The Good News About Your Income Taxes

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, didn’t just transform estate planning. It also brought meaningful relief on the income tax front, shielding many families from rising tax burdens that were scheduled to take effect in 2026.

No More Bracket Creep

Under the old law, federal income tax brackets were set to rise by about 3% in 2026, which would have nudged nearly every taxpayer into higher rates. The OBBBA stopped that increase in its tracks. That means you won’t find yourself “bracket creeping” into higher taxes simply because of inflation or structural changes in the code.

For households across the country, this translates into stability and predictability. And in estate planning, that stability is valuable—it allows families to more confidently plan for long-term wealth transfers without worrying that rising tax brackets will erode their resources.

A Bigger Standard Deduction

The OBBBA also raised the standard deduction for most taxpayers. This change means more of your income is shielded before taxes even apply. In practical terms, it reduces taxable income for millions of families, lowering overall tax liability without requiring complicated strategies or itemization.

For estate planning, this shift frees up resources. Dollars that might otherwise have gone to income taxes can now be redirected—whether into funding a trust, making lifetime gifts, supporting charitable causes, or simply strengthening retirement security.

Why This Matters for Planning

While these changes are good news, they also call for a closer look at your overall financial and estate plan.

• Withholding and Cash Flow: Employees should revisit W-4 withholding to avoid overpaying throughout the year, while business owners and retirees may need to adjust quarterly estimated payments with their CPAs.
  
• Funding Family Goals: With less pressure from income taxes, more families will be in a position to consider strategies like 529 college plans, gifting programs, or setting aside assets for a special needs trust.
  
• Charitable Giving: Higher standard deductions may change the way families approach philanthropy. For some, bunching gifts into a donor-advised fund may be more effective; for others, the additional income flexibility may allow charitable planning to expand.

The Takeaway

The OBBBA brought welcome relief by halting tax bracket increases and boosting the standard deduction. But its true value lies in how those changes ripple across your broader financial and estate picture. By working with your CPA—and reviewing your estate planning documents—you can make sure today’s tax relief turns into tomorrow’s family security.