Overview
The July 2025 Tax Legislation represents the most significant overhaul of the U.S. tax code since the Tax Cuts and Jobs Act of 2017. Signed into law in July 2025, the bill made sweeping changes across individual income taxes, business provisions, real estate, and estate planning. Many of the TCJA provisions that were set to expire were made permanent or extended, while new provisions were added across several categories.
This article breaks down the most important changes and their practical implications for individuals, business owners, and real estate investors. Given the breadth of the legislation, this is necessarily a summary – the specifics of how each provision applies to your situation requires personalized analysis.
Individual Tax Changes
New Tax Brackets (2026)
The tax brackets were adjusted, with modest rate and threshold changes. The top rate of 37% was preserved. Here are the 2026 brackets for single filers:
| Rate | Single Filer Income Range | MFJ Income Range |
|---|---|---|
| 10% | $0 – $11,925 | $0 – $23,850 |
| 12% | $11,925 – $48,475 | $23,850 – $96,950 |
| 22% | $48,475 – $103,350 | $96,950 – $206,700 |
| 24% | $103,350 – $197,300 | $206,700 – $394,600 |
| 32% | $197,300 – $250,525 | $394,600 – $501,050 |
| 35% | $250,525 – $626,350 | $501,050 – $751,600 |
| 37% | Over $626,350 | Over $751,600 |
Standard Deduction Increases
Business Tax Provisions
Section 179 Expensing
The Section 179 expensing limit was increased to $1.22 million, with the phase-out beginning at $3.05 million in total equipment purchases. This allows small and mid-size businesses to immediately deduct the cost of qualifying equipment, vehicles, and certain real property improvements rather than depreciating them over time.
Bonus Depreciation – Extended and Clarified
One of the most significant business provisions: bonus depreciation, which had been phasing down under TCJA, was extended and reset to 100% for 2025. Here is the new phase-down schedule:
The 100% rate for 2025 creates a compelling window for investors and business owners to accelerate asset purchases and cost segregation studies before the phase-down resumes. Equipment, personal property components identified in cost segregation studies, and qualified improvement property all potentially benefit.
QBI Deduction Made Permanent
The 20% deduction for qualified business income (QBI) from pass-through entities – sole proprietorships, partnerships, S-corporations, and certain trusts – was set to expire after 2025 under TCJA. The July 2025 bill makes it permanent.
The wage and capital limitation continues to apply for taxpayers above the income threshold ($383,900 for joint filers in 2026). Above the threshold, the deduction is limited to the greater of: 50% of W-2 wages paid by the business, or 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property. These limitations make QBI planning highly fact-specific for higher-income business owners.
Real Estate Investor Impact
Opportunity Zone Extension
The Opportunity Zone program, originally set to expire, was extended through 2033. Opportunity Zones allow investors to defer and potentially reduce capital gains by reinvesting in designated low-income communities through Qualified Opportunity Funds (QOFs). The extension gives investors an additional runway to deploy capital with the program's tax benefits intact.
Conservation Easement Tightening
Syndicated conservation easement transactions face new restrictions. A 2.5:1 deduction-to-investment ratio cap was imposed – arrangements that promise deductions exceeding 2.5 times the investment amount are now subject to automatic enhanced scrutiny and potential disallowance. This significantly curtails the abusive syndicated easement market while preserving the deduction for legitimate transactions.
1031 Exchange Rules Unchanged
Despite proposals in prior legislative cycles to limit or eliminate 1031 exchanges, the rules were left intact by the July 2025 bill. Like-kind exchange treatment for real property continues without modification.
SALT Cap Raised
The State and Local Tax (SALT) deduction cap was raised from $10,000 to $40,000, with the cap phasing out above $500,000 in AGI (reducing to $10,000 above that threshold). This provides meaningful relief for high-tax-state residents in the $100,000–$500,000 income range who were most constrained by the original cap.
Estate and Gift Tax
The enhanced estate tax exemption was made permanent, eliminating the uncertainty that had hung over estate planning since TCJA's scheduled sunsetting. Step-up in basis at death was also preserved – meaning heirs continue to receive assets with a basis equal to fair market value at the decedent's death, erasing embedded gains.
For wealthy families, the $14 million per-person exemption provides substantial shelter from the 40% federal estate tax. Couples with well-structured plans can shelter $28 million without using irrevocable trusts or other planning vehicles – though for estates above these thresholds, planning remains essential.
Key Planning Takeaways
The July 2025 legislation creates both immediate opportunities and longer-term planning considerations. Here are the actions most relevant to our clients:
- Accelerate bonus depreciation claims in 2025 – the 100% rate creates a narrow window. Cost segregation studies on recently acquired or improved properties should be completed now.
- Review QBI deduction eligibility – with the deduction now permanent, optimizing business structure for QBI (including W-2 wages and qualified property allocation) has long-term value.
- Consider Opportunity Zone investments before 2033 – the extension provides a long runway, but capital gains from 2025 and 2026 sales are eligible for deferral with proper reinvestment timing.
- Reassess estate plans in light of higher exemptions – some existing irrevocable trusts or plans premised on pre-bill exemption levels may need review; the permanent higher exemption changes the calculus for many families.
- Revisit SALT strategies for mid-high income earners – the $40,000 cap changes deduction optimization for taxpayers in high-tax states whose itemized deductions were previously constrained.
- Evaluate the QBI wage limitation if above threshold – the permanent status of QBI makes it worth revisiting business structure, payroll, and property allocation to maximize the deduction within the wage/capital limitation framework.