With the passage of the One Big Beautiful Bill Act (OBBBA) this summer, many uncertainties surrounding expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) have been resolved — meaning the tax planning landscape has changed significantly. For Baltimore residents and business owners, it’s the ideal time to review your tax strategy to determine if it needs an update.
Here are a few of the key areas where we see planning opportunities for clients:
Greater Stability in Individual Tax Rates & the Standard Deduction
OBBBA makes the lower individual tax brackets established under TCJA permanent, eliminating the risk of reversion in 2026. The standard deduction has also been slightly raised (to $15,750 for single filers and $31,500 for married couples filing jointly) and is now a permanent part of the tax code.
What to do now:
- While you no longer have to rush to lock in today’s lower brackets, you should still run projections to see if accelerating income or capital gains into 2025 is advantageous based on your cash flow, deductions, and state tax impacts.
- Roth conversions remain a valuable tool, especially for those who anticipate higher marginal tax rates in later years.
- “Bunching” charitable contributions may still offer strategic benefits, depending on your deduction strategy and itemization thresholds.
Estate & Gift Tax: Higher Exemptions, Less Urgency
OBBBA raises the federal estate and gift tax exemption to $15 million per person (indexed for inflation) starting in 2026, reversing what would have been a significant drop.This change reduces the urgency of making large gifts in 2025 just to beat a sunset.
What to do now:
- If your net worth is significantly below the new threshold, you have some flexibility. However, advanced estate planning(trusts, GRATs, family business transfers) still plays a crucial role in liquidity, control, and legacy planning.
- Consider using 2025 as a transition year by making targeted gifts or establishing structures, but don’t feel pressured into aggressive gifting solely due to expiration fears.
QBI Deduction: Permanence & Expanded Flexibility
One of the biggest changes is that OBBBA eliminates the sunset clause for the 20% Qualified Business Income (QBI) deduction, making it permanent.OBBBA also raises the phase-in ranges for wage/property limitations (from $50,000 to $75,000 for single filers and from $100,000 to $150,000 for joint filers) and establishes a minimum QBI deduction of $400 for eligible taxpayers with at least $1,000 in QBI.
What to do now:
- The permanence of the QBI deduction simplifies long-term business planning. You can model with confidence knowing it’s not ending.
- Evaluate your entity structure (S-corp, partnership, LLC) to see if any changes would be beneficial.
- Review wage/property allocations, especially if close to the phase-in thresholds.
- Claim the $400 minimum deduction if QBI is modest and you qualify.
Itemized Deductions, SALT Cap Adjustments & Credits
OBBBA temporarily increases the state and local tax (SALT) deduction cap from $10,000 to $40,000 (with phaseouts for high-income taxpayers) through 2029.The law also updates itemized deduction rules and charitable contribution thresholds.
What to do now:
- Especially for Maryland residents, this SALT cap increase is meaningful. Evaluate whether itemizing now becomes more advantageous.
- Reassess your deduction strategy (medical, mortgage interest, charity) to see what mix maximizes benefit under the new rules.
- State-Level Coordination Matters
Maryland and local jurisdictions will always have their own tax structures. Because OBBBA changes federal rules, alignment with state tax policy becomes more important than ever.
What to do now:
- Coordinate your federal and Maryland tax plans to ensure strategies don’t clash (e.g., itemized deductions, retirement contributions, SALT layering).
- Work with a Maryland-based financial advisor (like us!) to understand state-specific nuances, especially in light of these federal shifts.
In short, OBBBA eliminates much of the uncertainty that once dominated planning discussions in recent years by making many TCJA provisions permanent. However, that doesn’t mean your planning ends. Whether you’re a business owner or a family building your legacy, the strategies you implement in 2025 will shape your path in 2026 and beyond. Act now with informed adjustments and face the new tax era with clarity and confidence.