Critical Tax Law Changes that Could Have a Major Impact on Your Financial Plan

On July 4th, 2025, President Trump signed into law legislation (known as the BBB) making most of the tax cuts that were part of the 2017 Tax Cuts and Jobs Act (TCJA) permanent. The new legislation also updates many of the laws from the TCJA and includes new tax changes that could significantly impact different aspects of your financial plan.

The experts at Glassy Mountain Advisors compiled this guide, which provides an overview of how the legislation could impact you, your family, and your financial plan.

Summary of the Tax Legislation

The recently passed law prevents tax increases that would have happened on December 31, 2025, when the TCJA was set to expire. In addition to avoiding tax increases, the law will lower taxes for some people, including seniors, parents of younger children, and those with high state and local taxes. The new law will also negatively impact some people. Certain provisions in the legislation are permanent, while others are temporary and could change again in four years.

To pay for the tax reductions, Congress made cuts to Medicaid spending, ended clean energy credits that were part of the 2022 Inflation Reduction Act, and permanently eliminated personal exemptions.

Let’s review the tax implications of the new legislation in greater detail.

Tax Changes: The Specifics

We are dividing our analysis of the new law’s tax changes into permanent and temporary ones.

Permanent tax changes

The following provisions were part of the original TCJA and have now become permanent parts of the tax code. We explain the extensions, highlight the changes made to the provisions, and outline how these changes could impact your financial plan.

Broad-based permanent deductions

Seven tax brackets become permanent

The seven tax brackets defined in the 2017 TCJA, with a top tax rate of 37 percent for high earners and a bottom rate of 10 percent for low earners, will stay in effect. However, not all tax brackets will be adjusted for inflation going forward.

The standard deduction increases

The enhanced standard deduction remains in place and will increase to $31,500 for joint filers (up from $30,000) and $15,750 for single filers (up from $15,000) in 2025. These amounts will increase for inflation after this year.

The personal exemption eliminated

Before TCJA, individuals who itemized could deduct up to $4,050 for themselves, a spouse, and each dependent. While the personal deduction was repealed until December 31, 2025, the standard deduction and the Child Tax Credit were doubled at the time to limit the impact of the change. This legislation once and for all permanently eliminates the personal exemption.

Itemized deductions capped for the wealthiest taxpayers

Beginning in 2026, the value of deductions for people in the top 37 percent tax bracket who itemize will be capped at 35 percent.

Alternative minimum tax (AMT)

While the new legislation keeps provisions related to the alternative minimum tax unchanged for this year, new thresholds beginning in 2026 will expand the number of taxpayers subject to the AMT. As a result, couples with income over $1 million are more likely to owe additional tax under the new rules.

Deductions for casualty losses

Deductions for casualty losses are still only allowed for declared disaster areas. However, the classification will expand starting in 2026 to include some state-declared disasters as well as federal ones.

Certain broad-based provisions in the new tax code could majorly impact people with significant wealth. Our team at Glassy Mountain Advisors is available to answer your questions and help explore your future planning options.

Property-based and local tax issues

Mortgage interest deduction stays the same

The mortgage interest deduction will stay at its current limit of $750,000 in mortgage debt for couples filing jointly and $375,000 for single filers. It was reduced from $1 million of mortgage debt in 2017. The deduction for private mortgage insurance (PMI) comes back in 2026, subject to income qualifications.

SALT deduction increases

One of the biggest discussion topics in the budget reconciliation process has been the deduction for state and local taxes (SALT).

The SALT deduction was capped at $10,000 for single and joint filers in 2017. The new legislation increases it to $40,000. It will return to $10,000 in 2030. The higher SALT cap will begin to phase out for incomes above $500,000 ($250,000 for married people filing separately).

For tax years 2026 through 2029, the SALT deduction and income phase-out levels will increase by one percent yearly. After 2029, the $10,000 SALT deduction will become applicable to single and joint filers regardless of income. It will also become permanent.

Charitable giving and estate planning related tax issues

The law updates several charitable giving rules:

• For taxpayers claiming the standard deduction: Starting in 2026, joint filers can claim a deduction of up to $2,000 ($1,000 for singles) for cash gifts, as long as they are not made to a private foundation or donor-advised fund.
• For taxpayers who itemize deductions: The new law implements a floor for charitable contributions. Beginning in 2026, only contributions exceeding 0.5 percent of adjusted gross income will be deductible.
• For all taxpayers:
• Cash gifts to public charities will continue to be deductible up to 60 percent of AGI instead of falling to 50 percent as had been scheduled.
• Starting in 2027, a new tax credit of up to $1,700 is available for cash charitable gifts to scholarship-granting organizations that meet specific standards. Any amount claimed for this credit cannot also be claimed as a charitable contribution.

Estate planning changes

The lifetime gift and estate tax exclusions, which have more than doubled since 2017, will increase to $15 million for single filers (from $13.99 million) and $30 million (from $27.98 million) for married people filing jointly. In the future, they will be indexed for inflation.

Family-related tax changes

The law includes several updates aimed at supporting families.

• Child Tax Credit.The new legislation makes the Child Tax Credit (CTC) permanent. It will also increase to $2,200 per child starting in tax year 2025, with inflation adjustments beginning in 2026.
• Employer assistance for dependent care. Employers can currently provide tax-free dependent care assistance of up to $5,000 for each employee. In 2026, that will increase to $7,500.
• Child and dependent care expenses. The tax credit for working parents will increase from 35 percent to 50 percent of qualified expenses, but a new phase-out schedule will drop it to 20 percent.
• Adoption expenses. The tax credit for expenses related to adopting children was modified to allow $5,000 of the maximum $10,000 credit to be refundable. That means that portion of the credit is available to those whose tax liability is less than $5,000.

Glassy Mountain Advisors is committed to family financial planning. Schedule an appointment with us to ensure your plan will remain on track in the years ahead.

Tax adjustments related to education

Tax considerations for 529 Plan accounts

The new law expands the scope of qualified expenses for 529 reimbursement. It now includes:

• Non-tuition elementary, secondary, religious, and private school expenses
• Costs related to earning and maintaining professional credentials

Beginning in 2026, a 529 account can also be used to pay up to $20,000 of elementary or secondary tuition (up from $10,000 currently).

Employer educational assistance tax expansion

Employers can now pay employees up to $5,250 of educational assistance tax-free. The inclusion of student loan payments was supposed to expire after 2025, but the bill has made it permanent. The limit will be adjusted for inflation after 2026.

Is your education plan current? Now could be a good time to review it with your Glassy Mountain Advisors team.

Business-related tax changes

Here are some business-related tax changes that could impact you.

Qualified Business Income (QBI) deduction

The new law allows owners of pass-through businesses to continue to exempt a portion of their income from tax. Starting in 2026, the phase-out range will expand slightly, allowing more pass-through business owners to qualify for the deduction.

Business loss deduction

Non-business taxpayers can continue to deduct a portion of their business losses ($626,000 for couples filing jointly). This provision was supposed to expire in 2028 but is now permanent.

Temporary tax provisions with a four-year limit

In addition to the permanent provisions, the legislation includes several temporary deductions and credits limited to tax years 2025 through 2028.

Tip-related tax changes

Taxpayers in traditionally tipped occupations can now deduct up to $25,000 in qualified tip income. The IRS will define traditionally tipped occupations within the next 90 days. Deductible tip income must be reported on a form provided by the employer and will be subject to employment taxes.

Overtime tax changes

Joint filers can deduct up to $25,000 of qualifying overtime ($12,500 for single filers). The deduction applies only to the additional pay received above the standard rate and must be reported on the employee’s W-2. It will also be subject to employment taxes.

Additional senior tax deduction

People age 65 and older will receive an additional $6,000 deduction that begins to phase out at incomes over $75,000 for single filers and $150,000 for joint filers. The new deduction is in addition to the $2,000 single filer deduction and $3,200 married filer deduction that those over 65 can currently claim.

Car loan interest deduction

Taxpayers can now deduct up to $10,000 in interest on a loan used to buy a qualifying vehicle. Specific rules apply, including:

• The vehicle must be purchased (not leased) between 2025 and 2028
• It must be used for personal (not business) reasons
• The final vehicle assembly must occur in the United States

Do you have questions about the new temporary tax legislation and how it might impact your financial plan? Schedule a time to discuss with your Glassy Mountain Advisors team and tax professional.

Additional Provision of the Legislation that Could Impact Financial Plans: Children’s Savings Account

The legislation includes a new type of savings account for children. Contributions of up to $5,000 per year are allowed. The account is treated similarly to a nondeductible traditional IRA contribution for parents or other individuals. Parents, relatives, or any other taxable entity can contribute until the child reaches age 18. At that time, the account converts to a traditional IRA.

Parents of newborns born between January 1, 2025, and December 31, 2028, will also qualify for $1,000 in seed money from the federal government to start the accounts.

What’s Not Addressed in the New Legislation

The new law does not include the often-discussed proposal to eliminate taxes on Social Security benefits, which are taxable up to 85 percent for single tax filers with incomes of more than $34,000 or joint filers with a combined income of $44,000 or more.

However, the newly added $6,000 deduction for people 65 and older may help offset taxes on Social Security benefits for some people with incomes at these thresholds for the next four years.

Stay Informed and Get Help

The new tax legislation is undoubtedly complex. And its impact on everyone’s financial situation will be different. Consider speaking with a Glassy Mountain Advisors representative and your tax professional about your individual needs now and over the next few years as the situation evolves. We’ll also continue to send updates as we gain new insights.

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This blog contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this blog will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.  Glassy Mountain Advisors does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results.

Source: www.irs.gov