Insights

After months of buildup, the much-anticipated “Big Beautiful Bill” has officially passed. While much of the media spotlight has focused on headline-grabbing items like “no tax on tips” and Social Security updates (the latter not quite as advertised), several key provisions directly impact Microsoft professionals and their families.

Here’s a breakdown of the most relevant updates—and what to consider doing now to make the most of them.

1. Current Tax Rates Made Permanent

What Changed:
The bill locks in today’s historically low federal tax brackets, which were previously scheduled to sunset in 2026. Without this change, tax rates would have reverted to the higher pre-2017 levels. Under the now-permanent brackets, a married couple can earn over $400,000 after deductions and still remain in the 24% tax bracket. The top rate remains at 37%, a win given the history of top tax rates reaching over 90% in high-debt eras.

Why It Matters for Microsoft Professionals:
Preserving today’s favorable tax brackets gives high earners more room to execute smart planning strategies, especially Roth conversions.

What To Do:

• Continue making pre-tax 401(k) and HSA contributions to reduce current taxable income.
• Maximize Mega Backdoor Roth contributions while these brackets remain in place.
• Consider Roth conversions—especially early in retirement while your income is lower.

2. Estate Tax Exemption Locked In at $15 Million

What Changed:
The federal estate tax exemption was set to be cut in half in 2026—from $15 million per person to about $7.5 million. That reduction is now off the table.

Why is Matters for Microsoft Professionals:
Many Microsoft professionals accumulate significant wealth, especially in stock. This higher exemption shields more of your estate from the 40% federal estate tax. Be aware that state estate taxes (like Washington’s) still apply.

What To Do:

• Use annual gift exclusions—$19,000 per recipient in 2025—to gradually move assets out of your estate.
• For couples with two children, that’s $76,000 per year without filing a gift tax return.
• Leverage 529 college savings plans, which were expanded under the new bill to now allow more flexible use for apprenticeship programs and some student loan repayments—making them even more valuable as an estate and education planning tool.

3. SALT Deduction Cap Raised to $40,000

What Changed:
The cap on state and local tax (SALT) deductions has increased from $10,000 to $40,000. However, the cap phases down for incomes above $500,000 (married filing jointly) and will revert to $10,000 in 2030.

Why It Matters for Microsoft Professionals:
Those living in high-tax states like California, Oregon, or New York may now see meaningful tax savings. This change also allows more families to itemize again, restoring the value of charitable contributions and mortgage interest.

What To Do:

• Evaluate whether you’ll itemize moving forward.
• Still consider bunching charitable deductions using a Donor Advised Fund (DAF), particularly as the SALT cap drops again in 2030.
• Especially with the new 0.5% AGI floor for itemized charitable deductions when planning your giving.

4. $7,500 EV Credit Ends September 30, 2025

What Changed:
The federal electric vehicle (EV) tax credit is set to expire at the end of September 2025.

Why It Matters for Microsoft Professionals:
If you’ve been considering an EV purchase, now may be the time to act. This credit could provide a significant tax savings opportunity.

What to Do:

• Plan to take delivery of your vehicle by September 30, 2025, to claim the credit.
• If your income exceeds the eligibility cap, consider leasing—many dealers pass along the credit as a discount even when buyers are above the income threshold.

5. Opportunity Zones: Now Permanent and Enhanced

What Changed:
The Opportunity Zone (OZ) program is now permanent—and even more attractive in certain rural areas.

Why It Matters for Microsoft Professionals:
If you’re realizing a large capital gain—such as from selling Microsoft stock—you can reinvest that gain into a Qualified Opportunity Fund (QOF) to benefit from major tax deferral and even tax exclusion on future appreciation.

What to Do:

• Sell appreciated assets (e.g. MSFT stock) and reinvest the gain into a QOF within 180 days. This is especially effective if done after January 1, 2027.
• Hold for 5 years to receive a 10% step-up in basis (30% if invested in a Qualified Rural OZ). This also defers tax on the original gain.
• Hold for 10 years and pay zero capital gains tax on any QOF investment growth.
• Prioritize quality investments—tax benefits won’t help if the underlying investment underperforms.

Example:
Sell $100,000 of MSFT in January 2027 with a $90,000 gain → reinvest in a QOF → hold for 10 years → defer taxes on the original gain for 5 years → receive a step-up in basis → pay no tax on new QOF growth.

6. Qualified Business Deduction Extended and Expanded

What Changed:
The 20% Qualified Business Income (QBI) deduction was made permanent, with expanded income phase-outs. For service businesses, the deduction fully applies up to $400,000 (married filing jointly) and phases out completely by $550,000.

Why It Matters for Microsoft Professionals:
Many Microsoft professionals launch consulting firms or side ventures after their corporate careers. If you plan to generate business income post-Microsoft, this deduction could save you over $25,000 in taxes.

What To Do:

• Be mindful of how much income your new venture generates—staying under $400,000 can unlock the full QBI deduction.
• Work with a financial planner or CPA to ensure your business structure qualifies.

Final Thoughts

While some headlines in the Big Beautiful Bill may not apply directly to Microsoft professionals, the tax, estate, and business planning provisions certainly do. The extension of favorable tax brackets and estate exemptions presents a real planning opportunity—but only if acted on strategically.

Now is a great time to revisit your tax strategy, stock diversification plan, charitable giving, and estate goals to ensure you’re aligned with the new rules—and positioned for long-term financial success.

Want help mapping out the best way to take advantage of these changes?

Schedule a free consultation with one of our Certified Financial Planners. We’ll help you design a tax-smart, resilient plan tailored to your Microsoft compensation and life goals.

You may also want to read our White Paper: The 2025 Microsoft Financial Planning Guide that shares strategies to help you get the most out of your benefits.

team@stablerwm.com | (425) 646-6327

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No strategy assures success or protects against loss. Stabler Wealth Management and LPL Financial are not affiliated or endorsed by Microsoft.

Securities and Advisory services are offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Stabler Wealth Management is not registered as a broker-dealer or investment advisor.