Exam: CFP — Certified Financial Planner Chapter: Ch05 — Tax Planning Law: One Big Beautiful Bill Act (OBBBA), signed July 4, 2025 Testable: Starting March 2026 exam window Last Updated: 2026-06-26
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The Tax Cuts and Jobs Act (TCJA, 2017) lowered individual rates, expanded the standard deduction, created the 20% QBI deduction, and raised the estate exemption — but with a sunset date of December 31, 2025.
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made all major TCJA individual provisions permanent. This eliminates the uncertainty that drove years of "pre-sunset planning."
CFP Exam Tip: Prior to OBBBA, exam prep materials often discussed "pre-sunset vs. post-sunset planning." That framework is now obsolete. Any CFP question or scenario assuming TCJA expires is based on outdated law.
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The seven-bracket structure (10%, 12%, 22%, 24%, 32%, 35%, 37%) is now permanent.
2025 bracket thresholds (approximate):
| Rate | Single | MFJ | |---|---|---| | 10% | Up to $11,925 | Up to $23,850 | | 12% | $11,926–$48,475 | $23,851–$96,950 | | 22% | $48,476–$103,350 | $96,951–$206,700 | | 24% | $103,351–$197,300 | $206,701–$394,600 | | 32% | $197,301–$250,525 | $394,601–$501,050 | | 35% | $250,526–$626,350 | $501,051–$751,600 | | 37% | Over $626,350 | Over $751,600 |
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| Filing Status | 2025 Standard Deduction | |---|---| | Single | $15,000 (OBBBA base; some sources cite $15,750 with full inflation adjustment) | | Married Filing Jointly | $30,000 | | Head of Household | $22,500 |
New OBBBA Senior Bonus Deduction (2025–2028):
CFP Planning Context: Most clients still benefit from the standard deduction. High-income clients in high-tax states with large mortgage interest and charitable deductions may still itemize — but the higher standard deduction threshold means fewer clients benefit from itemizing.
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| Item | TCJA (2018–2025) | OBBBA (2025+) | |---|---|---| | SALT deduction cap (MFJ) | $10,000 | $40,000 | | SALT deduction cap (Single) | $10,000 | $20,000 | | Inflation indexed? | No | Confirm per IRS guidance |
CFP Planning Context: The $40,000 MFJ SALT cap is a major change for high-income clients in California, New York, New Jersey, and other high-tax states. Previously, the $10,000 cap meant most of the state income tax and property tax deduction was wasted. Now clients with combined state income + property taxes up to $40,000 MFJ can deduct the full amount.
CFP Exam Tip: Exam questions may test whether a client should itemize given the new SALT cap. A MFJ couple paying $30,000 in state income taxes and $12,000 in property taxes has $42,000 in state/local taxes — with the new cap, they can deduct $40,000 MFJ, making itemizing potentially beneficial if their total itemized deductions exceed $30,000.
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CFP Planning Context: For self-employed clients (Schedule C, S corp, or partnership), the QBI deduction is now a permanent feature of cash flow planning. Business structure decisions (S corp election, partnership agreement design) that optimize QBI should be made with permanency in mind.
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| Item | 2024 | 2025 (OBBBA) | |---|---|---| | Unified exemption per person | $13,610,000 | $15,000,000 | | Married couple (with portability) | $27,220,000 | $30,000,000 | | Annual gift exclusion | $18,000/recipient | $19,000/recipient | | Top estate tax rate | 40% | 40% (unchanged) |
CFP Planning Context:
CFP Exam Tip: Portability still requires a timely filed Form 706 (estate tax return) even when no estate tax is due. This is a commonly tested trap.
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| Item | Status | |---|---| | Capital gains rates (0%/15%/20%) | Unchanged — income-based thresholds | | Net Investment Income Tax (3.8%) | Unchanged | | Additional Medicare Tax (0.9%) | Unchanged | | Alternative Minimum Tax (AMT) | AMT exemptions permanently elevated but AMT itself remains | | Roth IRA income limits | Unchanged |
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1. Roth conversion timing: With permanent brackets, multi-year Roth conversion strategies can be planned with certainty — no need to rush before a sunset.
2. Gifting strategy: The permanent $15M exemption removes urgency. However, clients with estates approaching $15M may still want to gift early to remove future appreciation.
3. Business structure: QBI permanency makes S corporation election decisions more stable. The deduction is now a long-term planning tool.
4. SALT planning for high-tax-state clients: With the $40K MFJ cap, itemizing becomes viable again for clients with large state taxes + mortgage interest + charitable contributions.
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Tags: #CFP #Ch05 #TaxPlanning #OBBBA #TCJA #StandardDeduction #SALT #EstateTax #QBI #Permanent #March2026