Dollars & Sense Blog Series
2025 Tax Law Updates: Planning Opportunities Under the One Big Beautiful Bill
By Caroline Duke
Wealth Advisor
In July 2025, Congress passed the “One Big Beautiful Bill” (OBBB), introducing several changes to the individual tax code. For high-net-worth individuals, the updates around tax brackets, the SALT deduction cap, charitable giving, and new deductions for seniors may present timely planning opportunities.
Below is a summary of the key provisions Obermeyer Wealth believes may be most relevant to our clients and other high-net-worth individuals. Please note: This summary is for informational purposes only and should not be considered tax advice. We strongly encourage you to consult with your tax advisor before making any changes to your tax strategy.
- Updated Tax Brackets & Standard Deduction
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- Tax brackets: The current Tax Cuts and Jobs Act (TCJA) rates (10%, 12%, 22%, 32%, 35%, 37%) are now permanent, preserving lower marginal rates for individuals and couples.
- Standard deduction: Increased to $15,750 for individuals and $31,500 for joint filers in 2025, with annual inflation adjustments going forward.
- Senior deduction: A new $6,000 additional deduction is available for taxpayers aged 65 and older through 2028. This deduction phases out when modified adjusted gross income exceeds $75,000 for individuals or $150,000 for joint filers.
What this means: Most households will continue to benefit from lower effective tax rates while having flexibility to choose between standard and itemized deductions based on their situation.
- Expanded SALT Deduction
The OBBB raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 for joint filers, with the cap increasing by 1% annually through 2029. This expansion runs through 2030.
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- This change especially benefits clients in high-tax states such as New York, California, New Jersey, and Connecticut.
- The higher cap may make itemizing deductions worthwhile again for many filers who previously defaulted to the standard deduction.
- The deduction phases out for joint filers with incomes above $500,000.
- The cap is scheduled to revert to $10,000 after 2030, creating a five-year window for strategic planning.
What this means: If you live in a high-tax state and your combined state and local taxes exceed $10,000, you now have significantly more room to deduct these payments—but only through 2030.
- Charitable Giving
Charitable contributions remain deductible for those who itemize, with cash gifts deductible up to 60% of AGI.
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- New floor: Starting in 2026, only charitable deductions that exceed 0.5% of your AGI may be claimed. The first 0.5% is not deductible. Example: If your AGI is $500,000, the first $2,500 in charitable contributions (0.5% × $500,000) would not be deductible. Only amounts above $2,500 would count toward your itemized deductions.
- Planning opportunity: Consider “bunching” charitable gifts—consolidating multiple years’ worth of contributions into a single tax year—to maximize deductions during the SALT expansion period.
- 2025 opportunity: The 0.5% floor doesn’t apply until 2026, so front-loading charitable giving in 2025 may be particularly advantageous.
- Planning Considerations
Given these changes to the individual tax code, now may be an appropriate time to review your tax strategy with your CPA or tax advisor. Topics to discuss might include:
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- Whether itemizing makes sense under the new SALT and deduction thresholds
- Timing of charitable contributions and state tax payments to optimize deductions
- For clients age 65+, eligibility for the new senior deduction and tax-efficient distribution strategies
- Proactive planning around sunset provisions: Several key provisions expire after 2028 or 2030, making the next few years a critical planning window
As always, Obermeyer Wealth is not providing tax advice, and we strongly recommend consulting with your tax professional to understand how these changes apply to your specific situation. We’re happy to coordinate with your tax advisor to ensure your overall wealth strategy aligns with your tax planning goals.
