Sweeping Updates to Tax Rules Affect Us All

Recent tax law changes under the One Big Beautiful Bill have introduced sweeping updates to tax rules, savings plans, and estate planning strategies. At Silver Penny Financial Planning, we want to ensure you’re aware of these important developments and how they may impact your financial goals. One thing to keep in mind is that this is a BIG bill meaning there is a lot under the hood. It is always best to evaluate your personal financial situation.

These are a few important highlights:

Standard Deduction Permanently Increased

Estate Tax Permanency

The federal estate tax exemption is now set at $15 million per person(or $30 million per couple), effective January 1, 2026.

State & Local Tax (SALT) Deduction Changes

The SALT deduction cap has been raised to $40,000 through 2029, with a gradual phase-out for households earning over $500,000. *Subject to income phaseout.

Trump Children’s Savings Account

For children born between 2025–2028, the federal government will contribute $1,000 per year to a designated savings account, giving families a head start on future expenses.

Expanded 529 Plan Uses

529 plans are for college, but also for qualified K–12 tuition and vocational certifications — all on a tax-free basis. Aggregate limit: $10k/year in 2025, $20k/year starting in 2026.

Child Tax Credit Increase

The child tax credit increases to $2,200 per child, with inflation adjustments starting in 2025. *Subject to income phaseout.

Charity

As of 2026, itemizers can deduct charitable contributions only to the extent they exceed 0.5% of the taxpayer’s contribution base. Carry-forwards also allowed only if this 0.5% threshold is met. 60% AGI limit for cash gifts to public charities is retained.

There is a new charity deduction for non-itemizers. $1,000 (S/HOH) / $2,000 (MFJ) starting in 2026 • Below-the-line deduction (only available to non-itemizers)

Benefits for Seniors and Workers

Individuals aged 65 and older receive an additional $6,000 deduction, gradually phasing out by 2028 (note: this does not affect Social Security taxation). * Subject to income phase out.

Overtime and tip income deductions are capped but offer tax breaks for qualifying workers.

Keep in mind that some of these changes are subject to income phase out.