Beyond the Brackets: What OBBBA Really Changes

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    Nicholas Timm

    Few topics spark as much interest among our clients as taxes, and for good reason. Few areas of wealth management are as complex or as consequential as taxes. After all, you can choose not to follow the latest market trend or hot investment lead, but ignoring a tax law change can have lasting consequences for your future.

    That’s why the One Big Beautiful Bill Act (OBBBA) is so significant. At more than 900 pages, it represents the most sweeping federal tax reform since 2017. The law extends, modifies, or introduces dozens of provisions that will affect income, investments, deductions, estate planning, and even savings for future generations.

    The good news is that marginal income tax rates remain unchanged. The top bracket will stay at 37%, avoiding the scheduled jump back to 39.6%. But for many high-income households, the real impact of OBBBA lies not in rates but in deductions, thresholds, and timing.

    Several broad themes stand out in the new law:

    • Expanded deductions with phaseouts. The standard deduction rises again, while temporary deductions for seniors, overtime income, and even auto loan interest are introduced. But nearly all of these phase out for higher earners, creating planning cliffs.
    • SALT relief with strings attached. The cap on state and local tax (SALT) deductions increases to $40,000 beginning in tax year 2025, but begins phasing down above $500,000 of income and disappears entirely above $600,000. This makes careful timing of income and deductions critical for affluent households.
    • The return of the Alternative Minimum Tax (AMT). OBBBA lowers the income threshold where AMT exemptions phase out, and accelerates the phaseout rate, putting more high-income households back into AMT territory—especially those with incentive stock options or large income events.
    • Estate and gift tax certainty. The exemption rises to $15 million per person in 2026, instead of being cut in half as previously scheduled. That stability is a welcome relief for families with generational wealth planning on the horizon.
    • Charitable giving trade-offs. While non-itemizers get a modest new benefit, high earners face new limits. Starting in 2026, the first 0.5% of adjusted gross income (AGI) in charitable gifts is non-deductible, and top-bracket taxpayers will see the value of their deductions capped at 35 cents on the dollar. Strategic structuring of your giving will be more important than ever.
    • New opportunities for families. Among the more novel provisions are “Trump Accounts,” a new type of savings vehicle for children. Though details are still emerging, the accounts may open long-term tax-deferred savings opportunities for young families.

    The complexities and scale of OBBBA make it difficult to understand all of its tax impacts across your financial plan. Some opportunities are obvious and immediate. For example, if you itemize and are planning a large charitable gift, 2025 is the year to do it before the new 0.5%-of-AGI floor takes effect in 2026. If you hold incentive stock options, exercising them before 2026 may help you avoid the tighter AMT thresholds ahead.

    Other strategies will take time to crystalize. Some provisions start in 2025, like the new SALT deduction cap and the $6,000 senior deduction, while others don’t begin until 2026, such as the itemized deduction limits for top earners. With rules phasing in on different timelines, there may be additional strategies to implement in the coming years.

    The bottom line: OBBBA is less about tax rates and more about timing. Specialized planning tools and careful coordination with income will be essential to avoid getting caught where phaseouts erase the benefit of deductions you thought you were receiving. This is where your adviser can add real value: translating new rules into strategies that keep more of your wealth working for you.

    For a more detailed breakdown of OBBBA’s changes, check out our latest blog on cedarpointcap.com, or reach out and let’s start a conversation. We can help you map out a tax strategy that keeps you ahead of the curve. 

    Nicholas Timm is a director with Cedar Point Capital Partners specializing in tax and financial planning.
    For information and important disclosures, visit www.cedarpointcap.com/disclaimers-disclosures.

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