On January 1st, the One Big Beautiful Bill Act (OBBBA) will become effective. With higher exemptions, updated deduction limits, and expanded planning opportunities on the horizon, now is an ideal time to review estate and business planning. Key highlights for 2026 include:
- Estate, Gift, and GST Tax Exemptions: Increase to $15 million per individual and $30 million for married couples.
- Standard Deductions: Rise to $15,750 for individuals and $31,500 for married couples filing jointly, reflecting inflation adjustments for 2025 income.
- Income Tax Rates: The highest federal tax rate of 37% applies only to income over $640,600 for single filers and $768,700 for married couples filing jointly. Income below those thresholds is taxed at lower rates.
- Charitable Donations: Itemizers may benefit from giving in 2025 before new limits take effect in 2026, which will reduce deductions by 0.5% of income and cap deductions at 35% for high-income donors. Non-itemizers can also get a tax break with an above-the-line deduction of up to $1,000 for single filers and $2,000 for married couples starting in 2026.
- State and Local Taxes (SALT) Deduction: Changes from $10,000 to $40,000 for taxpayers earning under $500,000, with annual increases until 2029. For taxpayers earning over $500,000, the $40,000 deduction is gradually phased down at a 30% rate, reaching a maximum allowable deduction of $10,000 for those earning $600,000 or more. Utilizing an irrevocable, non-grantor trust can help avoid the deduction from being phased down and allow an offset against investment income.
Buckley Fine Law can help you navigate this evolving landscape and develop a strategy that is aligned with your family’s goals. Contact us at 847-381-0011 or attorneys@buckleyfinelaw.com.