Big Tax Changes Have Arrived; Here’s What Stayed, What’s New, and Why It Matters to You

On July 4th, Congress passed a sweeping new tax law with a name we couldn’t make up if we tried: the One Big Beautiful Bill Act, or OBBBA. Beautiful? We’ll let you be the judge. But big? Definitely. And depending on your income, investments, or charitable giving strategy, it could save (or cost) you thousands.

So, here’s your quick guide. What stayed, what changed, and most importantly, what it means for you.

 

What Stayed the Same

 

1. Tax Rates Didn’t Go Up
The OBBBA made permanent the current individual income tax rates created under the Tax Cut and Jobs Act of 2017 (TCJA). Without the OBBBA, the rates were set to increase at the end of this year as the TCJA was set to expire. That alone saves you thousands.

2. PTE Payments Survived
State pass-through entity (PTE/SALT) payments were on the chopping block (you know those quarterly emails you get from us asking for your permission for us to make a tax payment to your state from your business?). They’re safe for now, and we’ll continue leveraging them for clients with high income in states that allow PTE payments. As a reminder, this is important because it allows you to deduct State and Local Taxes (SALT) from your business and circumvent the $10-$40k cap discussed in further detail in item 5 below.

3. The Standard Deduction is Still Elevated
Originally boosted by the TCJA, the higher standard deduction is still in place. This makes itemizing less necessary for many taxpayers.

4. QBI Deduction Lives On
Many business owners still qualify for the 20 percent Qualified Business Income deduction. More on this in a moment.

5. Mortgage Interest Limit holds for Loans Over $750K
The deductible limit didn’t revert back to $1M of mortgage debt, but it also didn’t get lower. No change here is a small win in our book. If your mortgage is greater than $750k, you’ll still get to deduct the interest on $750k of your loan, but interest beyond that will be non-deductible.

 

What Changed and Why It Matters to You

 
Here’s where the new rules from the OBBBA start to kick in:
 

1. QBI Deduction Gets a Bigger Window
This is a huge win for clients near the income threshold.

Previously:
If your income exceeded $197,300 (single) or $394,600 (married) in 2025, your QBI deduction would phase out over the next $50,000 (single) or $100,000 (married) of income. In other words, by if you made over $247,300 or $494,600 of income, you would not be eligible for the deduction.

Now, under OBBBA:
That QBI deduction phaseout window is expanding to $75,000 for singles and $150,000 for married filers. That means the full deduction now fades out between $197,300 and $272,300 for single filers and $394,600 and $544,600 for joint filers. This gives high earners more space to qualify and more tools to plan with.

 

2. Student Loan System Overhauled
A few major shifts:
• Only two repayment plans will be available moving forward.
• The exclusion for loans discharged due to death or permanent disability was going to expire. OBBBA made that exclusion permanent. That means forgiven balances in those cases will not count as taxable income, ever.
These points are important for doctors and other professionals who carry high loan balances. If you have student loans, your PFG planning team will help you optimize your loan payback plan based on the new options available.

 

3. 529 Plans Expanded for K-12 Use
Starting in 2026, you can use up to $20,000 per year from 529 plans for K–12 education. And it’s not just tuition anymore. Qualifying expenses now include:
• Books
• Online educational tools
• Licensed tutoring
• Standardized tests
• Curriculum and subscriptions
This flexibility makes 529s more valuable for families.

 

4. Telehealth Coverage Made Permanent for HSAs
During COVID, high-deductible health plans (HDHPs) were temporarily allowed to cover telehealth services before the deductible without affecting HSA eligibility. That rule expired at the end of 2024.
OBBBA reinstated this provision and makes it permanent starting in 2025.
Now, HDHPs can continue offering pre-deductible telehealth services — a great win for flexibility and tax savings.

 

5. SALT Deduction Cap Increased to $40,000… Kind Of
The State and Local Tax (SALT) deduction cap increases from $10,000 to $40,000 beginning in 2025. Sounds great, but there’s a catch.
• For married filers with income over $500,000 (and single filers over $250,000), this expanded cap phases down from $40k to $10k quickly.
• For these clients, we’ll likely continue making PTE payments to preserve deductions.
We’ll be monitoring this one closely, client by client.

 

6. Charitable Giving Rules Are Getting Tweaked
Beginning in 2026:
• The first 0.5 percent of your income in charitable contributions won’t be deductible if you itemize your deductions.
• After that, deductions resume as normal.
• But even if you take the standard deduction, you’ll now get up to a $1,000 deduction per taxpayer (or $2,000 per couple) for charitable giving.

 

7. Itemized Deductions Will Be Capped
Starting January 1, 2026:
• Itemized deductions will be capped at $0.35 of tax savings per $1.00 of deductions for individuals in the top tax bracket.
• The maximum value of those deductions is now tied to the 35 percent marginal tax rate.
This adds another layer of complexity for high earners who itemize. Planning ahead will help minimize the surprise.

 

8. Clean Energy and Vehicle Credits Get Repealed
A lot of green credits are going away:
• The credit for energy-efficient home improvements is gone after 2025 (i.e. energy audits, energy efficient windows/doors, etc.)
• The credit for clean energy upgrades to residential property is also gone after 2025 (i.e. solar panels)
• The vehicle credits for new and used clean vehicles are repealed for purchases after September 30, 2025 (this was subject to an income limitation of $150,000 for single filers or $300,000 for married filing jointly; this going away may or may not affect your desire to own an EV)

 

9. Estate Tax Exemption Is Staying High
This one’s a relief. The increased federal estate and gift tax exemption from the TCJA was set to expire in 2026. OBBBA instead:
• Makes the higher limit permanent
• Sets the exemption at $15 million per person (or $30 million per couple) starting in 2026
• Indexes that amount for inflation going forward
This creates more room for planning around wealth transfer, gifting strategies, and generational legacy.

 

What Should You Do Now?

 

You don’t need to memorize the acronyms or read the fine print. That’s what we’re here for. But this bill isn’t just political theater. There are real planning opportunities and risks buried in it.

We’ll be updating your tax projections, reevaluating PTE payments, and looking closely at charitable strategies, QBI thresholds, and phaseout zones over the coming months.

If you want to get ahead of it, we’re always happy to take a look with you.

Because with tax law, the early birds don’t just get the worm. They get the deductions too.