Key individual, trust and estate tax provisions in the Senate-approved bill

Outlined below is initial analysis and important takeaways on the Senate-approved One Big Beautiful Bill Act.

Tax rates and bracket extensions

Current Tax Cuts and Jobs Act (TCJA) tax rates and brackets (inflation adjusted) would be made permanent.

• Not included: A millionaires’ tax or other increase in the top marginal rate
• Planning: The proposal retains TCJA rates and brackets, so rate planning is limited.
• House bill: No major differences

Estate and gift tax

Permanently increases the gift and estate tax exemptions to $15 million beginning in 2026, with inflation increases annually thereafter.

• Not included: A repeal of the estate tax, which appears unlikely in the near future
• Planning: Consider making lifetime gifts to use the approximately $1 million boost in the exemption next year
• House bill: No differences

Itemized deduction limitation

TCJA repeal of the Pease limitation is made permanent, but a new overall limit on itemized deductions effectively caps the benefit from itemized deductions at 35%, which should only impact taxpayers in the highest tax bracket.

• Planning: For taxpayers in the 37% bracket, their marginal tax benefit from charitable deductions will be 35%; consider accelerating charitable deductions into 2025.
• House bill: The limitation formula is slightly less favorable, reducing the tax benefit from itemized deductions by approximately 2-3%.

Charitable contribution deduction floor

Charitable contribution deduction is reduced by an amount equal to 0.5% of adjusted gross income (AGI) for tax years after 2025.