The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, introduces major overhauls to the U.S. tax system. The legislation extends key provisions from the 2017 Tax Cuts and Jobs Act (TCJA) while introducing new opportunities for individuals and businesses.
For financial professionals, understanding the fine print of this bill is essential to helping clients leverage its benefits while avoiding potential pitfalls.
From permanent income tax cuts to increased deductions for people age 65 and older and higher estate tax exemptions, the OBBB presents numerous opportunities for tax savings.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
However, many changes are temporary, creating both urgency and a need for strategic foresight.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
This guide offers financial advisers actionable insights into the bill's key provisions and outlines how to effectively incorporate them into client strategies.
Here are some key changes and opportunities.
Income tax rates and brackets
One of the OBBB's central achievements is its permanent extension of lower income tax rates from the TCJA. The tax system retains its brackets, with the top rate staying at 37%, ensuring predictability.
The marginal rates for lower brackets are also adjusted for inflation, ensuring that taxable thresholds rise over time.
Stability in tax rates allows advisers to create long-term strategies for clients, particularly those earning higher incomes.
For example, a client in the $250,000 range can benefit from avoiding a pre-2017 rate increase that would have jumped to 39.6%.
Adviser strategy. Advisers should encourage clients to optimize their withdrawal strategies from tax-deferred accounts like IRAs and 401(k)s, taking advantage of the stable rates to manage taxable income efficiently.
Boosted deductions for older people
The OBBB introduces an enhanced deduction to further help reduce the taxable income of Americans age 65 and older.
Between 2025 and 2028, those who qualify can claim an additional $6,000 deduction for individuals or $12,000 for couples, depending on whether both spouses meet the age requirement.
This is in addition to the higher standard deduction of $15,750 for individuals and $31,500 for couples.
Case study in action. A married couple, both age 70, with a combined income of $100,000, can reduce their taxable income to $53,300 by utilizing the standard deduction, the existing age-related deduction and the new enhanced deduction. These savings lower their tax liability, freeing funds for health care or investments.
Adviser strategy. This provision offers an excellent starting point for reassessing retirement income plans. Advisers should consider factoring in the new enhanced deduction when creating cash flow strategies, helping qualified clients use this temporary but impactful benefit.
Advising older people to plan now can help them maximize relief during its four-year window.
Expanded estate tax exemptions
For clients focused on wealth transfer, the estate tax exemption stands out as one of the OBBB's most generous updates.
Effective in 2026, individuals can shelter up to $15 million, and married couples up to $30 million, from federal estate taxes. These amounts will also adjust for inflation annually.
Practical application. Consider a married couple with a $25 million estate in 2026. Under the pre-OBBB thresholds, and after the TCJA estate tax provision expired (when the exemption would have reverted to an inflation-adjusted $14 million or so for couples), nearly $11 million would have been subject to estate tax.
With the updated exemption, they can now pass on their wealth tax-free, potentially saving heirs close to $4.4 million in federal taxes.
Adviser strategy. Advisers should prioritize reviewing estate plans with clients, particularly those with trusts, gifting plans or charitable intentions. Aligning existing strategies with the higher exemption thresholds helps ensure that clients preserve wealth for their beneficiaries.
Temporary provisions to act on
While many OBBB updates are permanent, several provisions are set to sunset at the end of 2028. These measures, however limited in duration, present significant fiscal advantages for qualifying clients:
State and local tax (SALT) deduction Increase. The SALT deduction cap temporarily rises to $40,000 for households earning under $500,000, reverting to $10,000 in 2030.
- Example: A household in a state with high property taxes could fully deduct their taxes under the raised cap over the next four years, saving several thousand dollars annually.
Worker relief for tips and overtime. From 2025 through 2028, workers can deduct up to $25,000 in tips and overtime pay of $12,500. For service workers, this could mean real savings.
Auto loan interest deduction. New-car buyers can deduct up to $10,000 annually in loan interest for vehicles built in the United States. This deduction phases out for individuals earning over $100,000 and couples over $200,000.
Adviser strategy. Educate clients on these temporary options and encourage timely planning to help avoid missing opportunities before the benefits disappear.
Navigating legislative uncertainty
Though the OBBB introduces landmark changes, financial professionals know that tax legislation can shift with new administrations. Even permanent provisions, such as the estate tax exemption, could potentially face revision in future congressional debates.
Interested in more information for financial professionals? Sign up for Kiplinger's new twice-monthly free newsletter, Adviser Angle.
Advisers should make flexibility a key component of client strategies by building resilient plans:
- Diversify withdrawals. A balanced withdrawal plan incorporating taxable, tax-deferred and tax-efficient accounts can help clients adapt to future adjustments while safeguarding income.
- Educate clients. Regularly communicate potential risks and opportunities with clients, helping ensure they understand how legislative shifts might influence their long-term goals.
Five actionable takeaways
1. Review client portfolios. Analyze how OBBB provisions affect income, deductions and estate planning. Identify opportunities for tax savings and provide tailored recommendations.
2. Prioritize estate planning. Stay ahead of the rising exemption limits by updating legacy plans, aligning trust structures and advising on new gifting strategies.
3. Maximize temporary provisions. Encourage qualifying clients to use enhanced deductions and credits before they expire in 2028.
4. Collaborate with experts. Join forces with CPAs and estate attorneys to deliver comprehensive, coordinated advice that addresses every aspect of your clients' tax planning needs.
5. Track legislative developments. Stay informed on potential tax reforms, helping clients remain agile in their financial planning.
Act now
The OBBB gives financial advisers an arsenal of tools to help clients reduce taxes, grow wealth and stabilize their financial futures.
By staying informed and proactive, advisers can turn these tax changes into measurable benefits for their clients and firms.
Now is the time to act — some of these opportunities won't last forever.
Advisors Excel's mission is simple yet profound: to help good advisers become great business owners while enabling their clients to enjoy the retirement of their dreams.
Investing involves risk, including the potential loss of principal. Any references to protection, safety or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the issuing carrier.
Our firm is not affiliated with the U.S. government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.
Past performance is not indicative of future results. 7/25 — 4613651
Related Content
- Savvy Marketing Tips for Financial Pros From a Financial Pro
- Navigating Annuity Taxation: A Guide for Financial Advisers
- How Financial Advisers Can Build Retiring Clients' Confidence
- How Financial Professionals Can Empower Their Female Clients
- Advisers: Master the Fed Funds Rate, Help Clients Master Retirement
-
Best Banks for Retirees 2025National banks offer a wide variety of accounts and services, including wealth and investment management. Here's Kiplinger's pick of the best.
-
Best Banks for High-Net-Worth Clients 2025National banks offer a wide variety of accounts and services, including wealth and investment management. Here's Kiplinger's pick of the best.
-
Dow Rises 585 Points on Rate Cut Hope: Stock Market TodayStocks moved more than 1% again Monday, this time to the upside following the Jobs Friday sell-off.
-
How to Guard Against the New Generation of Fraud and Identity TheftFraud and identity theft are getting more sophisticated and harder to spot. Stay ahead of the scammers with our advice.
-
The Retirement Bucket Rule: Your Guide to Fear-Free SpendingForget market declines or rising inflation. With this strategy, you won’t have to worry about any of that during retirement.
-
How Big Will the Fed Rate Cut Be This Fall?A dismal July jobs report has lifted expectations for fall rate cuts. How low could the fed funds rate be by year's end?
-
Five Ways to Maintain Charitable Giving During Volatile Times: A Giver's GuideWhen the economic outlook is uncertain, charitable giving is even more important — and impactful. You can be strategic by using donor-advised funds, diversifying assets and prioritizing unrestricted gifts.
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D PremiumsIn 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
The Weak Dollar is Making a European Vacation Harder to Afford in RetirementTravel pros explain how you can afford a European vacation in retirement despite a weak dollar.
-
Cash Balance Pension Plans: the Smart Way to Turbocharge Your RetirementCash balance plans can significantly boost your retirement strategy if you want a reliable, guaranteed income stream.
