The OBBB Act Is Law: What It Means for Your Retirement, Taxes, and Legacy
- alyssa235
- Jul 23
- 5 min read
Congress just rewrote the playbook—and if you’re planning for retirement, managing a business, or building a legacy, it’s time to rethink your strategy.
The Opportunity to Build a Better Budget Act (OBBB Act) delivers one of the most sweeping overhauls to tax and financial planning in recent years. From income tax rates to charitable giving rules, these changes are deep—and they’re permanent in many cases.
But here’s the good news: if you understand the rules, you can use them to protect your wealth, reduce taxes, and increase your long-term security.
At King Legacy Group, we’ve broken down the key provisions of the Act—one section at a time—with clear explanations and practical takeaways. Below is your guided tour through the law and what it means for your financial plan.
Income Tax Planning: New Deductions, Same Rates, Smart Moves
Top tax rate remains 37%, locked in indefinitely.
Standard deductions are going up in 2025—$15,750 for single filers and $31,500 for joint filers.
SALT (State and Local Tax) deductions expand from $10,000 to $40,000 for five years (phases out for AGI over $500,000).
New above-the-line deductions for:
U.S.-made auto loan interest
Overtime pay
Tip income in customary tip-based jobs
Personal Insight:
High-income earners can leverage above-the-line deductions to reduce taxable income without needing to itemize. SALT deduction increases may open advanced trust strategies—especially for clients with real estate or state tax exposure.
Financial Planning: More Flexibility, Earlier Starts, Senior Relief
529 plans can now be used for K–12 education expenses up to $20,000—double the previous limit. Qualified uses for post-secondary education have also been expanded, giving families more freedom with how they allocate funds for academic expenses.
"Trump Accounts" are a new retirement-style account exclusively for minors under age 18. These accounts function similarly to IRAs and are invested in index-tracking funds. Contributions are capped at $5,000 per year, and eligible children will receive a $1,000 government "seed" contribution automatically.
ABLE Accounts have been made permanent, maintaining higher contribution limits for individuals with disabilities who are employed.
A new $6,000 above-the-line deduction is available for taxpayers age 65 and older (phasing out after $75,000 individual or $150,000 joint AGI).
Dependent care contributions (used for long-term care or childcare) increased from $5,000 to $7,500 starting in 2026.
Personal Insight:
Families with young children now have greater options for education and early investing. For retirees, the $6,000 senior deduction and expanded dependent care contribution limits offer new ways to reduce taxable income and manage healthcare costs.
Retirement Planning: More Access, Higher Limits, Secure Income
The Act includes provisions to support lifetime income strategies, with no changes to tax treatment for life insurance or annuity income.
Fixed Indexed Annuities (FIAs) become even more compelling given the continued volatility of equity markets. With premium bonuses as high as 25%, and guaranteed roll-up rates for income bases, FIAs offer a path to predictable, tax-advantaged retirement income.
While 401(k)s and IRAs remain unchanged, the rising importance of tax-free income sources—such as cash value life insurance—becomes central in this new environment.
Personal Insight:
For retirees and near-retirees, the shift is clear: accumulation is no longer the goal—preservation and income are. That means using FIAs and well-designed IULs to guarantee income, eliminate market risk, and reduce future tax burdens.
Estate Planning: Bigger Exemptions, Strategic Gifting Windows
The estate and gift tax exemption increases to $15 million per individual ($30 million for married couples) in 2026, with inflation indexing beginning in 2027.
The step-up-in-basis rule remains intact, preserving the ability to reset capital gains basis at death.
Unlike previous estate tax expansions, this increase is not set to sunset—giving families more predictability and planning opportunity.
Families who have already used previous exemptions now gain room for additional gifting, particularly useful in private lending, split-dollar arrangements, and premium payments to irrevocable life insurance trusts.
Personal Insight:
This window creates a powerful opportunity for high-net-worth individuals to accelerate wealth transfer strategies. Gifting business shares, forgiving private loans, or funding trusts before future legislation changes can be a game-changer.
Business Planning: Big Deductions, More Favorable Structures
IRC Section 199A (20% pass-through deduction) is now permanent, and expanded phase-in ranges mean more high-income business owners qualify.
Qualified Small Business Stock (QSBS) under Section 1202 is enhanced:
Exclusion cap increased to $15 million
Gross asset threshold for QSBS rises to $75 million
Holding periods now offer tiered exclusions:
3 years = 50% exclusion
4 years = 75%
5+ years = 100%
Bonus depreciation is made permanent and expanded to include certain commercial real estate through 2029.
Section 179 deductions increased from $1 million to $2.5 million, with a new phase-out threshold of $4 million.
Opportunity zones now include new zones starting in 2027, with additional incentives for rural areas.
Executive compensation changes expand the reach of the 21% excise tax on nonprofit employee compensation above $1 million.
Personal Insight:
This section opens the door to significant tax planning. Business owners may reconsider their entity structures to leverage QSBS gains or optimize 199A deductions. Nonprofit leaders need to reevaluate executive comp structures to avoid costly penalties. Bonus depreciation and Sec. 179 updates are especially valuable for asset-heavy businesses or those planning expansion.
Charitable Planning: Simpler for Some, Complex for Others
Individuals who don’t itemize can now claim a $1,000 above-the-line deduction for charitable giving ($2,000 for joint filers), excluding gifts to donor-advised funds and private foundations.
Only donations exceeding 0.5% of AGI count toward the deduction. Amounts below that threshold are not deductible, but unused deductions may be carried forward five years.
Charitable contribution deductions are capped at 35%, even for those in the 37% tax bracket.
The 60% limit for cash donations to public charities is now permanent.
Private universities with high endowment-to-student ratios may now face higher excise taxes of 4% or even 8%.
Personal Insight:
While smaller donors benefit from the above-the-line deduction, high-net-worth givers face more complex rules and limitations. Strategic giving—through trusts, life insurance, or structured charitable gift plans—will become essential. This also creates opportunities for collaboration with planned giving officers and estate attorneys.
Final Thoughts: Adapt Your Strategy—Or Risk Falling Behind
The OBBB Act may not have made front-page headlines, but its impact will be felt in every corner of tax, retirement, business, and estate planning for years to come. Whether you’re a retiree, a high-earning professional, or a business owner, the message is the same:
What worked before may no longer work best now.
At King Legacy Group, we’ve always believed in proactive, tax-efficient planning—and this legislation reinforces why that matters more than ever.
Let’s talk through how the OBBB Act affects your unique plan—and how we can position you to grow and protect your wealth with confidence.
Ready to review your plan under the new rules?
Schedule your complimentary consultation with King Legacy Group today and get your custom retirement, tax, and legacy blueprint.
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