On July 4th, a new tax law was signed into place. It’s officially called the “One Big Beautiful Bill,” but don’t let the name distract you. This bill makes several major tax changes that could affect your income, your estate plan, and even how you save for your kids.
You don’t need to be a policy wonk to care about this. You just need to know what might change for you and how to plan around it.
Let’s walk through the new tax bill and its biggest updates, and what they might mean for your financial plan.
The Tax Brackets You’re Used To? They’re Staying Put
You might remember hearing that the 2017 tax law was going to expire soon. That law gave us lower tax rates and bigger standard deductions, but it was set to go away after 2025.
The new tax bill makes those lower rates and higher deductions permanent. That means the way most Americans pay taxes today will stick around. You don’t need to worry about a surprise tax hike in 2026.
The Estate Tax Exemption Is Now $15 Million
If you’ve been thinking about leaving money to your children or grandchildren, this matters.
The estate tax exemption has been raised to $15 million per person, and it will now adjust for inflation over time. It also maintains portability, meaning that a couple effectively has a $30 million exemption combined. Before, it was scheduled to drop back down in 2026, which would have impacted families with growing estates.
What this means for you:
If you’re in or approaching the $5 to $15 million range in net worth (Or $20-$30 million as a couple), this gives you more flexibility to transfer wealth without triggering estate tax. It might be time to revisit your trust or estate plan.
Bigger SALT Deduction (For a While)
For people who live in high-tax states like California or New York, the cap on deducting state and local taxes has been a sore spot.
That cap has now increased from $10,000 to $40,000 through 2029, but only if your income is below a certain amount (specifically, under $500,000). After that, it drops back down again.
What this means for you:
You might see a lower federal tax bill if you’ve been missing out on state tax deductions. But this is a temporary win, so it’s worth talking about whether you should accelerate certain deductions if you are under the income limits.
Child Tax Credit Is Going Up (But Not Yet)
In 2026, the child tax credit will increase to $2,200 per child. Part of it will be refundable, which means some families could receive money even if they don’t owe taxes.
What this means for you:
More help is on the way for parents, especially those with lower incomes. But it doesn’t kick in until two years from now.
New Retirement Account for Kids (aka “Trump Accounts”)
There’s a new type of IRA designed for children. Parents or guardians can contribute up to $5,000 per year to a special retirement account for kids, but the money has to go into U.S. index funds.
There’s also a one-time $1,000 government contribution for kids born between 2025 and 2028.
What this means for you:
This is a new way to build long-term savings for your children. If you’re already saving in a 529 or UTMA, this might be a new piece of the puzzle.
Seniors Get a New $6,000 Deduction
Taxpayers over the age of 65 will get a temporary $6,000 deduction starting soon. Like other deductions, it’s subject to income limits.
What this means for you:
If you’re retired or planning for retirement, this could lower your taxable income slightly. Worth checking in on if you’re filing solo or jointly with your spouse.
Tips and Overtime May Be Tax-Free (Up to a Point)
For tax years 2025 through 2028, workers may be able to deduct up to $25,000 in tips and $12,500 per individual in overtime from their income. This starts to phase out at $150,000 single or $300,000 married filing jointly. Note, this is only a federal income tax break. This income will still be subject to FICA and state taxes.
What this means for you:
If you or someone in your family earns tips or puts in a lot of extra hours, this could offer a real benefit. But you’ll want to understand the reporting rules before counting on it.
Some Inflation Reduction Act Credits Are Ending
If you’ve been thinking about installing solar panels or buying an electric vehicle, now is the time to act.
Starting in 2026, many of the clean energy tax credits from the Inflation Reduction Act are being phased out or eliminated.
This includes the credits for:
- New and used electric vehicles
- Residential solar and other clean energy upgrades
- Commercial energy-efficient buildings
What this means for you:
You’ll want to move quickly if you’re considering one of these purchases. The tax incentives are going away soon.
A Note for Business Owners
While this update focuses on individuals, there are a few big changes that may affect your business too:
- The 20 percent pass-through deduction is now permanent
- You can fully expense business assets again starting in 2025
- Research and development costs can be deducted immediately again
- There are new rules and limits on losses, interest, and depreciation
If you’re running a business, let’s have a conversation about whether your current setup still works for you.
Final Thoughts
The new tax bill is a mix of good news, long-term clarity, and a few ticking clocks. It gives us more certainty than we’ve had in a while, but also introduces new planning opportunities that are worth revisiting now.
If you have questions or want to know what this means for your situation, we’re here to help.
Let’s talk through how it might affect your cash flow, your retirement plan, your estate, or your family’s next move.
Simply use our contact page here to get in touch.
Until next time!
