Every tax code change brings an opportunity for clients to re-assess their financial plans and the composition of their portfolios. The “One Big, Beautiful Bill” is less dramatic than the nickname suggests: it locks in some familiar provisions, enhances others, and adds a few new tax benefits. Magnolia can identify opportunities and pitfalls in the ever-changing tax code that apply to your individual circumstances.

Here’s a summary of the recent changes, followed by a list of actionable steps to help you with your taxes.

Individual Tax Changes

1. Individual Tax Rates & Brackets
   
   1. The seven-bracket structure (10%, 12%, 22%, 24%, 32%, 35%, 37%) is now permanent.
      
   2. No scheduled increases after 2025.
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2. Above-the-Line Deductions and Exclusions
   
   1. Tips: Up to $25,000 in qualifying tips may be deducted, subject to phase-outs based on income.
   2. Overtime Pay: Single filers can deduct up to $12,500, Joint up to $25,000; phased out for AGI > $200K/$400K.
   3. Qualified Business Income (QBI) Deduction
   4. 20% of eligible pass-through income remains permanent.
   5. Income phase-in thresholds widened to $175K–$225K (single) and $350K–$400K (joint) for wage/property limits; ensures more small businesses qualify for the full deduction.
   6. A $400 “floor” deduction guaranteed if you report ≥ $1,000 of QBI.
   7. Effective for tax years or returns filed for years beginning after December 31, 2025.
   8. Charitable Deduction: Above-the-Line deduction for non-itemizers up to $1,000 (single) / $2,000 (joint).
   9. Opportunity Zones: Had been scheduled to sunset in 2026, but are now permanent.  Allows for a deferral of realized capital gains and to have capital gains from your opportunity zone investment be tax-free if held for 10 years..
   10. Moving Expenses: No deduction for moving expenses except for Armed Forces  members (or their spouse or child).
   11. Car Loan Interest Deduction: Up to $10,000 interest deduction on car loan interest, if final assembly of the car is in the U.S.  Will phase down based on income levels.
   12. Dependent Care FSA: Maximum contribution remains at $5,000 per household.
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3. Standard & Itemized Deduction
   
   1. Standard Deduction: Locked in at $15,750 (single), $23,625 (head-of-household), $31,500 (married filing jointly), indexed annually for inflation.
   2. Senior Exemption/Deduction: $6,000 temporary deduction for Seniors age 65 and older. Applies from 2025 through 2028 and is subject to a phase-out based on income.
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   3. Itemized Deductions:
      
      1. General: Limits the benefits of itemized deduction for 37% bracket taxpayers to only 35%.
      2. State & Local Taxes (SALT):  SALT deduction cap raised from $10,000 to $40,000, ($20,000 MFS), phased out for AGI > $500K (single) or $1 million (joint).  Indexed through 2029; thereafter, reverts to $10K cap unless extended.
      3. Principal Residence Loan Interest: The $750,000 ($375,000 married individual filing separately) limit is made permanent, as is the home equity interest exclusion.
      4. Personal Casualty Losses: The temporary limitation on personal casualty losses is made permanent and includes state-declared disasters.
      5. Gambling Losses: Deduct gambling losses incurred from gambling activity for tax years after Dec. 31, 2025, but limit the losses to 90% of the amount in excess of gains from the taxable year.
      6. Miscellaneous Deductions: Permanent exclusion of these miscellaneous itemized deductions: unreimbursed employee expenses, investment advisory fees, tax preparation fees, certain legal fees, hobby expenses, and safe deposit box rentals. Unreimbursed expenses for eligible educators are allowed.
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   4. Children & Education
      
      1. Child Tax Credit is now a permanent $2,200 per qualifying child under age 17, with up to $1,000 refundable.
      2. Adoption Credit: up to $5,000 is refundable and indexed for inflation.
      3. Employer-Provided Dependent Care: Exclusion is now $7,500 versus $5,000 previously.‍
         
         
      4. ‍K–12 “Scholarship” Accounts‍
         
         1. Allows $5,000 annual contributions for elementary & secondary education. Employers can contribute up to $2,500 of the $5,000 which will be tax free to both employee and child.
         2. One-time $1,000 federal seed deposit per child for children born in 2026.
         3. Accounts can be opened for children under Age 18.\529 Accounts
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      5. 529 Accounts
         
         1. Tax-exempt distributions are now allowed for additional educational expenses in connection with enrollment or attendance at an elementary or secondary school.
         2. Tax-exempt distributions from 529 savings plans to be used for additional qualified higher education expenses, including “qualified post-secondary credentialing expenses.” These rules apply to distributions made after the Law enactment date.
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4. Tax Credits Added or Eliminated
   
   1. Scholarship-Granting Organizations Contribution Credit: The bill adds a tax credit of up to $1,700 for charitable contributions to scholarship-granting organizations. The provision also creates a Section 139K, which excludes from income, scholarships for the qualified secondary or elementary education expenses of eligible students.  Since a tax credit is received, the donation up to $1,700 is not allowed to be deducted as a charitable contribution.
   2. Solar & Wind Investment Tax Credit (ITC) and Production Tax Credit (PTC):  Begins step-down after December 31, 2025. Full credit for projects placed in service in 2025; 80% in 2026; 60% in 2027; 40% in 2028; 20% in 2029; then expires.
   3. EV & Alternative Fuel Vehicle Credits: Ends for vehicles placed in service after September 30, 2025.
   4. Energy-Efficient Commercial Buildings (Sec 179D): Deduction ends June 30, 2026.
   5. Clean Hydrogen (Sec 45V): Credit phases out for facilities starting construction after January 1, 2028.
   6. Transferability: Remaining clean-energy credits may be transferred or sold under Section 6418—providing liquidity if the owner can’t deploy capital directly to projects.
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5. Estate & Gift Tax Changes
   
   1. Estate & Gift Tax Exemption: Permanently set at $15 million per individual, $30 million for married couples—indexed for inflation beginning 2026.
   2. Generation-Skipping Transfer (GST) Exemption: Matches the estate & gift tax exemption amounts.
   3. Top Estate/Gift Tax Rate: Remains at 40% on amounts exceeding exemption.
   4. Portability: Spouses may transfer unused exemption on a timely estate-tax return.
   5. Basis Step-Up: Remains intact at death (no change under this Act).
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6. International Transfers of Money
   
   1. Remittance Tax: 1% levy on personal transfers to non-commercial recipients abroad, with no offsetting credit.  Effective immediately and permanently.
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Business Tax Changes

1. Bonus Depreciation & R&D Expensing
   
   1. 100% Bonus Depreciation:  5-year, 7-year, 15-year and certain 20-year property (including manufacturing buildings) is permanent.
   2. Section 174 R&D costs:  Fully expensed immediately; for any remaining capitalized amounts, accelerated write-off permitted for 2022–2024
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2. Excess Business Loss Limitation
   
   1. Limitation on noncorporate taxpayer’s deduction of excess business losses is now permanent.
   2. Carried over excess business losses are treated as net operating losses.
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3. Business Interest Limitation‍
   
   1. Limited to 30% of EBITDA (Earnings before interest, taxes, depreciation and amortization).
   2. Certain foreign-sourced income will be excluded from the calculation.
   3. Ordering rules for capitalization changing.
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4. Opportunity Zones‍
   
   1. Scheduled to go away in 2026, buy are now permanent.  
   2. Opportunity Zones eligibility and designation rules are changing and zones will be redrawn.
   3. Businesses can now feel more confident developing real estate in these areas.
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5. Section 1202 Small Business Stock‍
   
   1. A permanent tiered gain exclusion:
      
      1. 50% for QSBS held for less than three years,
      2. 75% for QSBS held for at least four years,
      3. 100% for QSBS held for 5 years or greater.
   2. Applies to stock originally issued after the date bill is enacted.
   3. No AMT preference item for gain under the three- and four-year rules.
   4. The per-issuer cumulative capital gain exclusion increases from $10 million to $15 million, with an annual inflation adjustment increase.
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6. Pass-Through Entity Tax Deduction: Businesses are allowed to pay state taxes as a pass through entity and deduct them.  Basically, the deduction stays status quo.
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7. Advanced Manufacturing Investment Credit: The advanced manufacturing investment credit rate increases from 25% to 35%, effective for property placed in service after Dec. 31, 2025.
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Magnolia’s Top Planning Ideas

1. Certainty: No surprises on rates or brackets: plan your cash-flow, savings, and charitable gifts with confidence.
2. Income Stacking and maximizing the QBI Deduction: We’ll work with your CPA to model bonus deferrals, retirement contributions, and timing of S-corp distributions to keep you within QBI thresholds for maximum deduction.
3. Using Section 678 & Non-Grantor Trusts: Use these trusts to maximize the QBI deduction, tax income at lower rates for family members and make more effective use of charitable and SALT deductions. Use trusts to take advantage of the Section 1202 stock exemption.
4. Prepay & Pool SALT: Use family partnerships, trusts or LLCs to prepay state/local taxes and capture up to a $40K deduction.  Prepay property taxes or bundle state income payments via family entities to capture the $40K cap.
5. Charitable Bunching & Remittance Planning: Combine contributions, explore remittance vehicles, and layer DAFs or CRTs for optimal giving.  Also consider taking advantage of non-grantor trusts as a charitable vehicle. We can design a “bunching” plan—consolidating multiple years of giving into donor-advised funds or private foundations to exceed the AGI floor and maximize current-year tax benefit.
6. Optimize Family Credits: Coordinate tuition payments, FSA reimbursements, and child-care expenses to maximize above-the-line deductions.
7. Scholarship & 529 Accounts: For clients funding private K–12 or homeschool expenses, these new accounts can be a tax-efficient vehicle—let’s set them up before year-end.  May also provide some state income tax deduction benefits.
8. Estate Planning:  While the $15 million exemption is now law and most people are not going to be subject to estate tax, you still need to focus on income tax and asset protection planning within your estate plan.  People of significant means can not just do simple estate plans because they are not subject to estate tax.
9. Advance Gifting & Trust Funding: Make the most of your $15M exemption by using Spousal Lifetime Access Trusts (SLATs), Grantor Retained Annuity Trusts (GRATs), and direct gifts now—while exemptions are at peak.
10. Dynasty Trusts: Lock in the $15 million of GST exemption for future generations if exposed to Federal estate tax; we’ll coordinate.
11. Remittance Strategy: If you support overseas family or charities, we’ll explore aggregation, netting, or alternative vehicles (e.g., foreign-qualified charitable trusts) to reduce the net 1% cost.
12. Lock In Projects: If you’ve planned solar panels, EV fleet upgrades, or hydrogen investments, accelerate construction to qualify under the 2025 rates.
13. Bundled Solutions: We can structure an ESCO or joint-venture funding to ensure your project reaches “placed-in-service” status before the step-down.
14. Year-End Equipment & R&D Investments:  Accelerate purchases and research expenses in business.
15. Small Business Stock: Consider if it can be properly structured.  Only applicable to stocks in C Corporations.  Sometimes hard to get as most acquirers of businesses want to buy assets.  Most operators want a single layer of tax afforded by S Corporations
16. Opportunity Zones:  If realizing a capital gain in 2025 and forward, will consider the opportunity to defer some gains into an opportunity zone investment.
17. Advanced Manufacturing Investment Credit: Under the bill, the advanced manufacturing investment credit rate increases from 25% to 35%, effective for property placed in service after Dec. 31, 2025.

Magnolia Private Wealth provides comprehensive, integrated solutions for your planning and investment needs.  If you’re not yet a client, we invite you to schedule an initial consultation to see how these new provisions may impact your long-term financial goals.

Magnolia Private Wealth, LLC is a financial advisory firm.  We serve high and ultra high net-worth clients, with a focus on helping high-earning business owners, executives, other professionals and mulit-generational families manage the complexities…..live a richer life….. You can reach Chris and the rest of the Magnolia team here.

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_{Disclaimer: The opinions voiced and information provided in this document is for informational and educational purposes only.  It should not be considered investment, financial, or legal advice. Nothing herein constitutes a recommendation to buy, sell, or hold any security or financial instrument. Magnolia Private Wealth does not provide tax, legal or accounting advice. Investing involves risk, including the potential loss of principal. You should consult with a qualified financial advisor, tax professional, or other appropriate professional before making any financial decisions. The author and publisher assume no liability for any losses or damages resulting from the use of this information.}