One Big Beautiful Bill Act: General Overview
Presented by Marc Aarons
The new tax law permanently raises the estate, gift, and generation-skipping transfer tax exemption from $10 million to $15 million per person (adjusted for inflation). This avoids the planned 2026 rollback and allows individuals to pass on more wealth tax-free.
Capital Gains Brackets Adjusted for Inflation
Capital gains tax brackets have been adjusted for inflation, allowing more investors to stay in the 0% or 15% tax range. For 2025, individuals can have up to $48,350 in taxable income, and married couples filing jointly can have up to $96,700, and still qualify for the 0% rate.
This change offers added flexibility for individuals seeking to sell appreciated assets without incurring higher tax liabilities.
Other Noteworthy Changes
Alternative Minimum Tax Relief Made Permanent
The new law permanently extends the higher AMT exemption levels set by the 2017 tax cuts, helping more households avoid the AMT. The exemptions will continue to be adjusted for inflation, but the phaseout rate for higher earners increases from 25% to 50%, meaning the benefit tapers off more quickly for high-income taxpayers.
Major Medicaid Changes
OBBBA also includes major changes to Medicaid, including:
- Cuts of roughly $1 trillion in federal Medicaid funding over the next decade.
- Work or volunteer requirements (80 hours/month) and frequent eligibility checks for U.S. citizen recipients.
- Tighter restrictions on who qualifies for coverage and what services are included.
New “Trump Accounts” for Child Savings
In the new bill, children born in the United States between 2025 and 2028 who have a Social Security number will receive a onetime $1,000 federal deposit into a new tax-advantaged savings account, nicknamed a “Trump account.” These accounts are opened automatically once a parent files taxes and meets eligibility requirements.
Parents can contribute up to $5,000 annually, and employers may contribute up to $2,500 without it being considered taxable income. Funds will be invested in a diversified U.S. stock index fund, which will grow tax-deferred. Qualified withdrawals will be taxed as long-term capital gains.
EV and Clean Energy Tax Credits Phased Out
Several popular clean energy tax credits are set to end under the new legislation. The $7,500 credit for new electric vehicle purchases and the $4,000 credit for used EVs will expire after September 30, 2025. Tax breaks for home energy-efficiency upgrades — such as solar panels, heat pumps, and efficient windows — will also be eliminated after December 31, 2025.
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With all these changes, now may be a good time to review how the new law might impact your tax situation, retirement contributions, or investment planning. If you’d like to discuss this further, I’d be happy to connect. Give me a call or reply to this email, and we’ll arrange a time to talk.
Please don’t hesitate to reach out with any questions or concerns.
Marc Aarons may be reached at 714-887-8000 or Email Marc
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