OBBBA extends many provisions of the 2017 Tax Cuts and Jobs Act while significantly reshaping government spending priorities. Below is a breakdown of key elements that may impact individuals, families, and business owners from a tax and estate planning perspective.
🔹 Key Tax Provisions Impacting Individuals and Businesses
- Permanent Extension of 2017 Tax Cuts – Currently set to expire at the end of 2025, these lower income tax rates would become permanent.
- Pass-through Entity Relief – Extends and expands deductions for owners of sole proprietorships, partnerships, and LLCs.
- Estate Tax Exemption Increase – Raises the federal exemption from $14 million to $15 million.
- Expanded Standard Deduction – Increases the deduction and extends it through 2029.
- Child Tax Credit Expansion – Increases the credit to $2,500 temporarily, then to $2,000 indexed for inflation.
- SALT Deduction Cap Increase – Raises the cap on state and local tax deductions from $10,000 to $40,000, with a phase out starting at $500,000 for married couples ($250,000) married filing separately. Completely phased out at $600,000.
- Mortgage interest limitation limited to $750,000 for new mortgages. No deduction allowed for home equity loan interest, with minor exceptions. Miscellaneous itemized deductions permanently disallowed.
- 60% limitation on cash based charitable contributions now permanent. Only deductible to the extent they exceed 0.5% of income
- Qualified Small Business Stock
- Maximum capital gain exclusion increased form $10 Million dollars to $15 Million Dollars
- 3 year exclusion applies
- 50% stock held at least 3 years
- 75% for stock held at least 4 years
- 100% for stock held at least 5 years
🟢 New and Expanded Deductions
Included in tax cut cost above
- New $4,000 Deduction for Seniors
- Tax Exemptions for Overtime, Auto Loans, and Tipped Income
- MAGA Accounts – Government contributes $1,000 at birth. Parents can contribute up to $5,000 per year funds grow tax deferred
These provisions underscore the proposal’s effort to provide targeted tax relief, particularly for middle-income families and retirees.
🔴 Proposed Revenue Raisers and Spending Reductions
- Sunsetting Personal Exemptions
- Repealing Green Energy and Nuclear Credits
- Higher Taxes on Large Private University Endowments
- 5% Remittance Tax on international money transfers
- ACA and Medicaid Eligibility Restrictions
These measures aim to offset the costs of extended tax relief by phasing out incentives from recent Democratic-led legislation and limiting access to government programs.
🟣 Energy, Environment, and AI
- Rollback of Inflation Reduction Act (IRA) subsidies for clean energy and EVs.
- Increased funding and permitting support for:
- Fossil fuel extraction (oil, gas, coal).
- Pipeline infrastructure and traditional energy development.
- Restrictions on Department of Energy’s authority to regulate gas stoves and other appliances.
- Support for “energy independence” through deregulation of domestic energy production.
🔵 Homeland Security
ICE funding skyrockets from $10 billion to over $100 billion by 2029.
- $46.5 billion for border wall construction.
- $45 billion to create 100,000 extra migrant detention beds.
- $29.9 billion for new ICE agents and deportation logistics.
- Billions also earmarked for Border Patrol, DHS reimbursements, immigration courts & tech upgrades
⚪ Military Spending
Adds $150 billion in new defense funding through FY 2029, on top of the regular budget
Naval & Maritime
- $34 billion for shipbuilding: includes a second Virginia‑class sub and two guided‑missile destroyers
- Billions more for shipbuilding infrastructure, automation, and training—e.g., $250 million for factories, $450 million for autonomy systems.
Air & Missile Defense + Space
- $24–25 billion for air/missile defense: includes space sensors, intercept systems, hypersonic defense, classified space programs
- $25 billion toward the “Golden Dome” missile-defense initiative
- Additional space/defense spending: Sentinel ICBM ($2.5 billion), Minuteman III ($600 million), X-37B, ground-moving target satellites, etc.
🟤 SNAP and Food Assistance
- Tightens work requirements and shifts some costs to the states starting in 2028.
🟡 Education Reforms
- Restructures student loan repayment and imposes borrowing limits.
- Restricts eligibility for Pell Grants and limits federal authority to forgive debt.
🟠 A Note on Medicaid from our Elder Law Team
- Imposes work requirements for able-bodied adults without dependents.
- Excludes non-citizens and penalizes states that use public funds to cover undocumented immigrants.
- Blocks regulations for minimum staffing in long-term care, and defunds gender-affirming care for minors.
- Ends automatic re-enrollment in Affordable Care Act (“ACA”) Medicaid programs. This will require ACA Medicaid recipients to submit annual renewal applications in order to maintain their Medicaid eligibility.
The Medicaid provisions are expected to result in a 7.7 million-person reduction in enrollment.
Final Thoughts
This bill marks a significant reordering of national fiscal priorities. The continued expansion of tax cuts—particularly for business owners, estates, and high-income earners—presents substantial opportunities for proactive planning.
Clients with complex estates or those managing closely held businesses should be aware of the changing legislative landscape and consult with their advisors early to maximize benefits and avoid future risk.
For further guidance, contact our team at Mandelbaum Barrett PC’s Tax, Trusts & Estates Practice Group at tte@mblawfirm.com or if you need assistance with Medicaid provisions of this new bill, contact our Elder Law team at elderlaw@mblawfirm.com.