Navigating the OBBBA: Short- and Long-Term Planning

The recently enacted “One Big Beautiful Bill Act” (OBBBA) includes significant tax updates that could affect your financial picture. While there’s no need to dig into the technical details, it’s important to understand what’s changed, why it matters, and when to take action. We’ve highlighted key provisions to review with your CPA and financial advisor, organized by short- and long-term impacts. 

Short-Term Considerations (2025–2026)

1. State and Local Tax (SALT) Deduction Increase
The SALT deduction cap has temporarily increased to $40,000 (up from $10,000) through 2029. This could provide meaningful relief for high-income taxpayers if it applies to your situation.

2. Bonus Depreciation Returns to 100%
Businesses can immediately expense qualified purchases (such as equipment, furniture, and improvements) without the previous phase-down. This is a key time to consider timing large purchases.

3. Disaster Relief for Wildfire Victims
Special rules now apply for qualified disaster losses, including those impacted by California wildfires. These changes could allow more favorable deductions, even without itemizing.

4. Research and Experimentation Expenses
Businesses can once again deduct qualifying R&E expenses in the year incurred (rather than amortizing them over several years). This may be relevant for clients involved in product development or innovation.

5. Business Interest Expense Deduction
Interest expense deductions are now calculated more favorably, which could improve cash flow for leveraged businesses.

6. Clean Energy Incentive Phaseouts
Deadlines are approaching for electric vehicle credits, residential solar credits, and other energy-related tax benefits. If you were planning to invest in these areas, act soon to take advantage.

Long-Term Considerations

7. Qualified Business Income Deduction Made Permanent
The 20% deduction for certain pass-through business income is now permanent. This creates ongoing planning opportunities for structuring business operations. 

8. Estate Tax Exemption Permanently Increased
The estate tax exemption rises to $15 million per individual ($30 million for married couples) with ongoing inflation adjustments. Now is the time to review estate plans, gifting strategies, and trust structures. 

9. Qualified Small Business Stock (QSBS) Expansion
The QSBS exclusion increases to $15 million, with tiered benefits starting at three years of holding. This provides more flexibility for business owners considering growth or eventual sale. 

10. The Opportunity Zones Made Permanent
The Opportunity Zone program remains, now with rolling 10-year designations and expanded incentives for rural areas. This can create powerful tax deferral and exclusion opportunities for long-term investors. 

11. Tax Rates Made Permanent
Current individual rates (with 37% as the top bracket) are locked in, offering more certainty for long-term planning. 

The Bottom Line

The OBBBA changes present both immediate opportunities and important long-term considerations. While the details can be complex, the key takeaway is simple: review these provisions with your CPA and financial advisor to see how they fit into your personal strategy. Monarch Wealth Strategies can help you evaluate the impact on your financial plan and ensure you are positioned for both today and the future.