As 2025 comes to a close, recent tax law changes under the One Big Beautiful Bill Act (OBBBA) present meaningful opportunities for individuals and business owners to reduce tax liability before year-end. Several provisions are set to change or phase out beginning in 2026, making proactive planning in 2025 especially important.
Key Summary
The One Big Beautiful Bill Act introduces temporary and permanent changes that impact charitable giving, depreciation, and state and local tax deductions.
Acting before December 31, 2025 may allow taxpayers to preserve deductions and accelerate benefits that will be limited or unavailable in future years.
Prosperity Partners works closely with clients to evaluate these provisions and implement strategies aligned with their broader tax and financial goals.
Charitable Contributions: Why Accelerating Giving Into 2025 Matters
Beginning January 1, 2026, the allowable charitable deduction will be reduced by 0.5% of an individual taxpayer’s adjusted gross income. For higher-income taxpayers, this change may permanently disallow a portion of otherwise deductible charitable contributions.
As a result, accelerating planned charitable giving into 2025 may provide additional tax benefit.
Planning strategies to consider include:
- Consolidating multiple years of charitable contributions into 2025
- Using donor-advised funds to secure a 2025 deduction while distributing gifts over time
- Donating appreciated securities to avoid capital gains while deducting fair market value, subject to AGI limits
Our advisors can help model contribution limits and assess how charitable strategies interact with your overall tax profile.
Bonus Depreciation: 100% Deduction Reinstated
OBBBA permanently restores 100% bonus depreciation for qualifying property placed in service after January 19, 2025. This allows eligible taxpayers to fully expense certain capital investments in the year they are placed in service.
Taxpayers may benefit by:
- Placing eligible property in service by December 31, 2025
- Claiming the full deduction on the 2025 return
- Effectively deferring federal income tax for one year
This provision is particularly beneficial for active owners of partnerships and S corporations. Prosperity Partners can help determine asset eligibility and optimize depreciation elections within your entity structure.
SALT Deduction: Expanded Cap Creates New Planning Opportunities
The previous $10,000 cap on the state and local tax deduction limited itemized deductions for many taxpayers. Beginning in 2025, OBBBA increases the SALT deduction cap to $40,000 in the aggregate, subject to phaseouts for higher-income taxpayers.
With the expanded cap, taxpayers may benefit from:
- Accelerating 2026 state income taxes and real property taxes into 2025
- Combining SALT deductions with charitable contributions and mortgage interest to exceed the standard deduction
Prepayment strategies are not appropriate for every taxpayer. Our team can help determine whether accelerating payments makes sense based on your income, cash flow, and itemization thresholds.
Why Year-End Planning Matters More Than Ever
Tax law continues to evolve, and many of the most effective strategies require action before year-end. Waiting until tax season often limits available options. Coordinated planning across charitable giving, depreciation, and SALT deductions can materially impact after-tax outcomes.
At Prosperity Partners, we take a holistic approach to year-end planning, helping clients evaluate opportunities in the context of business ownership, investment strategy, and long-term financial goals.
Talk With an Advisor Before Year-End
We encourage you to review these opportunities as part of your 2025 year-end tax planning process. Our advisors are available to discuss how these provisions apply to your specific situation and to help implement strategies ahead of December 31 deadlines.
Contact Prosperity Partners to schedule a year-end planning conversation.
Frequently Asked Questions
What is the One Big Beautiful Bill Act?
The One Big Beautiful Bill Act is recent tax legislation that modifies deductions, depreciation rules, and SALT limits, creating both temporary and permanent planning opportunities.
Should I accelerate charitable giving into 2025?
For many higher-income taxpayers, accelerating charitable contributions into 2025 may preserve deductions that will be limited beginning in 2026. Individual circumstances vary, so modeling is recommended.
Who benefits most from 100% bonus depreciation?
Active owners of partnerships and S corporations often see the greatest benefit, particularly those making capital investments in equipment or qualifying property.
Is prepaying SALT always a good idea?
No. While the expanded SALT cap creates opportunity, prepayment strategies depend on income level, itemization status, and cash flow.
How can Prosperity Partners help with year-end planning?
Prosperity Partners provides integrated tax planning, modeling, and implementation support to help clients act confidently before year-end deadlines. Contact Prosperity Partners today!