Market Insights

Impact of One Big, Beautiful, Bill on Financial Advisors

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Jul 09, 2025|ByLincoln Fleming, CPA/PFS, CFP

The bottom line

  • The passage of the One Big Beautiful Bill presents an opportunity for financial advisors to connect with clients to assess planning opportunities and the impact on their overall financial plan.
  • Although many investors may not experience a large tax cut relative to recent years, they will avoid the significant tax hike that would have occurred had the Tax Cuts and Jobs Act been allowed to sunset.
  • Ongoing changes and increased tax complexity mean there will continue to be substantial value in proactive tax planning and increased demand for financial advisors who skillfully navigate the intersection of income taxes, investing, estate planning, and charitable giving.

How did we get here?

The Tax Cuts and Jobs Act (TCJA) of 2017 ushered in major changes to the tax code, which lowered taxes for many (but not all) individual investors. However, many of its provisions were only passed on a temporary basis, and absent congressional intervention, were scheduled to lapse after 2025. It was previously unknown whether Congress would ultimately allow some, all or none of these provisions to sunset.

The One, Big Beautiful Bill

On July 4th, 2025, many of the individual tax provisions of the TCJA were made permanent when President Trump signed the One Big Beautiful Bill (OBBB) into law. At its core, the law is an extension of once-temporary tax cuts introduced in the TCJA, though other significant policy changes were also included. Although many investors may not experience a large tax cut relative to recent years, they will avoid the significant tax hike that would have occurred had the individual provisions of the TCJA been allowed to sunset.

A detailed analysis of the OBBB is beyond the scope of this article; however, some of the most important changes for individual investors include the following:

  • The expanded tax brackets and lower top rate under the TCJA were permanently extended.
  • Many itemized deductions remain capped or disallowed, with the state and local tax (SALT) deduction cap increased to $40k for those making up to $500k.
  • The elevated standard deduction was made permanent.
  • The gift and estate tax exemption was increased to $15M per taxpayer and is now indexed to inflation.

Individuals:

TCJA One Big, Beautiful, Bill Act
Federal individual income tax rates Expanded the 7 tax brackets and lowered the top rate Permanently extended TCJA rates
Itemized deductions Many were temporarily capped or disallowed.
For example:
• State and local tax (SALT) deduction capped at $10k
• Misc 2% itemized deductions (e.g., investment advisory fees, etc) no longer deductible		 Many permanently capped or disallowed as well as other significant changes.
For example:
• SALT deduction capped at $40k for 5 years starting in 2025, phaseout for income at $500k
• For top bracket taxpayers, tax benefits of itemized deductions capped at $0.35 per $1 deducted
Standard deduction Doubled Elevated standard deduction made permanent
AMT Fewer individual taxpayers impacted due to higher exemption and phase-out thresholds Higher exemption and phase-out thresholds made permanent
Gift and estate tax exemption Doubled Increased from $13.99M to $15M per taxpayer, indexed to inflation

Other Entities:

TCJA One Big, Beautiful, Bill Act
Corporate income tax rate 21% 21% (no change)
Qualified business income deduction Certain owners of flow-through businesses and REITs may qualify for a 20% deduction 20% deduction made permanent
University endowment excise tax rate 1.4% for certain larger endowments Higher tax rates on large endowments, up to 8%
Private foundation excise tax rate 1.39% 1.39% (no change)

Impact on Investor Cohorts

The overall net impact of extending many of the individual TCJA tax provisions and other significant OBBB changes will vary based on an investor’s tax profile and circumstances. However, the bill is likely to have an outsized impact on certain cohorts.



Cohort Impact
UHNW investors Due to changes to the gift and estate tax exemption, wealthy investors can now shield more of their wealth from gift and estate taxation.
Taxpayers and property owners in high tax states The increase in the SALT deduction for 5 years provides additional tax relief (but phased out for very high-income taxpayers). A complete TCJA sunset would have resulted in no SALT deduction cap.
Charitable investors The impact of the bill on charitable giving is mixed. Due to the increased SALT deduction cap, more individuals may be able to itemize their deductions. This change, along with a new provision that creates a permanent charitable deduction up to $1k for individual filers ($2k for joint filers) who don’t itemize deductions, may increase the tax benefits of charitable donations and encourage additional giving. However, the bill also caps the tax benefit of charitable donations for those in the 37% bracket at $0.35 for each dollar donated (rather than the full $0.37 per dollar), and individuals who itemize their deductions would only receive a charitable deduction for donations in excess of 0.5% of their contribution base.
Certain large endowments Large endowments subject to increased excise tax rates on net investment income will need to shift from a (nearly) tax-exempt mindset to one that is more tax-aware.

Planning Considerations

The passage of the OBBB presents an opportunity for financial advisors to connect with clients to assess planning opportunities and the impact on their overall financial plan. Some potential considerations are listed below.

Even for situations where there are no clear steps that should be taken now, clients will appreciate that their planning choices have been thoughtfully considered and analyzed in light of the new OBBB legislation.

Tax Provision Impact on Planning/Strategy
SALT deduction increase • More investors will itemize their deductions
• Decisions on whether to “bunch” deductions should be revisited in light of increased SALT deduction
• In certain situations, potential advantages of utilizing non-grantor trusts, which are treated as separate taxpayers for income tax purposes and receive their own SALT deduction1
• For existing non-grantor trusts, evaluate whether less income should be distributed to beneficiaries to take advantage of trust SALT deduction
•Tax-loss harvesting, qualified charitable distributions (QCDs), pretax contributions to retirement accounts or health savings accounts (HSAs), the timing of income, and related planning to keep MAGI below $500k and avoid SALT deduction phaseout
Tax benefits of itemized deductions capped • Top bracket investors may wish to accelerate charitable donations to minimize impact
Higher AMT exemption and phase-out thresholds made permanent • No large spike in the number of individuals subject to AMT
Changes to gift/estate tax exemption • No longer an immediate exemption “use it or lose it” deadline for wealthy investors
• Additional wealth can be transferred tax free to beneficiaries/heirs
• Consider differences in federal vs state exemption amounts, if applicable
• Income tax and step-up in basis planning more relevant than estate tax planning for many investors
Qualified Opportunity Zone program • Tens of billions of dollars of previously deferred capital gains under the existing QOZ program must be recognized by 12/31/2026
• Implementing a loss-harvesting strategy in advance of this recognition event may help to offset gains and alleviate upcoming tax hit
Qualified Business Income Deduction Changes Avoidance of increased overall tax drag of REITs had the TCJA sunset

What Wasn’t Included in the OBBB

Investors may not fully appreciate the tax provisions included in the OBBB without revisiting earlier proposals and ideas that were NOT included in the final bill, a few of which are highlighted below.

Tax municipal bonds Change taxation of carried interest
Repeal the estate tax Higher (or lower) state and local tax deduction cap
Section 899 “Revenge Tax” on certain individuals and entities from “discriminatory foreign countries” Higher tax rates for large private foundations

If passed, some of these changes would have been significant and had a considerable effect on planning for those impacted.

Factors such as slim Republican majorities in both chambers of Congress and concerns about the impact of the bill on the federal deficit impacted decisions about what to include in the final bill.

As we’ve seen in the past, tax proposals tend to have long shelf lives and may be floated again in future administrations. In Washington, some say there’s no concept of a bad idea, just ideas whose time hasn’t come yet.

Future Tax Changes

Yogi Berra has been credited with saying “it is difficult to make predictions, particularly about the future.” Although the OBBB is intended to bring some permanency to the tax code, tax provisions only remain permanent until a future Congress changes the law.

It used to be that major tax reform happened every few decades. In today’s polarized political environment, it seems to be happening much more frequently. Accordingly, some of the “permanent” changes in the bill may not be truly permanent, and any perceived merits or shortcomings of the bill may not last forever.

Ultimately, nobody knows how the tax landscape may evolve in the future. What we do know is that ongoing changes and increased tax complexity mean there will continue to be substantial value in proactive tax planning and increased demand for financial advisors who skillfully navigate the intersection of income taxes, investing, estate planning, and charitable giving.

Final Thought

It has been said that beauty is in the eye of the beholder. In judging the merits of the One Big Beautiful Bill, some investors may focus less on sound tax policy and instead may echo sentiments that have been attributed to Senator Russell Long:

A tax loophole is "something that benefits the other guy. If it benefits you, it is tax reform.''

Lincoln Fleming

Lincoln Fleming
Senior After-tax Wealth Strategist