H.R.1, the new federal tax law signed in July 2025, makes permanent many provisions that were scheduled to sunset and introduces new planning considerations that affect working professionals, families, business owners, and everyone planning around estate and charitable giving. The moves made now, while the rules are clear and the runway is long, will make a meaningful difference later.
For Working Professionals
Standard deduction increases
Beginning in 2025, the standard deduction rises to $15,750 for single filers and $31,500 for married couples filing jointly. For taxpayers who do not itemize, this represents more income shielded from federal tax than in prior years, with no action required to capture the benefit.
SALT deduction cap increases temporarily
The state and local tax deduction cap increases from $10,000 to $40,000 through 2029, with a phase-out beginning at $500,000 in income. For taxpayers in high-tax states who previously hit the $10,000 ceiling, this change can be significant. A married couple in New Jersey earning $200,000 who previously maxed out at the $10,000 SALT deduction can now deduct up to $40,000, a potential federal tax savings of more than $7,500. The temporary nature of this provision through 2029 makes the next several years an important window for tax planning in high-tax states.
HSA access expands
Bronze and catastrophic health plans now qualify as high-deductible health plans for HSA purposes. Taxpayers who previously could not contribute to an HSA because their health plan did not meet the prior qualification threshold should review their plan's current eligibility and consider opening or increasing contributions if it now qualifies.
High earner itemized deduction limitations
Taxpayers in the 37% bracket face new limitations on the benefit of itemized deductions. The decision between itemizing and taking the standard deduction has become more complex at higher income levels and warrants a specific calculation for the 2025 tax year.
For Families
Child Tax Credit increases
The Child Tax Credit increases to $2,200 per qualifying child beginning in 2025, up from $2,000, with future adjustments indexed to inflation. For a family with three children, the increase represents $600 in additional credits annually.
New senior deduction
Taxpayers aged 65 or older qualify for a new $6,000 deduction available through 2028. The deduction phases out beginning at $75,000 of income for single filers and $150,000 for married filers. For those approaching these thresholds, income timing decisions in 2025 through 2028 are worth reviewing specifically in the context of this provision.
Estate tax exemption increases
The estate tax exemption increases to $15 million per person in 2026, or $30 million for married couples using portability. Even for families whose estates are well below these thresholds, the change affects optimal gift strategies and how family wealth is structured across generations. Estate planning documents that were last reviewed under prior exemption levels are worth revisiting.
Charitable giving rules change in 2026
Starting in 2026, non-itemizers can deduct up to $1,000 in charitable gifts ($2,000 for married filers), which is a new benefit for taxpayers who take the standard deduction. Itemizers, by contrast, will face a small threshold they must exceed before charitable deductions begin to count. Both changes affect the optimal timing and structure of charitable giving strategies and are worth planning around before 2026 arrives.
For Business Owners and Entrepreneurs
QSBS exclusion increases
The lifetime capital gains exclusion for Qualified Small Business Stock increases from $10 million to $15 million, but only for stock acquired after July 4, 2025. Additionally, the new law introduces partial exclusions: 50% at three years of holding, 75% at four years, and 100% at five years. For founders and early investors in qualifying businesses, the post-July 4, 2025 acquisition date is an important planning consideration when structuring new equity grants or purchases.
Equipment purchases and bonus depreciation
Section 179 expensing increases to $2.5 million for 2025, and 100% bonus depreciation is restored for qualifying assets placed in service after January 19, 2025. Business owners who have been deferring equipment purchases should evaluate timing decisions in the context of these provisions, since the full cost of qualifying purchases can be deducted in the year of acquisition rather than depreciated over time.
Pass-through deduction made permanent
The 20% deduction for qualified business income from S corporations, partnerships, and sole proprietorships is now permanent. Prior planning had to account for the possibility that this deduction would expire in 2025. Removing that uncertainty extends the planning runway and makes the deduction a more reliable component of business owner tax strategy going forward.
For Everyone
Predictability is the most underrated benefit
Many of the 2017 tax provisions were scheduled to expire in 2025, which created uncertainty in long-range financial planning. Making them permanent, or extending them for several years, removes that uncertainty and allows plans to be built on a more stable foundation. The value of a longer planning runway is difficult to quantify but genuinely significant for decisions about retirement contributions, estate structures, charitable giving, and business investment.
Green energy credits are ending
The federal EV tax credit ends September 30, 2025. Most residential energy credits, including those for solar installation, end December 31, 2025. Taxpayers who have been considering an electric vehicle purchase or a home energy upgrade should evaluate whether completing those transactions before the deadlines makes financial sense given the credits at stake.
Why Comprehensive Planning Matters More Now
Every provision in this law connects to other parts of a financial plan. How income is timed, when charitable gifts are made, whether estate documents reflect the new exemption levels, and which deductions are worth pursuing all interact with each other in ways that change the optimal approach. The rules changed, which means the math behind prior decisions may have changed as well. A review of the full picture is worth the time, particularly for business owners, high earners, and families with estate planning needs.
Frequently Asked Questions
What are the most important changes in H.R.1 for business owners?
The three provisions with the most immediate planning relevance for business owners are the restoration of 100% bonus depreciation for assets placed in service after January 19, 2025, the increase in Section 179 expensing to $2.5 million, and the permanent extension of the 20% Qualified Business Income deduction. For founders and equity holders in qualifying small businesses, the increase in the QSBS capital gains exclusion to $15 million for stock acquired after July 4, 2025 is also significant. These changes affect equipment purchase timing, compensation structure, and exit planning simultaneously.
What is the new SALT deduction cap and who benefits most?
The SALT deduction cap increases from $10,000 to $40,000 through 2029, with a phase-out beginning at $500,000 in income. Taxpayers who benefit most are those in high-tax states who itemize deductions and whose state and local taxes exceed $10,000 but fall below $40,000 annually. This includes many dual-income households and business owners in states like New York, New Jersey, California, and Illinois. The temporary nature of the increase through 2029 makes the next several years a meaningful planning window.
How does the new law affect estate planning?
The estate tax exemption increases to $15 million per person in 2026, with married couples able to combine exemptions to $30 million using portability. This change reduces the urgency of certain estate reduction strategies that were designed around lower exemption levels, but it also creates new opportunities for gift strategies and family wealth structuring. Estate planning documents drafted under prior law are worth reviewing to confirm they still reflect the owner's intentions under the new exemption structure.
What is the Qualified Small Business Stock exclusion and how did it change?
Qualified Small Business Stock allows shareholders in eligible C corporations to exclude a portion of capital gains from the sale of qualifying shares held for more than five years. Under prior law, the maximum exclusion was $10 million. Under H.R.1, the exclusion increases to $15 million for stock acquired after July 4, 2025. The new law also introduces partial exclusions at three and four years, which provides meaningful tax benefits for investors who cannot or do not hold the full five years. The acquisition date threshold makes this provision particularly important for new equity grants and purchases after July 4, 2025.
What green energy tax credits are ending and when?
The federal EV tax credit for new electric vehicle purchases ends September 30, 2025. Residential clean energy credits, including those for solar panel installation, battery storage, and related home energy improvements, end December 31, 2025. Taxpayers who have been planning these purchases should evaluate whether the economics make sense before the deadlines, accounting for both the credit amounts and any installation lead times that could affect eligibility.
Related Reading
- Year-End Tax Considerations for Business Owners (2025)
- Mid-Year Tax Strategy for Business Owners (Part 1 of 2)
- 5 Smart Year-End Tax Moves That Make a Difference (and 3 You Can Ignore)
- Business Owner, Meet CEO You: How to Align Personal and Business Finances at Tax Time
- Building Generational Wealth: A Simple Yet Powerful Strategy
HWM Wealth provides financial planning and investment advisory services. This article is for informational purposes only and does not constitute financial, legal, or tax advice. Tax laws are complex and subject to change. Please consult a qualified tax professional for guidance specific to your situation.
