ARTICLE HIGHLIGHTS

The One, Big Beautiful Bill Act, signed into law on July 4, 2025, marks a significant shift in the U.S. tax landscape by extending and modifying key provisions from the 2017 Tax Cuts and Jobs Act, many of which were scheduled to expire at the end of 2025. While some are labeled “permanent,” changes remain subject to future congressional action. Among the most notable updates are an increase in the estate and gift tax exemption to $15 million per person, a continuation of the 20% Qualified Business Income deduction, and a temporary increase of the SALT deduction cap to $40,000 through 2029, with income-based phaseouts. Seniors aged 65 and older will benefit from a new $6,000 deduction, and both itemizers and non-itemizers will see changes to charitable giving rules starting in 2026. Meanwhile, high-income taxpayers will face new limits on itemized deductions, and certain deductions—such as those for mortgage interest and casualty losses—have been clarified or restricted.

On the business side, the Act expands the tiered capital gain exclusions for Qualified Small Business Stock, expands Section 179 limits, and makes 100% bonus depreciation permanent for qualifying assets placed in service after January 19, 2025. The bill also extends Opportunity Zone designations, though it accelerates the expiration of several clean energy credits initially introduced under the Inflation Reduction Act. These changes, though far-reaching, are a reminder that tax law remains fluid. As such, individuals and business owners—particularly those with multigenerational wealth—should work closely with their advisors to proactively adapt their strategies and ensure alignment with this evolving tax environment.

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The Impact of the One, Big Beautiful Bill

It required overnight vote marathons, but the House and Senate finally agreed to terms on the budget and reconciliation bill commonly referred to as the One, Big Beautiful Bill Act. The Act “permanently” extends and changes the individual tax code provisions in the Tax Cuts and Jobs Act of 2017 that were slated to expire on December 31, 2025. Keep in mind that “permanently” means until changed by a future Congress. Due to cost concerns and the need to use the reconciliation process to pass the legislation, many of the new provisions are temporary, some are subject to income-level phaseouts, and others do not take effect until later tax years.

Below is a breakdown of a few key tax provisions with their effective dates:

INDIVIDUAL TAX PROVISIONS

Estate and Gift Tax Exemption
The exemption will increase to $15 million per person beginning in the 2026 tax year, instead of being cut in half. Unlike in 2017, the exemptions are not slated to expire but may only be changed by future congressional action. They will continue to be annually indexed for inflation.

Qualified Business Income (QBI) Deduction
This provision, previously scheduled to expire at year-end, will now continue with the 20 percent deduction unless changed by future congressional action.

State and Local Tax (SALT) Deduction
The existing deduction limit will increase to $40,000 for tax years 2025–2029, up from the 2024 limit of $10,000 for itemized state and local taxes including property taxes.

• The increased SALT deduction is phased out for incomes exceeding $500,000. It is reduced by $300 for every $1,000 of income over the threshold.
• Pass-through entities remain able to utilize state Pass-Through Entity Tax elections to pay state taxes at the entity level without limitation.
• Both the deduction and the phaseout threshold will increase by 1 percent annually before reverting to the $10,000 cap in 2030.

Enhanced Deduction for Seniors (65+)
From 2025 through 2028, seniors aged 65 and older are eligible for a $6,000 enhanced deduction.

• Phaseout begins at AGI $75,000 (single filers) and $150,000 (joint filers).
• Fully phased out at AGI $175,000 and $250,000, respectively.
• The deduction is available regardless of whether the taxpayer itemizes or uses the standard deduction.
• Individuals under 65 receiving Social Security are not eligible for this benefit.

Charitable Deductions
For Itemizers:

• Cash gifts to public charities remain subject to the 60 percent AGI limit.
• Beginning in 2026, contributions are only deductible to the extent they exceed 0.5 percent of the “contribution base” (AGI adjusted for net operating loss carrybacks).

For Non-Itemizers:

• Beginning in 2026, they may claim a charitable deduction of up to $1,000 (single) or $2,000 (joint).

Other Itemized Deduction Changes

• Mortgage Interest Deduction: The $750,000 cap on acquisition indebtedness becomes permanent. Mortgage insurance premiums are now included; home equity interest is permanently disallowed.
• Miscellaneous Itemized Deductions: Permanently disallowed.
• Overall Limitation on Itemized Deductions: Reinstated for high-income taxpayers; those in the 37 percent bracket will lose 2/37ths of the benefit from itemized deductions.
• Casualty Losses: Deductible only for losses occurring in federally or state-declared disaster areas.

BUSINESS TAX PROVISIONS

• Section 1202: Qualified Small Business Stock (QSBS) Capital gain exclusion tiers are now expanded:
  • 50 percent for shares held at least 3 years
  • 75 percent for shares held at least 4 years
  • 100 percent for shares held at least 5 years
• Maximum capital gain exclusion increases from $10 million to $15 million, indexed to inflation beginning in 2027.
• The corporate gross assets ceiling increases to $75 million, also inflation-indexed from 2027.
• These changes apply to stock issued on or after July 5, 2025.

Bonus Depreciation

• 100 percent bonus depreciation becomes permanent (unless changed later).
• Applies to property placed in service after January 19, 2025.

Section 179 Deduction

• The deduction limit increases to $2.5 million, indexed to inflation.

Charitable Deductions for Corporations

• C corporations may deduct charitable contributions only to the extent they exceed 1 percent of taxable income and not exceeding 10 percent.

Opportunity Zones

• The Act extends Opportunity Zone policies, creating rolling 10-year designations starting January 1, 2027.

Early Terminations from the Inflation Reduction Act
The following credits are now subject to earlier termination:

• Energy Efficient Commercial Buildings Deduction: Ends for properties beginning construction after June 30, 2026.
• Energy Efficient Home Improvement Credit: Ends for property placed in service after December 31, 2025.
• Residential Clean Energy Credit: Ends for property placed in service after December 31, 2025.
• Clean Vehicle Credit (Individual and Commercial): Ends for vehicles acquired after September 30, 2025.

Final Thoughts
The One, Big Beautiful Bill Act, signed on Independence Day, brings near-term clarity to the tax code by extending expiring individual tax provisions. Your Oxford team remains prepared to help multi-generational family clients develop and implement thoughtful wealth enhancement strategies in a timely and efficient manner.

Please consult your Oxford team to analyze how these tax policy changes may affect your personal or business financial outlook. A coordinated effort among your advisors will help identify optimal, long-term solutions tailored for your family’s needs.

Oxford Financial Group, Ltd. is an investment advisor with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Oxford Financial Group, Ltd.’s investment advisory services can be found in its Form ADV Part 2, which is available upon request. The information in this presentation is for educational and illustrative purposes only and does not constitute tax, legal or investment advice. Tax and legal counsel should be engaged before taking any action. This presentation has been prepared from sources and data believed to be reliable and also includes opinions that are subject to change based on changes in certain industries or market conditions. However, no representations are made as to the accuracy or completeness thereof. Past performance is not indicative of future results.OFG-2507-5