On Friday, Trump signed the most significant piece of tax legislation we have had in almost a decade.

Called the “One Big, Beautiful Bill”, this law cements almost $5 trillion in tax cuts… a large majority going to business owners, high-income earners and investors.

While it’s impossible to summarize every single thing in this mammoth piece of legislation, I’m breaking down some of the most significant updates.

Particularly for high-earning professionals, investors and business owners.

Full Disclosure: I'm writing this as myself, not as some investment adviser or broker-dealer. Purely educational or my personal thoughts - not investment, legal, tax, or professional advice. While my startup Carry owns an investment adviser and broker dealer, this is not meant to be an advertisement and nothing here represents them. Financial decisions involve risk, including losing money. Taxes are complex. Please do your own research or talk to a licensed pro before acting on anything you read here.

I’m also hosting a free live workshop next Wednesday breaking down exactly what business owners and high-income earners need to know about One Big, Beautiful Bill.

This workshop will be at 2pm Eastern / 11am Pacific and I’ll also send a replay to everyone who signs up.

Click here to register. We’ll hopefully have time for a live Q&A at the end as well!

In 2017, the Tax Cuts and Jobs Act (TCJA) lowered federal tax brackets for 8 years, as follows:

We were supposed to revert to the old rates next year, but the new bill makes these reduced rates permanent.

The corporate tax rate on C-Corps remains at a flat 21%, as opposed to a pre-2017 high of 35%.

I have previously written about how QSBS is the most powerful tax break in America.

This tax break allows all C-Corp shareholders, typically startup founders, investors and employees to pay no taxes when they sell their shares.

This updated bill makes QSBS even more generous in three separate ways:

QSBS allowed you to pay no federal taxes (and in most states, also no state taxes) on the maximum of 10 times your basis on the shares or $10 million. This bill updates it to $15 million!

To be eligible for QSBS, you had to hold your shares for 5 years. This new bill introduces partial QSBS as follows:

QSBS stands for Qualified Small Business Stock. Previously to qualify as a “small business”, the company had to have less than $50M in assets when you acquired your stock.

This bill updates the definition to up to $75M in assets! This means companies that previously may not have been eligible get a second shot at eligibility.

When you purchase a physical asset like property or machinery, you can typically deduct a small percentage of the purchase price every year as “depreciation”.

Bonus depreciation supercharges this.

If any asset has a a useful timeline of less than 20 years, bonus depreciation lets you depreciate the entire amount upfront.

This is massively significant for real estate investors!

As a commercial real estate investor, you can pay for a cost segregation study on any property you purchase to break it down into all of its individual components.

You can then take all the components with a quicker depreciation timeline, and use 100% bonus depreciation on those components to get a massive year 1 tax cut.

The upshot is you may be able to get a tax cut of 20%-25% of the purchase price upfront.

If you do go this route, watch out for depreciation recapture if you decide to sell the property at a later point.

In 2017, the TCJA introduced a massively unpopular measure for software companies stating that they had to amortize developer salaries over 5 years.

This means a business could technically lose money, but still owe taxes as they could only deduct 20% of what they paid a software engineer in the first year.

This caused a lot of chaos in Silicon Valley, and likely was an accelerant for some of the tech layoffs we recently witnessed.

OBBB fixes this, and brings back the ability to full deduct any salaries on R&D and software development in Year 1 for any US-based talent.

Critically, this does not apply for foreign R&D expenses.

The estate tax exemption used to be $5M for single people, and $10M for married couples prior to the 2017 TCJA.

The TCJA doubled this to $10M single and $20M married, indexed for inflation. As of 2024, the actual numbers were ~$14M single and ~$28M married.

However absent of new legislation, this exemption was stated to fall back to the original numbers (adjusted for inflation) at the end of this year.

But OBBB increased it further to $15M single, and $30M for married couples (again, indexed to inflation).

So instead of a halving of the estate tax exemption, we got a further increase and permanently. This is a very meaningful change for the wealthiest households in America.

The 2017 TCJA introduced a new tax deduction of up to 20% for business owners of pass-through businesses like LLCs and S-Corps.

This was called the Qualified Business Income deduction or QBI for short.

This deduction was supposed to sunset in 2026, but the new bill extends this indefinitely!

Salary restrictions still apply, and as a high earner, you still need to pay yourself enough in wages to fully maximize this out.

I’ve written more about the QBI deduction in this post on The Self-Employed Tax Saving Handbook.

All children born between 2025 and 2029 will receive a free $1,000 from the federal government in a new “Trump account”.

These accounts are set to track a major US index like the S&P 500 and parents can contribute an additional post-tax $5,000 a year.

These accounts compound tax-free, and are taxed as long-term capital gains when withdrawn for qualified expenses like education and buying a home.

I’m a big fan of the opportunity zone tax incentive and have personally benefited from it when I sold my company.

I’ve also written about it before in 10 Strategies for High W-2 Earners to Pay Less in Taxes.

When you have a capital gain, you can immediately roll over the proceeds from the sale into a qualified opportunity zone and defer paying capital gains taxes for 5 years on a rolling basis.

Additionally, if you hold the investment for 10 years, you then also receive an automatic step-up in basis. This effectively means any gains over the last 10 years are completely tax-free!

The opportunity zone program was supposed to sunset, but this legislation extends it indefinitely!

However, new thresholds are being imposed to define exactly what constitutes an opportunity zone moving forward.

A big change doing the rounds in the professional gambling communities:

You used to be able to deduct 100% of your gambling losses against your gambling winnings.

However, this bill makes a very significant update allowing gamblers to only deduct up to 90% of their losses against their winnings.

While that may seem like a small change, it is catastrophic for professional gamblers who have a small edge and make money with a high volume of bets.

This now means you could break even gambling… or potentially even lose a small amount of money and still owe significant taxes!

Prior to 2017, taxpayers in high tax states could deduct the entirety of their state and local taxes from their federal tax return if they itemized their taxes.

However, the TCJA limited this SALT deduction to a total of only $10,000 — no matter if you were married or single!

The new bill increases the SALT deduction 4 times to $40K this year, with a 1% growth slated every year until 2030. In 2030, it goes back to $10K.

While this does offer significant relief to taxpayers in high tax states, having this capped still hurts the truly high earners.

And a “marriage penalty” remains in check as both single filers and married couples get the exact same deduction of $40K.

Another critical part of the bill is it does NOT eliminate the pass-through entity tax workaround I’ve written about before.

This was discussed in early drafts, but eliminated in the final version, which is great news for business owners.

While these were the takeaways I found the most interesting, it is by no means exhaustive of every single thing contained inside this mammoth bill.

But this should serve as a really strong overview for anyone that is an investor, high earner or business owner.

If you have questions or want to learn any more about this, come to my free workshop next week where we break this down.

Until next time.

Disclosures: This post is for informational and educational purposes only and solely reflects the personal views of the author. It is not investment, legal, tax, or professional advice. Any examples, experiences, or investment returns discussed do not guarantee future results. Laws and regulations discussed are subject to change and may not apply to your individual circumstances. Unless specifically stated, posts do not reflect the views or opinions of The Vibes Company Inc. or its affiliates.