Originally published August 26, 2025

The One Big, Beautiful Bill (OBBB) Act, which took effect July 4th, 2025, enacted several key tax law changes that will impact how advisors help clients navigate decisions around retirement planning, estate strategies, and charitable giving.

This guide covers what changed, why it matters, and how to model possible scenarios in RightCapital.

The 7 biggest tax law changes to prioritize

Tax law change #1: Estate tax exemption increase (starting in 2026)

What changed

The estate tax exemption rises to $15 million per individual starting in 2026 and will adjust annually for inflation. For context, the exemption was $5.49 million per individual in 2017.

Why it matters

As a major concern for many estate planning clients stems from the taxable burden their heirs are subject to, this increase alleviates this stressor while also pushing for a shift in gifting and trust strategies. Client concerns regarding sheltering as much of their assets as possible from estate taxes may lift in the upcoming years due to this change. For clients who are part of the growing multi-millionaire estate club, those concerns will always exist while there are estate taxes.

What to do

Review any existing estate planning strategies to see if client needs have shifted with the relief brought on by the permanent estate tax exemption. As part of ongoing planning, view how trust strategies and estate gifting can fit into each client’s plan even with the higher exemption in place.

Tax law change #2: Standard deduction increases (2025), temporary senior deductions (2025–2028), and new charitable deductions for non-itemizers (from 2026)

What changed

For 2025, the standard deduction increased:

There’s also a new $6,000 deduction for those 65 and older, available for tax years 2025 through 2028.

There is a phaseout for households with modified adjusted gross income (MAGI) above $150,000 for married couples filing jointly, or $75,000 for all other filers. The deduction is reduced by 6% of income over those thresholds, with a full phase-out at $250,000 for those that are married filing jointly or $175,000 for all other filers.

Starting in 2026, taxpayers can claim a $1,000 per person charitable deduction, if made in cash, on top of the standard deduction.

Why it matters

Even slight increases to 2025’s standard deductions can provide benefits for clients and perhaps more flexibility for strategies sensitive to taxable income such as Roth conversions.

A new planning opportunity arises for financial planners with clients over the age of 65 in 2025 through 2028, as they can take advantage of an additional deduction to meaningfully reduce taxable income, subject to the phase-out rules.

Beginning in 2026, even non-itemizers can claim a charitable deduction, further incentivizing taking the standard deduction. Any additional deduction opportunities for filers with minimal tax deductions can lead toward assisting in reducing tax burdens. For many pre-retirees and retirees, their itemized deductions might not be high enough to overcome the standard deduction hurdle. For these clients, the additional charitable giving deduction in 2026 affords them a new opportunity to minimize their taxable burdens even further than before.

What to do

Account for the increase in 2025 tax year’s standard deduction. While it is a slight increase, it can impact those who are closer to higher tax brackets or affect any strategies sensitive to taxable income.

New planning opportunities arise with the temporary senior deduction. For those considering Roth conversions, this can provide an additional cushion to do so, especially with other taxable income streams at play. If possible, layering these deductions with other opportunities can greatly reduce seniors’ tax liabilities.

For seniors taking standard deduction, combining this opportunity with the new charitable giving deduction in 2026 can help maximize standard deductions. For seniors who are subject to higher state and local taxes (SALT), leveraging qualified charitable distributions, or using other deductions that can bring clients’ itemized deductions over the standard deduction hurdle, they can also layer this new senior deduction opportunity. For non-itemizers in 2026 and beyond, consider the additional charitable giving deduction available as an additional tax planning opportunity. Although it is another slight increase in deductions, $1,000 per filer can make a difference for clients in tax-sensitive positions. As always with charitable contributions, it is important to maintain proper documentation of any contributions and to remember that this particular opportunity only applies to cash donations.

Tax law change #3: New limitation on itemized deductions for higher earners starting in 2026

What changed

Beginning in 2026, a new tax law reduces itemized deductions by 2/37ths of the lesser of two amounts:

• The total itemized deductions, or

• The amount by which taxable income plus total itemized deductions exceeds the 37% tax bracket threshold

OBBBA solidified the permanent repeal of the PEASE limitation, while Sec. 70111 of OBBBA creates an entirely new rule for reducing itemized deductions.

Why it matters

For clients in the highest tax bracket, the value of itemizing shrinks under the new reduction formula. Deductions such as SALT and charitable gifts won’t go as far once the 2/37 rule applies. This addition illustrates a trend of legislative changes that can make it harder for filers to find value in itemizing deductions.

What to do

Plan the timing of major deductions with care and, if possible, prioritize itemized deductions prior to this change going into effect. When appropriate, leverage donor-advised funds to bunch charitable gifts now and distribute them to charities later, aligning charitable giving with your long-term strategy. Run projections to show how much the reduction lowers benefits each year beginning in 2026.

Tax law change #4: SALT cap increases for 2025 to 2029

What changed

The state and local tax (SALT) deductibility cap increased temporarily from $10,000 to $40,000 for all filers except those who are married filing separately, whose cap rose from $5,000 to $20,000.

These changes are applicable for tax years 2025 through 2029. In 2030, the deductibility cap reverts back to $10,000 for all filers except married couples filing separately who will revert back to $5,000.

While the increase to the SALT deductibility cap is a win for higher income earners that live in states exposed to higher tax burdens, they should also be mindful of the new phasedown thresholds. The SALT cap will be reduced by 30% of modified adjusted gross income (MAGI) that rises above $500,000 for individual and joint filers, with couples married filing separately having phasedowns starting above $250,000 MAGI.

While the phaseouts can significantly reduce SALT deductibility, the OBBB Act created a floor out of the previous caps of $10,000 for all filers except couples married filing separately, who have a floor of $5,000. Both the thresholds and caps then climb by 1% each year before reverting back to the SALT deductibility cap instituted by the Tax Cuts and Jobs Act (TCJA).

Why it matters

Clients in high-tax states and cities significantly benefited from SALT deductibility prior to the cap introduced in 2017 by TCJA. Increasing that cap (even temporarily) provides clients the opportunity for higher tax deductions and as a result, reduced tax burdens. While these changes last until 2030, it is important to note that clients would still need to overcome the standard deduction hurdle before enjoying the benefits of the increased SALT deductibility cap.

What to do

Run the numbers annually. In some years, itemizing will come out ahead; in others, the standard deduction will be the best option, especially considering there were additional opportunities added to standard deduction by OBBBA.

As there is a cap and phasedown placed on SALT deductibility, it will be a balancing act for most clients who would benefit from these changes, those with higher income and assets. For clients whose MAGI falls below the phaseout threshold and have SALT above $40,000 ($20,000 for MFS), then these changes can pay off significantly over the next few years. As always with itemized deductions, bunching any other deductions together can allow for an additional reduction of tax burdens. Until 2030, keep a watchful eye on clients’ MAGI to ensure they fall below the phaseout threshold. Leverage tax-smart tools to evaluate if this particular change makes sense for clients. If you have clients looking to move to higher tax-exposed states, use side-by-side plan comparisons to visualize the tax implications for those decisions, especially with the temporary increase to SALT deductibility.

Tax law change #5: Qualified Business Income (QBI) deduction updates (2026)

What changed

The QBI deduction itself remains the same, looking at up to 20% of qualified business income plus 20% of qualified real estate investment trust (REIT) dividends and publicly traded partnership income. The OBBBA introduced a minimum deduction floor of $400, adjusted annually for inflation.

Beginning in 2026, the phase-out range for married couples filing jointly expands to $150,000 ($75,000 for single filers). Income earned through a C corporation or as an employee does not qualify. The deduction is available whether clients itemize or take the standard deduction.

Why it matters

The wider corridor created through the floor and expanded phaseout range shifts eligibility for many business owners and opens new opportunities around compensation and timing of expenses. The bill also further defines “active qualified business income” as the IRC Section 469(h)’s definition of “material participation,” which helps alleviate confusion surrounding the intention of the term stemming from its introduction via TCJA.

What to do

Review clients’ participation in the businesses they own to verify they qualify for this deduction. Work with your business-owner clients to align compensation and expense timing with the phase-out ranges that start in 2026.

Tax Law Change #6 Alternative Minimum Tax (AMT) exemption adjustments

Starting in 2026, the AMT phase-out thresholds revert to $500,000 for single filers and $1 million for married couples filing jointly, with amounts indexed to inflation.

The phase-out will increase by 50% of the amount that AMT income exceeds those thresholds. AMT exemption amounts remain the same.

Why it matters

Tightening of the AMT exemption’s phaseouts can lead to higher tax burdens for clients with higher AMT. The narrow phaseout range means advisors must be more mindful of any AMT-generating events their clients incur.

What to do

Advisors should stress-test AMT exposure for higher-income clients, especially if they’re exercising incentive stock options (ISOs).

Tax Law Change #7 Tax Cuts and Jobs Act (TCJA) brackets made permanent

The TCJA income tax brackets will not sunset. Beginning in 2026 and beyond, today’s rates remain permanent: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Why it matters

Uncertainty surrounding the future of tax brackets caused a lot of concern for clients and advisors trying to plan for the future. Keeping the lower tax brackets means any tax strategies created that are reliant on tax brackets don’t need to be shifted drastically. Filers who fall within the 12%, 22%, 24%, and 37% brackets benefit the most from these adjustments as these brackets are significantly lowered compared to pre-TCJA. Maintaining the 37% tax bracket versus the previous 39.6% tax bracket particularly benefits those who fall within the highest bracket.

What to do

Advisors will not need to drastically adjust any bracket filling strategies that they employed for future tax years. While other OBBBA changes certainly call for a review of any tax strategies, the decision to keep current tax brackets would not be a major contributing factor. For advisors who planned for TCJA brackets sunsetting, a review should already be underway.

Planning for these tax law changes with RightCapital

Compare deductions before you file

Create two plans side by side: one “status quo” baseline and one that layers in strategies that take advantage of the OBBBA changes. Show clients how taxes shift under each scenario, using examples like accelerating income before 2026 or delaying deductions into more favorable years. A clear before-and-after comparison helps make proactive planning tangible.

Use the 2025 to 2029 SALT window to bunch deductions into years when itemizing makes sense. You can also plan ahead for the new itemized deduction reduction for higher income earners that begins in 2026. With the SALT deductibility cap increase, it might make sense for itemized deductions for those in higher tax-exposed states, but we also must consider the increased deductions for standard deductions. Having a software that accounts for both options can assist in a more thorough review of a client’s tax picture.

Stack charitable giving for retirees

For clients 70½ and older, qualified charitable distributions (QCDs) remain one of the most efficient giving tools, especially in reducing RMD tax burdens. With a limit of $108,000 per person in 2025 under the “first dollar out” rule, this can provide a great opportunity for clients who are not reliant on RMDs as their main retirement income source or have enough surplus to cover their needs plus the donation.

With the temporary senior deduction and the new charitable giving deduction for non-itemizers, seniors have an unprecedented opportunity for minimizing their tax liability. This can also provide more room to perform Roth conversions without bumping up tax brackets as quickly. Combining these three strategies can help clients give generously while keeping taxable income in check.

Time Roth conversions with care

The larger standard deduction and temporary senior deduction window open a path for strategic Roth conversions. It might make sense for some clients to perform Roth conversions to put more assets into the tax-free bucket, whereas others might be more concerned about reducing current tax liability. For current Medicare filers, or those planning to file over the next two years, staying below certain thresholds can play a part in these decisions. Through RightCapital’s Tax Strategies tool, you can review any impacts to Medicare thresholds through these strategies, or even propose Roth conversions without triggering IRMAA or up to certain Medicare brackets.

Each client situation is unique, but careful timing and review of tax strategies helps protect clients from surprises while building long-term tax-free income.

Model estate outcomes under the new tax law

From 2026 onward, the estate tax and gift exemption rises to $15 million. Create strategies that account for how that higher threshold changes estate tax exposure, portability between spouses, and lifetime gifting strategies.

Visualize the impact for clients

Use the RightCapital Tax module to model out various tax strategies and leverage the visuals found within Tax Analyzer, Tax Estimate, and Tax Strategies to illustrate the impacts on clients’ lifetime tax burdens, RMDs, end-of-plan wealth, and more. With any deduction-based strategies, it is important to note that RightCapital automatically takes the higher of standard or itemized deductions based on the information entered in the client plans. Before-and-after scenarios and visuals help make the value of proactive planning tangible for clients.

Conclusion

The OBBB tax law changes aren’t abstract policy shifts. They create temporary openings and future constraints. Without proper planning, these opportunities may also yield longer-term costs.

The real value comes from showing clients the tradeoffs. Side-by-side scenarios make it clear how decisions affect lifetime taxes, Medicare premiums, and legacy outcomes. Turning those into simple, client-friendly visuals keeps the focus on what matters: protecting wealth and making smarter moves while the windows are open.

Disclaimer: This material is for educational purposes only. Advisors should recommend that clients consult their CPA or attorney for guidance on their specific tax and legal situations.