President Trump signed the "One Big Beautiful Bill Act" into law on Friday, capping off a whirlwind legislative process that saw the House pass it 218-214 and the Senate approve it 51-50, with Vice President JD Vance casting the tie-breaking vote. After weeks of uncertainty about which provisions would survive the House-Senate negotiations, Bequest’s clients now know exactly what they can expect.
How Our Guidance Evolved: From Uncertainty to Reality
When we analyzed the competing House and Senate versions, several key provisions were up in the air. Here's how the final bill resolved those debates:
Estate Tax: Certainty Delivered: As we predicted, both versions agreed on this, and the final bill permanently increases the exemption to $15 million per person and $30 million for married couples starting in January 2026. The current levels ($13,990,000 for an individual, $27,980,000 for married couples) will hold through the end of the year.
SALT Relief: House Version Won (Mostly): The final bill adopts the House's $40,000 SALT cap through 2029, with annual 1% increases starting in 2026 ($40,400) and a phase-out for high earners. The deduction begins phasing down at a 30% rate for taxpayers with modified adjusted gross income over $500,000, but can never go below the old $10,000 cap.
Tips and Overtime: Senate's Measured Approach Prevailed: The final bill includes the Senate's capped approach—$25,000 for tips, $12,500 for overtime ($25,000 for married couples)—rather than the House's unlimited deductions. Both phase out at $150,000/$300,000 income levels and run through 2028.
Child Tax Credit: Senate Number Stuck: The final bill settles on the Senate's $2,200 per child (versus the House's $2,500), indexed for inflation starting in 2025.
Senior Deduction Enhanced: The final bill keeps the Senate's more generous $6,000 deduction for taxpayers 65 and older, available through 2028. However, this benefit phases out significantly as income increases and importantly, does not change the taxation of Social Security benefits.
The deduction begins phasing out at $75,000 for single filers and $150,000 for married couples, reducing by 6% for each dollar above these thresholds. This means:
Single filers lose the entire deduction at $175,000 income
Married couples lose it entirely at $250,000 income
At $125,000 income, a single filer gets only $3,000 instead of the full $6,000
Critically, this deduction is completely separate from Social Security taxation. It doesn't lower your adjusted gross income, won't help you avoid Medicare IRMAA surcharges, and won't reduce state taxes. Social Security benefits remain taxable under the same rules as before; the deduction is simply an additional benefit for seniors, not relief from Social Security taxes.
Car Loan Interest Deduction: This provision, which wasn't in our earlier analysis, allows deductions up to $10,000 for interest on loans for US-assembled vehicles through 2028. It phases out at $100,000 income for singles, $200,000 for couples.
Clean Energy: The final bill terminates most clean energy credits, but with more measured timelines than the House originally proposed. Most individual credits (electric vehicles, residential solar) end by late 2025 or 2026, while business credits like the clean electricity production credit phase out for wind and solar by 2027. Nuclear, hydropower, and geothermal maintain support longer.
The Economic Reality Check
According to the Tax Foundation's analysis, the bill will increase long-run GDP by 1.2%, create nearly 940,000 jobs, and raise pre-tax wages by 0.4%. However, it comes with a significant cost: $3.8 trillion in additional deficits over the next decade (including interest costs), pushing the debt-to-GDP ratio from 117% to 127% by 2034.
The economic benefits are front-loaded, with GDP growing 0.2% in 2025, peaking at 1.5% in 2028, then stabilizing at 1.2% long-term as temporary provisions expire.
Timeline and Implementation
Most provisions take effect January 1, 2025 (retroactively), with the estate tax changes beginning in 2026. Temporary provisions like the tips, overtime, and senior deductions run through 2028, while the enhanced SALT deduction phases back to $10,000 starting in 2030.
Bottom Line
The dust has settled on this major tax legislation, but good planning never goes out of style. If you haven't reviewed your estate plan recently, now is the perfect time to ensure it reflects both the new tax realities and your family's current needs. We're here to help you navigate these changes—call Bequest Estate Planning today to discuss updating your trust, will, power of attorney, and health care directive.