Permanent Brackets, AMT Relief, and New Deductions: How OBBBA Reshapes Your Tax Strategy

Get ahead of the curve with the latest updates to tax rates, deductions, and exemptions. Discover what these changes mean for your financial planning in 2025 and beyond.

Permanent Individual Tax Rates

Starting in 2026, the individual tax brackets will be permanently set at 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

These permanent brackets provide taxpayers with more certainty when planning their finances. Individuals can now estimate their tax liabilities with greater accuracy, reducing the need to adjust plans due to potential annual changes in tax rates.

Trusts and Estates: Locked-In Brackets

For trusts and estates, the permanent brackets are 10%, 24%, 35%, and 37%.

With these fixed brackets, trustees and estate planners can better manage distributions and retained income. This stability allows for more effective financial planning, ensuring that trusts and estates are optimized for their intended purposes.

Inflation Adjustments: A Subtle but Important Shift

The 10% bracket will receive an extra year of inflation adjustment, helping lower-income taxpayers retain more of their earnings.

This adjustment ensures that taxpayers in the lowest bracket benefit from additional protection against inflation, allowing them to keep more of their income over time.

Filing Thresholds and Deductions

• • Permanent repeal of personal and dependency exemptions
• • Adjustments to the standard deduction
• • A temporary $6,000 deduction for seniors (2025–2028)

The adjustments to filing thresholds and deductions simplify tax filing while providing targeted relief. Seniors, in particular, will benefit from the temporary $6,000 deduction, offering additional financial support during retirement.

Alternative Minimum Tax (AMT)

The AMT exemption amounts are now permanent. For joint filers and surviving spouses, the phaseout threshold reverts to $1 million, adjusted for inflation.

These changes to the AMT provide higher exemption thresholds and greater predictability for taxpayers. Those with growing incomes can now plan with confidence, knowing they are less likely to face unexpected AMT liabilities.

What This Means for You

Whether you're an individual taxpayer, business owner, managing a family trust, or assisting aging parents with their taxes, these changes offer clarity and predictability. The permanent brackets and deductions simplify planning and reduce surprises.

Need Help Navigating the Changes?

At AllTax Accounting, we are dedicated to helping our clients prepare for what’s ahead in their financial journey. Whether it’s trust planning or navigating the complexities of filing thresholds and itemized deductions, we’ll be there to guide you through every step of the process. Our team is committed to providing you with the support and expertise you need to make informed decisions and achieve your financial goals.