The Big Beautiful Bill: Key Takeaways

Published on

August 1, 2025

Wisconsin businesses and high net worth individuals have been anxiously watching to see what new tax legislation would be passed under the current administration.

The Big Beautiful Bill (BBB) signed by President Trump on July 4, 2025, contained numerous tax provisions. As in all tax legislation, some of the provisions had broad application to individuals, and others more lasered for business tax and accounting.

The 2017 Tax Cuts and Jobs Act (TCJA) provided for many tax provisions that would sunset at the end of 2025. The BBB prevented this sunset on many provisions.

Wisconsin businesses and high net worth individuals should be meeting with their planning team, including their attorney and accountant,to determine which provisions apply to them and how they should be proactively planning for the future. The following highlights the provisions which will impactindividuals more directly and may be matters for discussion:

ESTATE AND GIFT TAX EXEMPTION

The BBB made permanent the increased estate and gift tax exemption which was to sunset at the end of 2025. Effective January 1, 2026,the exemption amount is $15,000,000 per person, indexed for inflation. Accordingly, a couple with proper planning will have a $30,000,000 estate and gift tax exemption.

There is no sunset on this increased exemption.

Most individuals and couples will find that these exemption amounts will eliminate concerns regarding estate tax at death.

However, many individuals/couples who have businesses and non-liquid estates will utilize these exemptions in implementing their succession plans. For example, estate tax exemption limits often are an issue for Wisconsin business owners with a large amount of their net worth invested in their business and real estate. These increased exemption amounts will be particularly helpful if the value of the estate will grow organically or by inflation.

FEDERAL INCOME TAX FILING CHANGES

There have been several changes that may affect Wisconsin individuals and businesses. You should consult with your accountant to determine if these changes will impact your tax filings:

Increased Standard Deduction. The standard deduction continues to increase, and most Americans will not itemize. For 2025 the standard exemption is $15,750for single individuals and $31,500 for couples filing jointly. These amounts will be adjusted for inflation annually.

Cap on State and Local Taxes (SALT) Deduction. The SALT itemized deduction was previously capped at $10,000. Under the BBB, itis increased to $40,000 for 2025, increased by 1% through 2029, and then will revert to $10,000 in 2030. We would anticipate that SALT will be discussed in future tax legislation, especially as 2030 approaches.

Elimination of Personal Exemption. TCJA eliminated the ‘personal exemption’. The BBB makes this elimination permanent. Historically, the personal exemption allowed taxpayers to reduce their taxable income for themselves and qualifying dependents.

Child Tax Credit. The BBB made this child tax credit permanent for qualifying children under 17, in the amount of $2,200adjusted for inflation. If the credit exceeds an individual’s tax liability, up to $1,700 may be refundable. The child tax credit phases out at an adjusted gross income (AGI) of $400,000 for couples, $200,000 for single filers.

Alternative Minimum Tax (AMT). The alternative minimum tax (AMT) is a determination of computing income tax liability by eliminating certain deductions and exclusions. It was intended to create a tax computation so that high income taxpayers would have a tax liability. The TCJA had increased the exemption amounts for AMT applications. The BBB permanently increases this exemption amount to $500,000 for single filers and $1,000,000for joint filers beginning in 2026. The prior and now increased exemptions will further limit the application of the AMT.

No Tax on Tips. Under the BBB, there will beno tax on tips, but this is limited to $25,000 in tip income. Specifically, the BBB allows an ‘above the line’ deduction of $25,000 on tip income which must be separately listed on Form W-2. This provision phases out for high income earners ($150,000+ for individuals and $300,000+ for couples). This provision sunsets in 2028.

No Tax on Overtime. Under the BBB, there will be no tax on overtime, with limits. Specifically, overtime must be separately listed on Form W-2, and the deduction is limited to $12,500 for a single filer, and $25,000 for joint filers. This provision phases out for high income earners ($150,000+ for individuals and$300,000+ for couples). This provision sunsets in 2028.

BUSINESS PROVISIONS

The updates to the business tax provisions are complex, buta few significant changes are highlighted here:

1. Section 168K Bonus Depreciation. 100%allowance for property acquired after January 19, 2025, with Section 179deduction increased to $2,500,000. This eliminates the need to depreciate over a period of time.

2. Farm Sales. The BBB requires Sellers of farmland to report capital gain in four equal installments, provided the land was usedin farming for 10 years preceding and will be used in farming 10 years after the sale.

3. Qualified Business Income Deduction. The BBB extends the Qualified Business Income Deduction indefinitely.

ADDITIONAL PERSONAL PROVISIONS

There are a multitude of other changes, so we recommend all clients meet with their CPA to review their individual situation. A few other provisions to highlight include:

1. Interest deduction for ‘qualified passenger vehicle’ loan interest.

2. Tax credit up to $1,700 for contribution to scholarship granting organizations (sunsets in 2026).

3. Charitable contribution deduction subject to a floor of 5% x gross income, beginning in 2026.

4. Above the line charitable contribution deduction for non-itemizers of $1,000 single file and $2,000 joint, beginning in 2026

5. Trump Accounts – these accounts will be funded at $1,000 at creation by US Treasury, taxable withdrawals.

6. Qualified Opportunity Zones – these provisions may assist in tax-free exchanges.

SUMMARY

This outline is just that – an outline. It is intended to provide a glimpse of the breadths of BBB and to highlight the impact it has had on tax compliance, and most importantly tax planning. Individuals and businesses should proactively meet with their accountant to confirm how these new tax provisions will affect them and if there are any steps they should betaking. Wisconsin businesses and high net worth individuals should meet with their attorney now to review how the new laws will affect them.

Taxpayers, now more than ever, need to do ‘tax planning’. Your personal objectives may not be attained by utilizing different techniques and timing. Each may have a different tax result for you and your family and heirs.

This is especially true as to the increase in the gift and estate tax exemption. Income tax is a measure of amount realized in excess of basis (cost). Appreciation on wealth, and its exemption from income tax, should be a primary planning goal, and then opportunity for individuals and couples.