“One Big Beautiful Bill” & What It Means for High‑Earning Millennial & Gen-Z Professionals
After months of chatter and a whole lot of disagreement, One Big Beautiful Bill (OBBBA)—has landed, reshaping the tax landscape for high‑earning professionals. In today's post, we break down what the new law means for you—and how to act smart before 2026.
1. 🏡 SALT Deduction Reboot: A Homeowner’s (Temporary) Win
What’s new: The state-and-local tax (SALT) deduction cap skyrockets from $10K to $40K—but phases out for incomes above $500K (single) / $600K (joint) & likely reverses by 2029 Kiplinger+2MarketWatch+2Loeb & Loeb+2.
Why it matters: For those in high-tax states—think California attorneys, physician partners in New York, or tech execs in Seattle's pricey suburbs—this opens up a window to deduct more from federal taxes for a few years.
Action tips:
- Decide now if itemizing beats the standard deduction.
- Consider pre-paying property or state taxes this year to maximize your $40K cap.
2. Tax Breaks for Tips, Overtime & Car Loans: A Surprise Relief
What’s new:
- Tipped and overtime income now deductible (limits apply) The Advisory Group of SF+2MarketWatch+2Wikipedia+2Wikipedia+2AP News+2Tax Foundation+2
- Up to $10K in annual interest on US-made auto loans qualify between 2025–2028 Loeb & Loeb+8Wikipedia+8MarketWatch+8
Who it helps:
- Less relevant to most high earners—but if you run a small business with tipped staff or occasionally clock OT, this could shave taxable income.
- Auto interest deduction is phased out for incomes >$100K (single) / $200K (joint).
Pro tip: Employers with tipped workers (like restaurant or healthcare settings) should prep now for October Treasury guidance filings.
3. Equity‑Heavy Income? Monitor AMT & QBI Adjustments
BASELINE: The OBBBA permanently extends the 24–37% brackets and inflation indexing, keeping top rates intact through 2025 and beyond MarketWatch+6IRS+6AP News+6Wikipedia+11Loeb & Loeb+11MarketWatch+11.
What shifts for you:
- If you're a physician, attorney, or tech leader with sizable equity or pass-through income, there’s reassurance if you’ve been relying on Qualified Business Income (QBI) deductions—they’re now locked in permanently (23% through Congress) Tax Talks+3Bipartisan Policy Center+3The Wall Street Journal+3.
- However, the expanded SALT deduction could push you into AMT territory, lowering its exemption threshold versus prior limits MarketWatch.
Next steps:
- Run tax projections: model both AMT and regular tax outcomes before year-end.
- Consider Roth conversions, offset gains, or accelerate equity vesting in low-income years to stay under AMT thresholds.
4. Estate & Retirement: Inflation Adjustments & Trust Planning
Inflation updates:
- Standard deduction for 2025: $15K single / $30K joint .
- Contribution limits jump: 401(k) up to $23.5K (+$500), plus $7.5K catch-up; HSA limits also increase .
Planning reminders:
- These limit hikes are golden for turbo-charging tax-deferred retirement savings before year-end.
- If you’re building a legacy—especially tech founders or private practice owners—increased estate tax exemptions (to $15M single / $30M couple in 2026) offer gifting and trust opportunities Milestone Financial Planning+11Bipartisan Policy Center+11greenbeeadvisory.com+11.
Tactical moves:
- Max out your 401(k), IRA, HSA early.
- Fund a bypass or dynasty trust now to shield future growth from estate taxes.
5. Looking Ahead: Capital Gains & Policy Risks
On the radar:
Conservatives are pushing for capital gains indexed for inflation—an enormous benefit to high earners with big equity holdings The Washington Post. But opposition from Democrats means outcome is uncertain.
Plus: expect the SALT cap to revert post‑2028. Budget for it now.
Why it matters:
- If enacted, indexed gains could save tech execs or startup founders 3–5% in tax—but don’t bank on it yet.
- Prepare fallback plans for post‑2029 SALT limits.
🔍 Case Study: Tech CTO in CA with $600K Salary + RSUs
| Situation |
Strategy |
| High state taxes, $600K income, $25K mortgage interest |
Itemize to capture $40K SALT in 2025–2028 |
| Vesting RSUs subject to AMT |
Model AMT vs regular tax; consider pre‑vesting Roth conversion in low‑income window |
| Max Retirement Savings |
Fully fund 401(k), HSA, and back-door IRA this year |
| Equity Gains |
Use gain harvesting in low tax years; keep track for potential inflation indexing |
📌 Conclusion & Your Call to Action
- Run a full 2025 tax projection: itemized vs standard, AMT exposure, equity vesting scenarios.
- Maximize retirement and HSA contributions
before the year's end.
- Line up estate and gifting strategies
if your wealth approaches exemption thresholds.
- Model multiple scenarios
assuming SALT reversion and potential capital-gains policy shifts.
If you're a high-achieving physician, attorney, founder, or tech leader, floating through 2025 without strategic planning risks leaving tens of thousands on the table.
📣 Call to Action
Take control before year-end. Run these projections and adjust your tax strategies for 2025. Connect with your financial planner—or drop me a line—to help build your personalized game plan.
#HighEarners #TaxPlanning #SALTdeduction #EquityCompensation #401kMax #AMT #EstatePlanning #GenYFinance #YoungPros
Disclaimer: This blog is for informational purposes only and not tax, legal, or investment advice. Consult your professional advisors for guidance tailored to your situation.
