Beyond OBBBA: Strengthening Your Long Term Financial Plan

The enactment of the One Big Beautiful Bill Act (OBBBA) marks a meaningful turning point for long‑term financial planning. By making many provisions of the Tax Cuts and Jobs Act (TCJA) permanent, the legislation replaces years of uncertainty with a more predictable planning environment. For high‑net‑worth families and business owners, this stability creates an opportunity to move beyond defensive tax planning and focus instead on strategies designed to endure.

With fewer moving legislative targets, planning can become more intentional and integrated—aligning income decisions, charitable goals, estate structures, and business investments within a disciplined, long‑term framework. The focus is no longer on reacting to what might change, but on optimizing what is now known.

1. Income Tax Planning

OBBBA introduces a period of welcome stability to individual income tax planning. Permanent inflation adjustments to tax brackets and the introduction of new deductions—such as exclusions for tips, overtime income, and certain car loan interest—create a more predictable framework for multi‑year income recognition, investment planning, and charitable giving strategies.

This increased certainty allows advisors and taxpayers to model cash flows and tax outcomes over longer horizons with greater confidence, particularly for high‑income households navigating complex compensation and investment structures.

Itemized Deductions vs Standard Deduction

Under the Tax Cuts and Jobs Act (TCJA), the long‑standing Pease limitation—which capped itemized deductions for higher‑income taxpayers—was suspended. OBBBA made the repeal permanent, however, beginning in 2026, OBBBA introduced a new limitation for taxpayers in the top 37% marginal bracket:

Single filers with income above $640,600
Married filers filing jointly with income above $768,700

For those in the 37% bracket, Itemized deductions will be reduced by 2/37 of the lesser of:

Total itemized deductions.
The amount by which income (before itemized deductions) exceeds the 37% bracket threshold

Even with the new cap, itemizing may remain advantageous for higher‑income households whose deductible expenses exceed the standard deduction, particularly in years involving charitable contributions, large medical expenses, or mortgage interest.

At the same time, OBBBA makes the enhanced TCJA standard deductions permanent. Beginning in 2026, the standard deduction amounts increased to:

$16,100 for single filers
$32,200 for married couples filing jointly
$24,150 for head‑of‑household filers

Additional Benefits for Older Taxpayers

Individuals age 65 and older continue to receive an increased standard deduction of:

$2,050 for single filers
$1,650 per spouse for married couples filing jointly

In addition, OBBBA introduces a new $6,000 senior deduction, available to both standard‑deduction and itemizing taxpayers. This deduction phases out at a rate of 6% for taxpayers with income above:

$75,000 (single filers)
$150,000 (married filing jointly)

This provision meaningfully benefits middle‑income retirees and can influence decisions around retirement distributions, Roth conversions, and the timing of Social Security benefits.

State Tax Considerations

State and local tax exposure continues to be one of the most overlooked long‑term wealth drains—particularly for high‑income households in high‑tax states.

While the state and local tax (SALT) deduction cap has increased from $10,000 to $40,000 through 2029 for married couples filing jointly, phase‑outs and future legislative uncertainty mean proactive planning remains essential.

State‑level decisions often compound over time, making early and coordinated planning critical to preserving long‑term wealth.

Other Deductions Available Through 2028

Eligible workers may also benefit from two temporary deductions that can reduce taxable income through the end of 2028:

Tips Deduction

Up to $25,000 in voluntary, qualified tips may be deducted.
Applies to voluntary cash tips or tips received from customers or through approved tip‑sharing arrangements.
The deduction phases out for those with modified adjusted gross income (MAGI) over $150,000 ($300,000 for joint filers).
Available to both itemizing and non‑itemizing taxpayers.
The deduction cannot exceed an individual’s net income.

Overtime Deduction

Individuals may deduct qualified overtime compensation (QOC) of up to:
- $12,500 for single filers
- $25,000 for joint filers
The deduction phases out for those with MAGI over $150,000 ($300,000 for joint filers).
Available to both itemizing and non‑itemizing taxpayers.

2. Charitable Giving: Updated Planning Considerations

Recent changes to charitable giving rules introduce new planning considerations for taxpayers who regularly itemize deductions.

Key Rule Changes

Adjusted Gross Income (AGI) Threshold: Only charitable contributions exceeding 0.5% of AGI are deductible.
Overall Itemized Deduction Cap: As previously noted, itemized deductions, including charitable contributions, are generally limited to 35% of AGI.

QCD Limits and Opportunities

Qualified Charitable Distributions (QCDs): A QCD is a direct transfer from an IRA to a qualified charity available to those age 70 ½ or older. Because QCDs are excluded from taxable income, they are not subject to the 35% itemized deduction cap and can be an effective way to support philanthropic goals while managing taxable income.
Annual QCD Limit (2026): Up to $111,000 per individual may be transferred annually from an IRA to qualified charities.
One-Time Lifetime QCD Opportunity:
Taxpayers may make a one-time QCD of up to $55,000 to fund:
- A Charitable Remainder Unitrust (CRUT)
- A Charitable Remainder Annuity Trust (CRAT)
- A Charitable Gift Annuity (CGA)

This lifetime limit is indexed for inflation and can provide a way to combine charitable impact with an income stream.

Strategic Planning Considerations

To maximize both charitable impact and tax efficiency, charitable giving should be aligned with income patterns and long-term goals. Strategies may include:

Consolidating several years of charitable contributions into higher-income years.
Using donor-advised funds to separate the timing of the tax benefit from the timing of charitable distributions.
Contributing appreciated securities to avoid capital gains while supporting charitable causes.
Coordinating QCDs with required minimum distributions (RMDs) to reduce taxable income in retirement years.

Key Consideration

Philanthropic intent remains paramount, but achieving tax efficiency now depends more on thoughtful structuring and coordination than on timing alone.

3. Estate Planning

OBBBA introduces long‑term stability to transfer tax rules by establishing durable thresholds and preserving core estate planning provisions. This permanence allows families to plan with greater confidence and intentionality. Key elements include:

$15 million lifetime estate and gift tax exemption per individual ($30 million per couple), indexed for inflation
Generation‑Skipping Transfer (GST) exemption equal to the basic exclusion amount and indexed for inflation; however, the GST exemption remains non‑portable between spouses
$19,000 annual exclusion per recipient, indexed for inflation
Step‑up in basis at death, which remains unchanged

With these parameters now stabilized, individuals and families should ensure existing plans continue to align with current objectives and family priorities. This includes:

Reviewing estate documents including irrevocable trust structures.
Reassessing advanced transfer strategies such as Spousal Lifetime Access Trusts (SLATs), Grantor Retained Annuity Trusts (GRATs), and dynasty trusts.
Evaluating hold‑versus‑transfer decisions for highly appreciated assets in light of long‑term tax efficiency and legacy goals.

Key consideration

Long‑term legislative stability supports stronger alignment between estate structures and family intentions. Existing plans merit a thoughtful, purpose‑driven review—not simply to confirm technical compliance, but to ensure they continue to serve broader family objectives.

4. Education Savings Updates: 529 Plans

Changes to 529 plan rules under OBBBA expand how education savings can be used, creating greater flexibility for families and learners at all stages.

Expanded K–12 withdrawals: The annual allowable withdrawal for K–12 expenses has increased from $10,000 to $20,000 per year.
Broader eligible expenses: Qualified K–12 costs now include curriculum materials, standardized test fees, and approved online education programs.
Credential programs included: Funds can also be used for approved credential and certificate programs, opening new opportunities for both traditional students and mid‑career learners seeking reskilling or upskilling.

These changes make 529 plans a more versatile tool for long‑term education planning.

5. Trump Accounts: A New Tax‑Advantaged Investment Account for Children

Trump Accounts are federally created, tax‑advantaged investment accounts designed to help children build long‑term wealth from an early age. The program officially launches July 4 -5, 2026.

Who Can Have a Trump Account?

Any U.S. child under age 18 with a valid Social Security number may have a Trump Account opened on their behalf.
The account is owned by the child, with a parent or legal guardian acting as custodian until the child turns 18.

$1,000 Government Contribution (Limited Eligibility)

Only children born between January 1, 2025, and December 31, 2028 are eligible for a one‑time $1,000 federal “pilot program” contribution from the U.S. Treasury.
The contribution is not automatic—an account must be properly opened and the election made.
Children born outside this window may still have an account, but will not receive the $1,000 seed deposit.

Annual Contribution Limits

Up to $5,000 per year may be added to a child’s Trump Account while they are under 18.
- Contributions may come from parents, grandparents, relatives, or others.
- Employers may contribute up to $2,500 per year, counted within the $5,000 annual cap.
The $1,000 government contribution does not count toward the $5,000 annual limit.
Annual limits are indexed for inflation in future years.

Tax Treatment

Contributions are made with after‑tax dollars (no upfront deduction).
Earnings grow tax‑deferred while the child is under 18.
When the child turns 18, the account automatically converts to a traditional IRA in the child’s name.
From that point forward, standard traditional IRA rules apply, including taxes on withdrawals and penalties for non‑qualified early distributions.

Investment Restrictions

During the growth period (before age 18), funds must be invested in low‑cost, diversified U.S. index mutual funds or ETFs (for example, S&P 500–style funds).
Individual stock picking is not permitted during this period.

How to Open a Trump Account

Parents or other authorized individuals can open an account by:

Filing IRS Form 4547 (Trump Account Election)
- Can be filed with a 2025 tax return or separately.
Registering online at TrumpAccounts.gov
- IRS online enrollment is live in 2026, with accounts becoming active starting in early July 2026.

The Broader Planning Opportunity

OBBBA’s permanence establishes a more predictable planning environment for high‑net‑worth families and business owners. With increased clarity across income planning, charitable strategies, estate design, and QSBS rules, planning can shift from short‑term reaction to long‑term coordination.

The most effective approach is an integrated one—ensuring that tax, estate, investment, and business decisions work together under the updated law. This is an ideal moment to review existing structures, refine your strategy, and confirm that every element of your financial plan supports your long‑term goals.