New tax law drives estate, giving and 529 strategies

On the heels of the July 4, 2025, signing of the One Big Beautiful Bill Act (OBBB), we asked professionals in Rochester’s financial planning and investment space to share some of the trends and tools readers should be aware of stemming from the bill, other new regulations and the economy in general.

“ The One Big Beautiful Bill Act is one of the largest bills that we’ve seen [in the taxation space] since 2017 with the Tax Cuts and Jobs Act,” said Anthony R. Scinto, CPA, partner at MMB+CO, who also chairs the firm’s tax department. “When you think of where most people will be able to find some opportunity, I think a big area is what we call deduction bunching for itemized deductors.”

Bunching allows individuals to strategically maximize their deductions in certain years by concentrating their itemizable expenses. The OBBB significantly increases the standard deduction, making it harder for many to exceed it by itemizing every year.

A tool for bunching charitable contributions that Scinto is seeing more interest in currently is donor-advised funds (DAFs), which allow you to make a large lump sum contribution in a bunching year to claim a deduction while also allowing you the flexibility to disburse the funds to charities in the future.

“A donor-advised fund is a great tool to use for people who want to contribute philanthropically, don’t always know when they’re going to make this contribution or exactly where they want those funds to go, but want the immediate tax deduction,” Scinto said.

Scinto explains that people interested in creating a donor-advised fund can do so in a number of ways, including by working with an attorney to set up a charitable giving account that’s administered by a public charity or finding a donor-advised fund available through their financial institutions.

Another opportunity Scinto points out readers should be aware of is that the OBBB raised the federal estate tax exemption to $15 million per person. It’s a lifetime exemption that starts in 2026, is permanent and will be adjusted for inflation on an annual basis.

“This exemption was just about doubled back in 2017, and it was set to sunset after 2025, so we really struggled as a profession to give our clients meaningful advice because we didn’t exactly know what was going to happen long term,” Scinto said. “We know now that we’ve got these permanently higher exemptions.”

Now is also the time for taxpayers who could benefit from this planning to sit down with their attorneys to talk about a plan to put in place for the decades to come and for their family wealth.

“From my perspective, the theme overall when you think about all of these opportunities, many of which have been spurred by more permanency in the tax code that the One Big Beautiful Bill Act has provided, is that that permanency gives individual taxpayers the ability to more confidently look at their financial futures and plan accordingly,” Scinto said.

Elizabeth Thorley, CFP, founder and CEO of Thorley Wealth Management, also sees increased interest in  charitable giving – especially through DAFs.

“For many people looking at the longer-term perspective of their planning and estate planning, they might set up a donor-advised fund and then name their children to be successor donors to encourage and to demonstrate to them to keep giving to charities,” Thorley said.

She is also seeing increased interest in 529 plans due to the OBBA expanding the tools, flexibility and reach of these tax-advantaged savings plans.

“The 529 account has always been a great option for people to consider for saving for school expenses, and the federal government has enhanced the 529’s flexibility,” said Thorley, explaining the OBBB has expanded qualifying education expenses for 529 withdrawals from $10,000 per year (for elementary or secondary education) to $20,000.

Another major change is that qualified expenses for children in grades K-12 have been expanded to include non-tuition costs, including curriculum materials, tutoring, dual-enrollment fees, fees for nationally standardized tests and more. Eligible expenses for vocational and career training programs have also been expanded.

Not part of the OBBB, but something else Thorley is seeing interest in currently is the Social Security Fairness Act, which was signed into law on January 5, 2025, and makes major changes to how some individuals receive their Social Security benefits.

Thorley explains that the Social Security Fairness Act repealed the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The WEP previously reduced Social Security benefits for those with pensions from non-covered employment and the GPO reduced spousal or survivor Social Security benefits for those receiving government pensions.

“It primarily impacts federal and state employees, firefighters, police officers and non-profit employees,” Thorley said. “It’s a fairly large group of people and if those individuals did not apply for Social Security because they knew that it would be eliminated by those provisions, they need to make sure that they apply for benefits from Social Security now because they’re entitled to retroactive payments back to January of 2024,” Thorley said.

Jonathan Thomas, CFP, private wealth advisor at LVW Advisors, says a financial planning tool individuals should be area of right now is direct indexing platforms.

“Direct indexing platforms allow investors to replicate benchmarks such as the S&P 500 or construct customized portfolios by owning the underlying securities directly, rather than through a mutual fund or ETF [exchange-traded fund],” he said.

Thomas explains that this approach offers flexibility to exclude specific stocks, adjust sector weights, or integrate environmental, social, and governance [ESG] screens, while leveraging automated tools to manage portfolios with tax considerations in mind.

“For taxable portfolios—especially those holding low-cost-basis positions—direct indexing may offer meaningful tax management opportunities,” Thomas said. “This approach can facilitate systematic tax-loss harvesting, cost basis management, and portfolio rebalancing.”

In volatile stretches like April of this year, Thomas says this strategy particularly shines.

“Rapid down-market movements create short-term losses, which can then be used to trim low-cost-basis holdings with large unrealized gains,” he said. “This process can help gradually realign a portfolio with its target index and position it to potentially generate positive tax alpha over time.”

Caurie Putnam is a Rochester-area freelance writer.

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