John G. Youngs,
Partner, CEO
The One Big Beautiful Bill Act (OBBBA) introduced several changes that could have a real impact on your planning—from state and local tax deductions to charitable giving, retirement accounts, and education planning.
These five strategies may help you navigate the changes, maximize deductions, reduce taxes, and preserve wealth.
1. Take Advantage of the Increased SALT cap
State and Local Tax (SALT) deductions matter, especially if you live in a high tax state.Here’s what you need to know about changes under the OBBBA1:
- For 2025 the SALT deduction cap has increased from $10,000 to $40,000.
- You must itemize to claim the deduction, with income phaseouts beginning above $500,000 and reverting to $10,000 deduction if AGI exceeds $600,000.
- For 2026 the figures rise by 1% annually through expiration in 2029.
Action Step: Review your projected 2026 state and property tax payments early. Consider tax-efficient strategies—such as bunching property taxes or charitable contributions—can further enhance the value of itemizing your deductions.
2. Leverage the New $6,000 Senior Tax Deduction
For taxpayers age 65 and older, the OBBBA introduces a temporary enhanced Senior Deduction, available each year from 2025 through 2028. Keep in mind that2:
- This $6,000 deduction is in addition to the regular standard deduction and can be claimed whether you itemize or not.
- For married couples filing jointly, the benefit effectively doubles to $12,000, creating planning opportunities when paired with IRA withdrawals or charitable giving strategies.
- The benefit phases out for higher earning retirees, beginning at $75,000 for individuals and $150,000 for couples.
Action Step: Consult with your accountant to determine whether the standard or itemized deduction works best. Plan withdrawals, charitable gifts, and other income timing to maximize benefits before income phase-outs take effect.
3. Rethink Your Charitable Giving Strategy
Starting in 2026, the OBBBA reshapes charitable deductions—creating new opportunities for some taxpayers and limits for others. Non-itemizers may deduct up to $1,000 in qualified cash gifts, while itemizers can deduct only amounts exceeding 0.5% of AGI.4 See details below:
| Taxpayer Type | OBBBA Change (Effective 2026) | What It Means |
| Non-Itemizers | New charitable deduction of up to $1,000 (Single) / $2,000 (Joint). | Charitable giving becomes deductible even without itemizing. |
| Itemizers | New 0.5% of AGI floor on charitable deductions. | Only contributions above 0.5% of AGI are deductible, reducing the benefit of smaller gifts. |
| High-Income Itemizers | Tax benefit of charitable deductions capped at 35% for all earners. | Top-bracket taxpayers (37%) receive reduced tax benefits. |
| Strategic Givers | Increased emphasis on timing and coordination. | Deduction value varies based on income and deduction mix. |
Action Step: Speak with your advisory team about adjusting your giving strategy to include larger less frequent gifts or bunching donations to maximize tax-efficiency under the new rules.
4. Mind the New Catch-Up Contributions Rule
Starting this year, high earners 50+ with Social Security W-2 wages over $150,000 must make catch-up contributions to 401(k)s and other employer plans via Roth accounts.4 Key takeaways include:
- Contributions are after-tax, which could raise your current tax bill.
- Higher AGI may limit your income-based deductions and credits.
- Roth withdrawals are tax-free in retirement (account ≥5 years, owner 59½+), and Roths generally avoid Required Minimum Distributions (RMDs).
Action Step: Review your retirement contribution strategy now—balance tax impacts today with future tax-free growth to maximize retirement benefits.
5. Put Expanded 529 Withdrawals to Work
With thoughtful coordination, 529 plans can help cover education costs while remaining federally tax-free. New provisions under the OBBBA significantly expand the flexibility and value of these accounts5:
- Families may now withdraw up to$20,000 per student, per year for K–12 in private schools expenses (up from $10,000).
- Expanded qualified expenses include curriculum materials, tutoring, online education materials, standardized test fees, and educational therapies.
Action Step: Grandparents may consider superfunding a 529 plan: front-loading up to five years of gifts—to potentially reduce the value of their taxable estate while accelerating tax-advantaged growth.
2026 OBBBA Tax Planning: A Brief Q&A
Q: Who qualifies for the 6K Senior Deduction?
A: Individuals 65 and older. Married couples filing jointly may qualify for a $12,000 deduction.
Q: Do all 401(k) and SIMPLE catch-ups have to be Roth?
A: Yes— for people above the income threshold based on 2025 wages, any catch-up contribution in must go into a Roth account. In 2026, the regular catch-up limit increases to $8,000 and it remains $11,250 for those age 60 to 63.4
Q: How do OBBBA’s charitable giving changes affect HNW donors?
A: Speak with your advisor about reassessing qualified charitable distribution (QCD) use from IRAs, making larger donations, and the timing of multi-year gifts to potentially maximize tax-efficiency under the new rules.
Q: When should I review these strategies?
A: Early 2026 is ideal. Coordinate your state and local taxes, charitable giving, retirement contributions, and education planning with upcoming tax deadlines and distributions to seek improved efficiency and savings.
Sources
1https://bipartisanpolicy.org/article/how-would-the-2025-house-tax-bill-change-the-salt-deduction/
2 https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors
3 https://taxfoundation.org/blog/charitable-deduction-big-beautiful-bill/
4 https://ncllcpa.com/are-you-ready-for-the-new-roth-catch-up-contribution-rules/
5 https://gbq.com/unlocking-new-opportunities-how-the-one-big-beautiful-bill-act-transforms-529-plans/
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