How the “One Big Beautiful Bill” Helps High-Income Families

On July 4th, the “One Big Beautiful Bill” was signed into law, delivering significant benefits for high-income professionals, especially those raising families and living in high-tax states.

This legislation extends many provisions that were set to expire and introduces new deductions and planning tools that can reduce your tax burden starting in 2025.

Here’s a breakdown of the most relevant updates for high-income families:

1. Tax Rates Stay Low

The tax brackets introduced in 2017 were scheduled to sunset after 2025. This new law makes them permanent. That means you avoid rate increases like:

Permanent Tax Brackets with Bill Passage	Tax Brackets in 2026 Had the Bill Not Passed
10%	10%
12%	15%
22%	25%
24%	28%
32%	33%
35%	35%
37%	39.6%

For high earners, this preserves thousands of dollars in annual tax savings.

2. Standard Deduction Increases

Starting in 2025, the standard deduction increases to:

• $15,750 for single filers

• $23,625 for heads of household

• $31,500 for married couples filing jointly

This helps reduce your taxable income even if you don’t itemize—and it will continue to rise with inflation.

3. SALT Deduction Cap Raised to $40,000

For those living in high-tax states like New York, New Jersey, or California, this is a significant win.

The cap on deducting state and local taxes increases from $10,000 to $40,000 in 2025, with small annual increases through 2029. This restores a meaningful deduction that was previously limited.

The deduction phases out for incomes exceeding $500,000 and is scheduled to revert to $10,000 in 2030, unless extended.

4. Dependent Care FSA Limit Increased

Beginning in 2026, the limit on Dependent Care Flexible Spending Accounts rises from $5,000 to $7,500.

This allows working parents to set aside more pre-tax dollars for childcare, helping reduce taxes and fund a real-life expense more efficiently.

5. 529 Plan Flexibility Expanded

Beginning in 2026, 529 savings plans can be used for far more than just college. Eligible uses now include:

• K–12 tutoring and books

• Homeschooling and online learning programs

• Special education support like occupational therapy and adaptive software

This makes 529s a much more versatile education planning tool for families.

6. New Trump Account for Minors

A new long-term savings account has been created for children under 18:

• $5,000 annual contribution limit (non-deductible)

• Must remain invested until age 18

• Funds must be invested in ultra-low-cost index funds

• $1,000 tax credit available for children born between 2025–2028

This offers a simple, structured way to invest for your child’s future.

7. Charitable Giving Deduction for Non-Itemizers

Starting in 2026, charitable contributions are deductible even if you take the standard deduction.

You can deduct up to:

• $1,000 if filing single

• $2,000 if married filing jointly

This makes it easier to support causes you care about while still receiving a tax benefit.

What It Means for You

If you’re earning a high income, raising children, and living in a high-cost area, this new tax law offers a variety of tools to help you:

• Lower your tax bill

• Take advantage of expanded deductions

• Plan more effectively for long-term family goals

Now is the time to review your financial plan and assess how these changes align with your broader strategy.

If you’d like to understand how these updates apply to your situation, schedule a call here.