One Big Beautiful Bill Act: Key Tax Changes That May Impact Your Estate Plan

One Big Beautiful Bill Act: Key Tax Changes That May Impact Your Estate Plan - Tax Alert - September 2025 - Brach Eichler
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9/2/2025

The One Big Beautiful Bill Act (“OBBBA”) extends certain provisions of the Tax Cuts and Jobs Act (“TCJA”) (2017) set to expire at the end of 2025 and introduces several new tax measures. The following are a few of the key provisions which may affect you as an individual, family, and/or business owner below. Please contact us to discuss any of these provisions (or others) in further detail.

Estate and Gift Tax Basic Exclusion Amount: Effective January 1, 2026, OBBBA raises the federal estate, gift, and generation-skipping transfer tax exclusion amount from the current $13.99 million to $15 million, indexed for inflation, with no sunset provision.

Income Tax Rates and Standard Deduction: OBBBA permanently extends TCJA tax brackets (top rate 37%) and maintains the higher standard deduction ($15,750 for single filers, $31,500 for married couples filing jointly, and $23,625 for heads of households, all indexed for inflation).

State and Local Tax (SALT) Deduction Limit: The SALT deduction cap will be temporarily raised from $10,000 to $40,000 (indexed for inflation at 1% annually) for tax years 2025 through 2029. However, there is a phase out for taxpayers starting at $250,000 ($500,000 for married couples filing jointly.).

Limits Charitable Deductions: Beginning in 2026, for taxpayers who itemize, only contributions exceeding 0.5% of the individual’s adjusted gross income will qualify as a charitable deductible. For taxpayers claiming the standard deduction, OBBBA limits charitable deductions to $1,000 ($2,000 for married couples filing jointly). Starting after December 31, 2025, corporations can only deduct contributions exceeding 1% of taxable income, capped at 10%.

Child Tax Credit: OBBBA makes permanent the TCJA’s enhancements to the Child Tax Credit, increasing the nonrefundable credit amount to $2,200 per qualifying child indexed for inflation and increasing the refundable portion to $1,400.

529 Accounts: OBBBA expands the scope of tax-exempt distributions from a 529 plan. Under the new provisions, 529 plan funds can now be used for a broader range of educational expenses for K-12 education and secondary education such as tuition, books or other instructional materials, tutoring educational therapies and other expenses, with certain limitations.

Qualified Small Business Stock (QSBS): Exclusions for gains on QSBS under Section 1202 is expanded under OBBBA in order to incentivize investment in startups and small businesses. Section 1202’s 100% gain exclusion was previously available for QSBS issued after 2010 if a taxpayer’s holding period exceeded five years. Now, taxpayers with QSBS issued after July 4, 2025, can take advantage of a tiered exclusion based on the applicable holding period. (New Jersey will be in conformity with IRC 1202 for tax years beginning on or after January 1, 2026 pursuant to the signing of Bill A4455)

Temporary Deductions for Tips and Overtime Pay (2025–2028): OBBBA creates a deduction allowing taxpayers who receive tips to deduct up to $25,000 in qualified tips, and creates an additional deduction of $12,500 for qualified overtime income (excluding tips) ($25,000 for married couples filing jointly).

For more information or assistance, please contact: 

Susan K. Dromsky-Reed, Esq., Member and Co-Chair, Trusts and Estates Practice, at sdromsky-reed@bracheichler.com or 973-403-3146

Stuart M. Gladstone, Esq., Member and Co-Chair, Trusts and Estates Practice, at sgladstone@bracheichler.com or 973-403-3109

David J. Ritter, Esq., Member and Chair, Tax Practice, at dritter@bracheichler.com or 973-403-3117

*This is intended to provide general information, not legal advice. Please contact the authors if you need specific advice.

Susan K. Dromsky-Reed

Member
Trusts and Estates, Tax, Family Law Services

973.403.3146 · 973.618.5546 Fax

Stuart M. Gladstone

Member
Trusts and Estates, Corporate Transactions & Financial Services, Tax

973.403.3109 · 973.618.5509 Fax

David J. Ritter

Member
Tax, Corporate Transactions & Financial Services, Trusts and Estates

973.403.3117 · 973.618.5517 Fax

Related Practices:   Tax, Trusts and Estates