After months of political theater and headlines, Congress finally passed Donald Trump’s “One Big Beautiful Bill Act” (OBBBA). While much of the media coverage claims that the highest earners are the biggest winners, this is not entirely accurate. In reality, upper-middle income earners making between $200,000–$500,000 and certain business owners with pass-through entities (like S corps and LLCs) who are positioned to benefit the most, but only if they can:

• Take full advantage of the expanded SALT deduction
• Stay below QBI phase-out threshold
• Maximize this deduction when itemizing on tax returns

Below is a breakdown of some of the OBBBA’s key components:

SALT Deduction Gets a Big Win

The state and local tax (SALT) deduction cap per couple jumps from $10,000 to $40,000 starting in 2025. However, this benefit begins to gradually phase out for taxpayers earning more than $500,000. Both the deduction amount and phase-out threshold will increase by 1% each year through 2029.

For residents dealing with sky-high property taxes (think California, New Jersey, New York, etc.), this represents significant relief. The average SALT deduction in California was close to $10,000 in 2022, indicating many taxpayers were hitting the old cap. The new $40,000 per couple ($20,000 per person) limit provides substantial breathing room for middle to high-income earners.

The QBI Deduction Survives

Here’s the big one, especially for business owners who don’t even realize they’ve been benefiting from it: The Qualified Business Income (QBI) deduction, originally set to sunset after 2025, has now been made permanent.  Even better, the deduction has become more accessible. The phase-out thresholds for Specified Service Trades or Businesses (SSTBs), such as law, accounting, architecture, and medicine, have increased. The phase-out now begins at $150,000 for joint filers, up from $100,000 under prior law.

For non-SSTB business owners, the full deduction continues to apply as long as income stays below the general thresholds, and OBBBA introduces a $400 minimum QBI deduction for eligible taxpayers with at least $1,000 of qualified business income, offering relief to lower-earning entrepreneurs as well.

Depending on your business income and filing status, this deduction could result in up to $200,000 of qualified income being shielded from tax, potentially generating over $70,000 in tax savings if you’re in a high federal and state bracket, especially in states like California.

Backdoor Roths Just Got Even Better Under the New Tax Law

The OBBBA does not eliminate backdoor Roth IRA conversions or any other Roth conversion strategies, which is a welcome surprise for many. For years, there has been growing concern that this powerful planning tool might be phased out, especially given repeated proposals to close perceived “loopholes” for high earners. But OBBBA left these strategies untouched.

In fact, some provisions in the bill—such as the permanent extension of favorable tax brackets and an increased standard deduction—actually enhance the appeal of Roth conversions by providing more tax-efficient opportunities to execute them.

Depending on your marginal tax rate, a well-timed Roth conversion could now be even more valuable, allowing you to shift money into tax-free growth while rates remain relatively low.

Estate Tax Exemption Made Permanent

The bill makes permanent a $15 million gift, estate, and generation-skipping transfer tax exemption (adjusted for inflation), eliminating concerns about the exemption being cut in half, which was scheduled to happen in 2026.

While this primarily affects families with significant wealth, it provides planning certainty. If your net worth approaches or exceeds these thresholds, now is the time to evaluate gift strategies and estate planning before potential future law changes.

But We’re Still Waiting on the Fine Print

While the OBBBA has passed and many of its provisions are now law, there’s still a great deal we don’t fully know. Federal regulations and IRS guidance have yet to be released, which means many of the technical details, particularly around phase-outs, deduction eligibility, and planning opportunities, are still up in the air.

Until we see how these rules are interpreted and implemented, it’s difficult to say exactly how the changes will affect every taxpayer. What we do know is that this bill will reshape tax and financial planning for years to come, and 2025 is shaping up to be a critical year for proactive strategy.

As always, we’ll be tracking developments closely and will continue to provide updates as more information becomes available. 

This material is distributed for informational purposes only. Investment Advisory services offered through Journey Strategic Wealth, a registered investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). The views expressed are for informational purposes only and do not take into account any individual’s personal, financial, or tax considerations. Opinions expressed are subject to change without notice and are not intended as investment advice. Past performance is no guarantee of future results. Please see Journey Strategic Wealth’s Form ADV Part 2A and Form CRS for additional information.