Key Takeaways:

• Permanent tax cuts and higher exemptions create room for strategic planning, but timing matters.
• Business owners stand to benefit from enhanced QBI, QSBS and bonus depreciation rules.
• Estate strategies remain essential, with elevated exemptions and trust options to consider.

On July 4, 2025, President Trump signed H.R. 1, the One Big Beautiful Bill Act, ushering in some of the most impactful tax law changes in years. For individuals, families and business owners, these changes bring opportunities to strengthen your plans, but also new pitfalls to avoid.

At Comerica, we help clients cut through the noise, focus on what matters and make informed decisions. Here’s how you can respond effectively to the new law.

Individual Taxes: Steady Rates, Enhanced Deductions

The top individual tax rate remains at 37%, applying to married couples earning over $751,600 and single filers earning over $539,900. Brackets remain indexed[ML1] [LF2]  to inflation, and rates are maintained indefinitely[ML3] [LF4] , which provides a predictable baseline for multi-year income planning.

What’s New:

• Opportunity Zones continue past 2026 with a stricter 10-year designation process starting in 2027. This provides an option for deferring recognition of capital gains. In addition, individuals may be able to eliminate tax on gains from certain real estate or business investments in the specified zones.
•  A new “above-the-line deduction,” which means you don’t need to itemize to claim it, allows up to $10,000 for interest on loans used to purchase automobiles with final assembly in the United States. The deduction is available for new[ML5] [LF6]  car loans from 2025 through 2028, including refinancing of existing qualified passenger vehicle loans, and is phased out when income exceeds certain thresholds.
• Deduction on qualified tips, up to $25,000 per year and qualified overtime pay up to $12,500 per year from 2025 through 2028. Both are subject to phaseouts[ML7] .
• The 2017 tax law substantially increased the exemptions from Alternative Minimum Tax (AMT), which provided relief for many high-income taxpayers. The new law preserves the exemptions but accelerates the phase out of the exemptions.
• 529 Plans: Expanded to include more expenses for K–12, homeschool and secondary education costs. In addition, funds can be used for a variety of post-secondary credentialing, like the CPA or apprenticeships.
• Trump Accounts: A tax-preferred savings account can be established for children age 18 or under, with a $1,000 credit per child born between 2025 and 2028. Parents will be able to fund $5,000 per year and employers can contribute up to $2,500 per year (pre-tax) to age 18, providing an opportunity to build tax-deferred savings for children that can be used for education or other qualified purposes after age 18. This new account could provide significant planning opportunities for children employed by parents’ businesses as well as children of other employees. These accounts are intended to incentivize saving at a young age.

Expanded Tax Credits:

• Child Care Credit: Increased to a maximum of $2,200 per child, of which $1,700 can be refunded this year, even if no tax is due. The credit will be indexed for inflation but phases out when income exceeds $200,000 (single) or $400,000 (married filing jointly). These changes are effective January 1, 2025.
• Child and Dependent Care Tax Credit: Permanently increased to include 50% of qualifying expenses (up from 35%). The credit phases out at certain income thresholds and is effective after December 31, 2025.

Deductions: Opportunities and Pitfalls

• SALT Deduction

The State and Local Tax (SALT) cap rises to $40,000 through 2029, with the increased benefit phasing out for taxpayers with adjusted gross income above $500,000. After 2029, the cap is scheduled to revert to $10,000. This elevated cap provides a great planning opportunity; however, the phaseout will make timing of income critical.

• Itemized Deduction Limits

For top earners, itemized deductions now yield less, capped at 35 cents per dollar.  SALT deductions are reduced by $0.30 for every dollar of income over $500,000 in 2025 (adjusted for inflation annually), until the deduction is reduced to $10,000.

In addition, beginning January 1, 2026, charitable contributions will be deductible only to the extent they exceed 0.5% of AGI, thus reducing the deduction. However, the temporary limit of 60% of AGI for cash contributions to public charities is extended indefinitely. To maintain efficiency, we recommend strategies like bunching contributions or using donor-advised funds (DAFs).

• Other Deductions[LF8] :
  •  Mortgage interest: Remains deductible on qualified loans up to $750,000. Home equity interest is permanently not deductible unless it qualifies as mortgage interest.
  • Standard Deduction: Increased to $31,500 for married couples filing jointly ($15,750 for single filers), indexed annually.
  • Senior Deduction: A new $6,000 deduction is available to taxpayers age 65 and older from 2025 through 2028, with the benefit gradually phased out for adjusted gross incomes above certain thresholds.
  • Charitable Deduction for Non-Itemizers: An above-the-line deduction, beginning in 2026, offering $1,000 for single filers or $2,000 for joint filers.

Many clean energy tax credits introduced under prior law, including incentives for residential energy-efficient improvements and electric vehicles, are eliminated for property placed in service after 2025. If you’re considering such investments, now is the time to assess whether accelerating them makes sense.

We recommend working with your Comerica advisor and tax advisor to map out your income, deductions and credits over the next several years to optimize tax savings and avoid unnecessary exposure to higher rates or phaseouts.

Estate Planning: More Room to Act

• Higher Exemptions: Estate, gift and GST exemptions increase to $15 million per person, with portability between spouses preserved, allowing married couples to shield up to $30 million beginning in 2026 and adjusted for inflation annually. The step-up in basis at death remains intact. This creates an opening to revisit your gifting strategies and transfer wealth efficiently.
• Trust Options: The new law leaves the rules around grantor and non-grantor trusts unchanged, preserving their value as planning tools.  This stability means you can continue leveraging grantor trusts for control and income tax efficiency, while non-grantor trusts remain a viable option for shifting income to lower-tax jurisdictions and optimizing deductions such as Qualified Business Income Deduction (see below) and SALT and well as the Qualified Small Business Stock gain exclusion (see below).

We recommend reviewing your current estate planning and trust structures to ensure they still align with your estate and tax objectives under the updated law.

Business Owners: Key Moves to Consider

• QBI Deduction

The 20% qualified business income (QBI) deduction is now permanent, providing ongoing tax relief for owners of pass-through entities such as partnerships, S corporations and sole proprietorships. This provision effectively lowers the top tax rate on qualified business income, making pass-through structures an attractive option for many business owners. In addition, phase out thresholds were increased, and a new $400 minimum deduction is added for individuals with at least $1,000 of QBI.

• Qualified Small Business Stock (QSBS) Enhancements

C corporation owners can now exclude up to $15 million of gain (up from $10 million) if stock is held at least five years. Eligibility has also expanded to corporations with up to $75 million in assets, up from $50 million under prior law. A new tiered exclusion applies: 50% if held three years, 75% if four years, and 100% if five or more years. These enhancements provide exciting tax planning opportunities.

• Bonus Depreciation and Expensing

Permanent 100% bonus depreciation allows you to immediately deduct the full cost of qualifying property in the year it’s placed in service, making it a powerful tool for businesses looking to reinvest in equipment, technology, or other capital assets. This is retroactive January 19 ,2025.

The Section 179 deduction limit, meanwhile, has increased to $2.5 million, with a phaseout beginning at $4 million of purchases. This offers additional flexibility for smaller-scale investments.

Other Business Provisions

• Research and experimental expenses are deductible if domestic, retroactive to 2022 with amended returns.
• 1099 reporting threshold is increased from $600 to $2,000.
• Corporate charitable contributions are capped at 10% of taxable income after a new 1% floor.
• The pass-through entity tax (PTET) was maintained, which allows pass-through entities to pay SALT on behalf of the owners. Thereby enhancing the SALT deduction for business owners.

Strategic Considerations for Wealth Planning

Timing Matters

With many deductions now phasing out at higher income levels, it’s critical to take a multi-year view of your tax picture. Planning when to recognize income and when to accelerate or defer deductions can help you keep your effective tax rate as low as possible.

Planning when Starting a Business

The permanent 21% corporate tax rate and expanded QSBS exclusion make the C corporation structure worth considering when creating your business. The best choice depends on your long-term plans, the type of income your business generates and how much flexibility you need for cash flow. If you don’t anticipate dividend payments or a long-term hold for your new company, a C corporation could provide attractive tax benefits.

Refine Your Charitable Giving Strategy

With tighter limits on charitable deductions for high-income taxpayers, it’s worth exploring options like bunching contributions in specific years or using donor-advised funds or charitable trusts. These approaches can help you maintain tax efficiency while continuing to support the causes that matter to you.

What is Permanent?

While many of the tax provisions are written as permanent in the law, we have seen several tax law changes in the past few decades. Multi-year planning is critical with the law as written, but we have to consider that it could change in the future.

Comerica is Here to Help

The One Big Beautiful Bill brings meaningful changes for everyone. We recommend reviewing your plan now to capture new opportunities and avoid unintended pitfalls.

Speak with your Comerica wealth advisor today to develop a strategy that reflects the new law, supports your long-term goals, and protects your wealth and legacy.