How Recent Policy Changes May Influence Your Financial Plan
With tax season approaching, many taxpayers are beginning to assess how last year’s sweeping policy changes may affect their finances. The provisions of the One Big Beautiful Bill Act (OBBBA), many of which are retroactive to the 2025 tax year, introduce updates that could reduce this year’s tax bill and, in some cases, warrant adjustments to long-term wealth management strategies.
While the legislation includes tax changes affecting a wide range of income levels, these highlights are particularly relevant for higher-net-worth families.*
- Income Tax Rates.Several provisions of 2017’s Tax Cuts and Jobs Act were set to expire at the end of 2025, but OBBBA made them permanent. These include the 37% cap on marginal income tax rates and elevated standard deduction of $15,750 (single filers, indexed for inflation). These changes may provide greater certainty for multi-year income planning.
- State and Local Tax (SALT) Deduction.The SALT deduction cap is temporarily increased to $40,000 starting in 2025 (reverting to $10,000 in 2030). Even in states with no income tax — like Texas — this change could make itemizing deductions worthwhile for taxpayers with significant property taxes.
- Wealth Transfer.OBBBA permanently raises the lifetime federal estate and gift tax exemption to $15 million for individuals (double for married couples), indexed for inflation. This eases the pressure families previously felt to accelerate planning decisions before higher limits expired, allowing for greater long-term flexibility.
- Charitable giving.Several new tax provisions offer expanded opportunities for donors that could influence their philanthropic strategies. For example, OBBBA permanently extends the ability to deduct up to 60% of Adjusted Gross Income (AGI) for cash contributions to 501(c)(3) public charities.
- Education.Updates to 529 plans expand the definition of “qualified expenses” for K-12 education, now including certain nontuition costs such as instructional materials and standardized test fees. Starting in July 2026, a new tax-advantaged investment vehicle for kids— MoneyAccounts for Growth and Advancement — may complement other savings strategies.
- Business planning.Several OBBBA provisions affect business-related decisions such asexpensing, interest deductibility, investment timing, lendingstrategiesandsuccession planning. For individuals whose personal wealth is closely tied to their business, these changes underscore the importance of coordinating personal and business tax strategies.
With these and many other tax changes in play this year, be sure to work with your CPA to understand how these rules apply to your specific situation. Frost’s team across banking, wealth management and risk management can work alongside your tax advisors to help translate these updates into informed financial decisions, keeping your broader strategy aligned with your goals. Contact Brad Clark at 214.213.4897 or Brad.Clark@frostbank.com to learn more. *All tax provisions mentioned are subject to specific IRS limits and exclusions.
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