GOP’s ‘One Big Beautiful Bill Act’ brings permanence to many tax provisions affecting private wealth taxpayers
The new tax law (commonly referred to by its unofficial name, the One Big Beautiful Bill Act):
On July 4, President Trump signed into law the legislation formally titled “An Act to provide for reconciliation pursuant to title II of H.Con.Res.14” (“the Act”) – commonly referred to as the One Big Beautiful Bill Act (OBBBA) – a landmark bill that makes permanent (and in some cases modifies) many of the expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017, introduces a range of new tax benefits primarily targeted toward low- and middle-income workers, and also includes revenue-raising and spending cut provisions designed to offset some of its cost.
These changes signal yet another evolution in the tax landscape – one that presents both immediate opportunities and long-term planning considerations for private wealth taxpayers.
Key takeaways
- Permanent extensions: The new law permanently extends several tax provisions first enacted as part of the TCJA. For individuals, this includes maintaining the lower tax rates and enhanced Alternative Minimum Tax exemption and phase-out thresholds, extending estate and gift tax relief, and permanently extending the Section 199A deduction.
- SALT changes: The OBBBA codifies a long sought-after deal among moderate and conservative Republicans to lift the individual SALT cap, but only through 2029.
- New tax cuts: Fulfilling several high-profile campaign promises, the new law introduces temporary tax relief measures effective through 2028. These include new deductions for tipped wages, overtime pay, and interest payments on certain auto loans. An expansion of Section 1202 brings new opportunities to exclude capital gains on certain small business stock.
- Notable offsets: The OBBBA brings permanence to the “excess business loss” limitation applicable to noncorporate business owners, while also putting in place a new limitation on the value of itemized deductions.
Although the OBBBA has been signed into law, the work doesn’t stop here - strategic planning is just beginning. This document summarizes a few of the law’s main provisions affecting private wealth taxpayers and their effective dates, while also offering insight into what policymakers in Washington may focus on next.
