How the “One Big Beautiful Bill Act” Reshapes Estate Planning, Business Succession, and Family Wealth Preservation
Are you managing a growing estate, preparing to sell a business, or working to safeguard your family’s long-term financial health? The sweeping “One Big Beautiful Bill Act,” signed into law on July 4, 2025, introduces the most significant federal tax changes in over a decade. Its provisions will affect estate planning, business ownership transitions, charitable giving, and household budgeting across income levels.
At First American Bank, we break down the key provisions affecting estate and trust planning, offering insights on navigating this rapidly evolving landscape.
Federal Estate Tax Exemption Update
The federal estate tax exemption is raised to $15 million per individual, or $30 million for a married couple utilizing comprehensive planning involving credit shelter and marital trusts. The current exemption was scheduled to sunset December 31, 2025, and revert back to approximately $7 million without congressional action.
However, state estate taxes still pose risks. For example, Illinois retains a $4 million exemption, which may expose high-net-worth estates to significant state-level estate tax liabilities. Comprehensive planning involving credit shelter trusts, marital trusts, and possibly state-specific strategies remains essential to fully leverage this expanded exemption.
Navigating the SALT Deduction and Its Impact on Estate Liquidity
The State and Local Tax (SALT) deduction cap quadruples to $40,000 per return, offering relief for many taxpayers in high-tax states with less than $500,000 income. However, because the cap applies per return (rather than per individual), it continues to penalize married couples filing jointly. It has indexing, phaseouts, and other nuances that require careful individual analysis to understand how it might affect you.
Time to Buy: Auto Loan Interest Deduction and Expiring Green Incentives
- Deduct up to $10,000 in interest on auto loans for new cars assembled in the U.S.
- The electric vehicle (EV) tax credit will expire on September 30, 2025, much earlier than the previously scheduled 2032 deadline.
- The energy-efficient home improvement credit will now sunset on December 31, 2025, moved up from 2032.
If you’re considering a vehicle purchase or energy upgrades, acting within these revised windows may help you capture the available tax benefits.
Seniors Get New Social Security Tax Relief
While Social Security benefits remain taxable, individuals over 65 now enjoy a $6,000 per person deduction, potentially reducing income tax burdens for retirees.
Charitable Giving Boost
Starting in 2026, non-itemizers will be allowed to deduct up to $2,000 in charitable contributions per return for joint filers.
529 Plans Now Cover K–12 and Trade School
The 529 plan just got more flexible. It can now be used for:
- K–12 education expenses
- Vocational certifications, such as HVAC, plumbing, or other trades
This makes 529 plans more useful for families prioritizing practical, career-ready education pathways.
Child Tax Credit Increases to $2,200
Beginning in 2026, the Child Tax Credit increases slightly to $2,200 per child, offering a modest but welcome boost for families with dependents.
Business Owner Benefits: Enhanced QBI Deduction
The Qualified Business Income (QBI) deduction—which allows owners of pass-through entities like LLCs, partnerships, and S corporations to deduct up to 20% of business income—has expanded its eligibility window.
- For joint filers, the income phase-out threshold rises to $550,000 starting in 2026.
This gives high-earning business owners more room to benefit from this valuable deduction.
Tax Breaks for Service and Hourly Workers
The law introduces new deductions aimed at supporting working-class Americans:
- Up to $25,000 in tip income
- Up to $12,500 in overtime pay
These deductions apply to specific occupations and industries, and may provide relief to millions of service-sector employees.
Capital Gains Tax Stays the Same — Opportunity Zones and QSBS Updates
While capital gains tax rates remain unchanged, two key incentive programs offer valuable tax planning opportunities for business owners and investors:
- Opportunity Zones: Investors selling a business can roll gains into a qualified Opportunity Zone fund investing in distressed areas.
- Hold for 5 years to receive a 10% exclusion of the deferred gain.
- If invested in a rural area, the exclusion increases to 30%.
- After 10 years, all gains accrued within the Opportunity Zone fund are exempt from capital gains tax.
- Qualified Small Business Stock (QSBS): The capital gains tax benefits for QSBS investors have been expanded:
- The exclusion cap has increased to the greater of $15 million or 10 times the original investment, up from $10 million.
- Larger businesses may now qualify.
- Reduced Holding Period with Tiered Benefits: Previously, you had to hold QSBS for five years to get any tax exclusion. The new rules create a graduated schedule: 50% exclusion after 3 years (effective tax rate: 14%)
- 75% exclusion after 4 years (effective tax rate: 7%)
- 100% exclusion after 5+ years (tax-free)
- Additional QSBS revisions are currently under IRS review, including possible further expansions of exclusions and eligibility. Taxpayers should stay informed and seek professional guidance.
The “One Big Beautiful Bill Act” presents a limited window of opportunity for proactive tax and estate planning. With several key provisions set to expire or phase out by 2026, the next 12–18 months may be critical for reviewing your financial strategy.
Whether you’re preparing for a business transition, transferring generational wealth, or adjusting family finances, timely action can help you make the most of today’s new tax environment. Your First American relationship managers can work with your tax advisors to help you interpret the new law, identify planning opportunities, and design a personalized approach to protect and grow your wealth.
Sources
Wall Street Journal, “Some of the Tax Breaks in the ‘Big, Beautiful Bill’ Are Smaller Than You Think,” Weekend Edition, July 6–7, 2025.
Joint Committee on Taxation, Summary of the “One Big Beautiful Bill Act,” July 2025.
