BBB Part 3! Lifestyle & Legacy: How the New Tax Bill Impacts Education, Energy, and Estate Planning

The One Big Beautiful Bill Act isn't just about income tax rates; it fundamentally changes how we plan for education, how we deduct state taxes, and how the government incentivizes energy use.

For those looking at the big picture—college planning, real estate, and estate planning—here are the pivotal shifts you need to be aware of.

1. The SALT Cap Shake-Up

The controversy over the State and Local Tax (SALT) deduction cap has been addressed with a new tiered system.

• The Change: The deduction cap is increased to $40,000 for 2025 (up from $10,000).

• The Catch: There is a phase-out for high earners. The deduction is reduced if your adjusted gross income exceeds $500,000, though it cannot be reduced below the original $10,000 floor.

2. Education Savings Revolution (529 Plans)

529 Plans are no longer just for college. The bill drastically expands what counts as a "qualified expense," giving parents more freedom:

• K-12 & Homeschooling: Funds can now be used for elementary and secondary school expenses, including private school tuition and homeschooling expenses.

• Credentialing: Costs for obtaining professional licenses and post-secondary credentials are now qualified expenses.

3. The "Green New Deal" Repeal

In a major policy pivot, the bill repeals dozens of "green energy" subsidies to fund other tax cuts.

• EV Credits: The Clean Vehicle Credit and the credit for previously owned clean vehicles are terminated early (Sept 30, 2025).

• Home Improvements: Credits for energy-efficient home improvements (windows, doors, heat pumps) and residential solar are set to expire at the end of 2025.

• Strategy: If you were planning green upgrades or an EV purchase, you must act before the new deadlines to capture the credits.

4. Estate Tax Exemption

The bill secures the legacy of high-net-worth families by making the doubled Estate and Gift Tax exemption permanent.

• The Number: The exemption is set at $15 million (indexed for inflation) per person for 2026. This allows married couples to pass on significant wealth without incurring federal estate tax.

Conclusion

This bill presents a mix of opportunities (Education, Estate, SALT) and disappearing incentives (Green Energy). The window to claim energy credits is closing fast, while the window for education planning has thrown wide open. Contact us to update your long-term financial plan.