High earners in Minnesota have a unique opportunity to benefit from the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. With several federal changes taking effect for tax year 2025—and some set to diminish the following year—Echo Wealth Management encourages clients to take timely, strategic action.

Relief Through SALT Deduction Expansion

Beginning in 2025, the state and local tax (SALT) deduction limit will temporarily increase from $10,000 to $40,000. “It’s wonderful news and provides significant relief,” says Echo Huang, CFA, CFP®, CPA, founder and president of Echo Wealth Management. However, the full benefit is only available to taxpayers with modified adjusted gross income (MAGI) under $500,000. The deduction phases out and returns to $10,000 once MAGI reaches $600,000.

To help clients stay below the threshold and claim the maximum deduction, Echo Wealth Management proactively recommends:

- Maximizing pre-tax 401(k) contributions
- Contributing to a health savings account (HSA)
- Deferring income from bonuses, restricted stocks, or salary

Consider this: A Minneapolis executive with $550,000 in income defers a $100,000 bonus into a non-qualified deferred compensation (NQDC) plan. This strategy reduces his MAGI below $500,000, preserving the full SALT deduction. These plans must be elected during specific enrollment windows and may impact future MAGI—for instance, in 2027 if elected in late 2026.

Charitable Giving: Act Before the Deduction Cap Shrinks

OBBBA introduces a deduction cap change for charitable contributions, reducing the benefit for high earners starting in 2026. “In 2026, the value of itemized deductions for those in the 37% tax bracket will be limited to 35%,” Echo explains. “To maximize your impact and your deduction, 2025 is the year to act.”

High earners can benefit from bunching future charitable contributions into 2025 using a donor-advised fund (DAF). This allows for a larger deduction under the current rules while supporting charitable causes over time.

Example: A St. Paul couple with $1 million in combined income gives $15,000 annually to charities. If they donate in 2026, the first $5,000 is disallowed due to a new 0.5% AGI floor. Instead, donating before year-end 2025 through a DAF allows full deduction and control over disbursement timing.

“Donating appreciated stock or stock funds held for over a year is an excellent strategy,” adds Echo. “Clients can deduct the full market value, avoid capital gains tax, and retain flexibility in when and where to grant funds.”

Opportunity for Small Business Owners: PTE Tax Election

For qualifying business owners, the pass-through entity tax (PTET) election remains a powerful tool to reduce MAGI. “Since the SALT cap was introduced in 2018, I’ve advised business clients to consider PTET to reduce income passed through to their personal returns,” says Echo.

By paying state taxes at the entity level, owners can effectively bypass the SALT cap on individual returns. Additionally, the election may reduce self-employment tax and allow further deductions for those who do not itemize.

Long-Term Strategy, Not Last-Minute Planning

“Tax planning is not a December event—it’s a year-round discipline,” Echo emphasizes. With new legislation, evolving markets, and life transitions, timely decisions can lead to significant savings. Echo Wealth Management remains committed to helping clients navigate complexity with clarity, using customized strategies and forward-thinking tools.

📅 Schedule your complimentary Discovery Call: https://calendly.com/echo-huang/30-minute-discovery-call?month=2025-11