The 2025 reconciliation bill signed into law on July 4, 2025, (commonly referred to as the “One Big Beautiful Bill Act” or “OBBBA”), brings sweeping changes to be discussed with clients.

This three-part series outlines several time-sensitive provisions that may impact clients’ 2025 tax planning. In Part 1, we look at charitable giving, state and local tax, pass-through entity tax and expiring energy credits. Part 2 reviews depreciation and expensing for real estate & business assets; estate and gift planning; research & experimental (R&E) expenses; and international tax changes. Here, we cover other opportunities for individuals and families under the OBBBA, as well as businesses and investors, and interconnected provisions.

Other Opportunities for Individuals and Families

• Trump Accounts: Children born between 2025 and 2028 are eligible for a $1,000 government seed contribution in a newly created “Trump Account.” These accounts operate under rules similar to individual retirement accounts (IRAs) but are available for newborns and can be funded with up to $5,000 per year regardless of whether the child has earned income. The program is new and limited in scope, but it is worthwhile to open an account if your client’s child qualifies for the free $1,000 contribution. Other savings options such as 529 plans or Roth IRAs will continue to play a larger role in long-term planning.

• 529 Plan Expansion: Starting in 2026, qualified expenses will include certain elementary, secondary, homeschooling and credentialing costs. Families considering these types of expenses may want to review whether contributing to or expanding use of a 529 plan makes sense, especially since earnings grow tax-free when used for qualified purposes. In addition, 529 plans allow for “superfunding,” where up to five years’ worth of annual exclusion gifts ($19,000 per donor, or $38,000 per married couple in 2025) can be contributed at once, frontloading the account to maximize potential tax-free growth. Keep in mind that superfunding uses up future annual exclusions for that beneficiary during the five-year period.

• Income Tax Rates and Roth Conversions: With current income tax brackets permanently extended under the new law, rates will remain at the lower post-2018 levels instead of reverting higher after 2025. Roth conversions remain a valuable planning tool, especially for those who expect higher taxable income or higher tax rates in the future. Because the lower rates are now permanent, there is no need to accelerate income into 2025 simply to avoid higher rates, which would have been a consideration before this change.

Other Opportunities for Businesses and Investors

• Qualified Small Business Stock (QSBS): Expanded benefits apply to qualified small business stock acquired after July 4, 2025, which can now qualify for a 50 percent exclusion if sold after three years, a 75 percent exclusion after four years, and the full exclusion after five years. The per-issuer exclusion cap is permanently increased from $10 million to $15 million, and for qualified small-business stock acquired after July 4, 2025, the gross-assets test is raised from $50 million to $75 million. These changes create new opportunities for founders and investors to plan around entity choice, business structuring and exits. Potential strategies may include using multiple trusts or family members to “stack” exclusions, coordinating basis planning, and carefully timing sales or restructurings.

• Qualified Opportunity Zones (QOZ): Gains previously deferred under the existing QOZ program will still be taxable on Dec. 31, 2026, but a new permanent program begins in 2027. For new investments made after 2026, taxpayers can defer gain recognition for up to five years. If the investment is held the full five years, basis in the deferred gain increases by 10 percent, effectively reducing the taxable portion. In addition, appreciation on the QOF investment itself remains tax-free if held for at least 10 years. Planning strategies such as installment sales or charitable remainder trusts may help delay the recognition of gains to 2027 to qualify for deferral.

• Business Interest Deduction: The business interest deduction remains limited to 30 percent of adjusted taxable income (ATI). For tax years beginning after Dec. 31, 2024, the new law changes the definition of ATI to once again add back depreciation and amortization, which had phased out under prior law. Combined with the restoration of 100 percent bonus depreciation, businesses can now expense qualified assets while preserving a higher ATI base, allowing leveraged businesses and real estate investors to deduct more interest.

  • For tax years beginning after Dec. 31, 2025, the new law also provides that the amount of business interest expense allowed after applying the 30 percent of ATI limit is applied first to amounts that would be capitalized and only the remainder if any would be deducted.

  • An irrevocable election out of business interest expense limitation remains available for real property trades or businesses, but it comes at the cost of slower depreciation and the loss of bonus depreciation on qualified improvement property. With ATI restored to an EBITDA (earnings before interest, taxes, depreciation and amortization) basis, however, this election may be less attractive going forward.

Interconnected Provisions: No One-Size-Fits-All

Many of the changes in the new law are interconnected, and their combined effect may be quite different from looking at any single provision in isolation:

• Bonus depreciation can be limited by passive activity loss rules and excess business loss limitations.

• PTET elections may reduce AGI, which in turn impacts income-based limitations.

• Charitable giving strategies depend on whether clients are itemizing in a given year.

• R&E guidance may affect adjusted taxable income (ATI), which in turn impacts the business interest deduction.

• Trust-based planning: In some cases, non-grantor trusts may be used to maximize certain benefits, such as stacking QSBS exclusions, increasing access to the SALT deduction or avoiding the new 0.5 percent AGI floor on charitable contributions. These strategies are complex and must be carefully evaluated to ensure compliance and effectiveness.

• State tax considerations: While this summary focuses on federal tax changes, it is important to remember that states vary in whether they conform to federal rules. As a result, the state tax impact of a strategy may differ significantly from the federal benefit, and planning must take both into account. For example:

  • California does not conform to bonus depreciation, QSBS gain exclusion, business interest expense limitation or expanded qualified 529 plan expenses and applies a much lower Section 179 deduction limit ($25,000).

  • New York also does not conform to bonus depreciation, but does conform to the higher Section 179 deduction, QSBS gain exclusion, business interest expense limitation, and expanded qualified 529 plan expenses.

Next Steps

Because every situation is unique, and the new provisions can interact in unexpected ways, the right approach depends on clients’ specific circumstances. Some changes create opportunities this year, while others introduce new limits or affect longer-term plans. Careful, forward-looking planning will be essential to make the most of these developments—and now is the time to review situations to determine the best course of action for your clients.

Any tax advice in this communication is not intended or written by Navolio & Tallman LLP to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer, or (ii) promoting, marketing, or recommending to another party any matters addressed herein. With this newsletter, Navolio & Tallman LLP is not rendering any specific advice to the reader.