, if you have $1 billion in assets and gift it all to your spouse during your life, this will not go towards the exemption amount. Plus, with portability remaining unchanged, if the $1 billion is left to your spouse, they can take the $15 million in exemptions with them, thus giving you the $30 million.
Another key tax law that remains unchanged is the annual exclusion. Another way to think about this concept is that the IRS doesn’t want to keep tabs on all of your birthday presents. As of the 2025 fiscal year, any gifts up to $19,000 can go tax-free. And there are no limits on the amount of gifts you can give up to the $15 million exemption.
The chart below tracks how the total exemption amount has increased over time, from just $675,000 per person in 2001.
The impacts of these changes are clear. If your estate is worth under $7 million, or $14 million as a married couple, your estate planning strategies should remain largely unchanged. If your estate is worth between $7 million and $15 million ($14 million and $30 million as a married couple), you are now safer from estate taxes than ever before. If your estate is worth more than $30 million, your strategy would remain largely unchanged. As always, it’s important to regularly consult your tax advisor to ensure your plan continues to adapt to changing financial regulations.
Where the new laws bring a plethora of changes is with personal income tax. Now, this bill was pushed through by Congress. Now, it is up to the IRS to implement each change. OB3 continues a lot of the shifts made in 2017, which at the time was the most significant tax reform since 1986. To set the record straight, Social Security benefits will remain taxable. There were rumors in the media that this was going away, but up to 85% of your future benefits will still be included in your taxable income. That remains unchanged.
The income tax brackets from 2017 also remain the same, giving working families a bit more security in knowing they’ll likely not be paying more in 2026 and the years to come.
Additionally, the standard deduction for taxes remains much higher, with up to $15,000 for individuals and $30,000 for married-joint filings. This can be used for medical expenses, property taxes, charitable contributions, and more.
Now, what will be changing? The short answer is quite a bit. The State and Local Tax Cap (SALT) for individuals has increased from $10,000 to $40,000. While this law phases out higher earners of $500,000 or more, it will allow you to potentially enjoy higher itemized deductions until 2030. On top of this, Trump Accounts will now be opened for kids born from 2025-2028. The federal government will make an initial $1,000 deposit, with up to $5,000 in annual after-tax contributions until the child reaches 18 years of age. Growth is tax-deferred, with early withdrawals after age 18 subject to a 10% penalty. However, many questions remain about how these accounts will work, what will be sunset in the future, and the overall mechanics, so be sure to discuss this with your tax advisor.
Additional changes include a $6,000 deduction for taxpayers 65 years and older, expansions to eligible expenses for 529 funds, and no taxes on overtime and tips up to $25,000. For business owners, the bill also allows for an alignment of tax-deductible expenses with cash flow, plus the potential for significant capital gains savings through company stock.
If you have any questions about the new OB3 laws or need to take a closer look at your current estate plan, contact the BIP Wealth team today!
Disclaimer: This is a very high-level overview of some of the important aspects of the new tax law. It’s intended for general informational purposes, and it’s not intended to constitute tax, legal or investment advice, so if you need or want tax, legal or investment advice, please consult your personal tax professional or estate planning attorney before making any decisions.
