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One Big Beautiful Bill Act (OBBBA) Tax Strategies:  How can “Bunching” Unlock Larger Itemized Deductions?

The One Big Beautiful Bill Act (OBBBA) enacted into law on July 4, 2025 has reshaped the landscape of Itemized Deductions.  One of the most effective strategies to emerge in this environment is “Bunching” Deductions which includes a deliberate approach to timing expenses so they can be concentrated into specific tax years to exceed the standard deduction and maximize tax savings.

For Business Executives and other High-Income Households, “Bunching” can create meaningful, Multi-Year Tax Efficiency especially when applied to Property Taxes, Mortgage Interest, Charitable Donations, and combined with an Auto Purchase Sales Tax & Auto Loan Interest Deduction.

What Is “Bunching”?

Bunching is the practice of accelerating or deferring deductible expenses into a single tax year to push total Itemized Deductions above the standard deduction threshold. In alternating years, you may take the standard deduction instead.

1. Property Taxes (SALT Strategy Optimization)

While OBBBA modified the State and Local Tax (SALT) deduction cap, many high-income households still find themselves limited in how much they can deduct annually.

Bunching Strategy:

• Combine property tax payments into one tax year to exceed the standard deduction 

Example:
Instead of paying $15,000 annually, a taxpayer might:

• Pay $30,000 in one year (Maximizing Itemized Deduction impact)
• Pay $0 the following year and take the standard deduction

Planning Insight:
This strategy is particularly effective in high-property-tax states, but even in moderate-tax states, timing can materially improve after-tax outcomes.

2.  Charitable Donations (Donor-Advised Fund)

Charitable giving is one of the most flexible and powerful bunching tools available. 

Bunching Strategy:

• Contribute multiple years’ worth of charitable donations into a Donor-Advised Fund (DAF) in a single year.
• Take the full tax deduction upfront, while distributing funds to charities over time.

Example:
Instead of donating $10,000 annually:

• Contribute $30,000 in Year 1 (Maximize Itemized Deduction)
• Take standard deduction in Years 2 and 3

Planning Insight:
For Business Executives with highly variable income (Bonuses, RSU Vesting, Deferred Compensation Payouts, etc.) making large charitable contributions in high-income years can help reduce marginal tax rate.

3. Auto Purchase Sales Tax & Auto Loan Interest Deduction 

One of the more notable additions under OBBBA is the introduction of Auto Loan Interest Deduction (subject to income phaseouts and new vehicles with final assembly in USA).

Bunching Strategy:

• Time vehicle purchases in Bunching years to take advantage of the large Sales Tax paid, and combine with Property Taxes, Mortgage Interest, and Charitable Donations to super-size your Itemized Deductions.

Planning Insight:
While historically limited, this deduction becomes more valuable when integrated into a broader Bunching strategy layered with property taxes, mortgage interest, and charitable giving.  Separately, you may potentially claim the Auto Loan Interest Deduction, assuming your income is below the income phaseouts, and your new vehicle has final assembly in the USA.

Who Benefits Most from Bunching?

Bunching strategies under OBBBA are particularly effective for:

• Business Executives with fluctuating income
• Households with significant itemizable expenses
• Individuals impacted by deduction caps or phaseouts
• Charitably inclined families seeking tax efficiency

Ready to discuss your Multi-Year Tax Planning Strategy?

Schedule free Zoom or Phone Consult Now:

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