The “One Big Beautiful Bill” and What It Means for Estate Planning in Hawaiʻi

On July 4, 2025, the federal government passed the “One Big Beautiful Bill” — a sweeping 900-page tax and benefits overhaul that impacts nearly every American household. While political headlines may have dominated the national conversation, what truly matters for local families in Honolulu and across Hawaiʻi is how this law affects your long-term financial security — and your estate plan.

Whether you're raising keiki, supporting kūpuna, or planning for retirement, understanding the new law isn’t just about tax savings — it's about creating a plan that works for your ʻohana now and for generations to come.

Major Financial Changes Every Hawaiʻi Family Should Know

The new law introduces a series of temporary tax breaks and benefit programs, which may sound great now but require thoughtful planning. Without a solid estate plan, your family may lose out on key advantages — or worse, face unexpected burdens down the line.

Family-Friendly Provisions:

• Child Tax Credit increases to $2,200 per child starting in 2026

• “Trump Accounts” for children born between 2025–2028: $1,000 from the government, with up to $5,000 in family contributions annually

• Parent PLUS Loans capped at $65,000 per student — reshaping college funding strategies for many Honolulu families

Worker-Based Deductions (Through 2028):

• Tip earners can deduct up to $25,000 of tip income

• Overtime workers get up to $25,000 in deductions for married couples

• Car loan interest is deductible (up to $10,000) for U.S.-made vehicles

  
  

Other Temporary Benefits:

• SALT deduction cap increases from $10,000 to $40,000 — a major plus for high-tax states like Hawaiʻi, though it phases out for high earners

• Seniors (65+) receive a $6,000 deduction if income-eligible — but this also expires after 2028

  
  

These provisions offer short-term advantages but will expire unless extended — which means timing matters more than ever in your planning.

Changes to Healthcare and Benefits

Beyond taxes, this new law dramatically changes access to public benefits. Many families in Hawaiʻi who rely on Medicaid or food assistance may be surprised by new requirements — and the potential for loss of coverage.

Medicaid Adjustments (Starting Late 2026):

• Must work, volunteer, or attend school 80+ hours/month (ages 19–64)

• Caregivers of young children are exempt, but administrative hurdles may lead to coverage loss

SNAP (Food Assistance) Changes:

• Work requirements now apply up to age 64

• Hawaiʻi must start funding 5–15% of benefits by 2027, possibly impacting local eligibility

ACA Marketplace:

• Enhanced tax credits expire, leading to projected premium increases of up to 75%

• New paperwork rules may disrupt coverage for many local families

These changes highlight why your estate plan should go beyond asset distribution — it must also plan for transitions, health needs, and potential benefit gaps.

Estate Planning in the New Tax Landscape

You may have heard that the estate tax exemption has increased to $15 million per person (or $30 million for couples). While this shields most Hawaiʻi families from federal estate taxes, it doesn’t mean you can skip planning.

Why Estate Planning Is More Important Than Ever:

• Many benefits are temporary — and their expiration could impact your financial plan

• New laws reward certain groups (e.g., tip earners, parents) but ignore others

• Political change could reverse key tax breaks at any time

My approach to estate planning — called Life & Legacy Planning — ensures your plan adapts to legal changes and your evolving family needs.

What Is Life & Legacy Planning?

Unlike traditional estate planning, which often stops at documents, my process considers real-life needs and ongoing support. Here’s how:

1. Immediate Access and Instructions

• Step-by-step guidance for loved ones

• Info on where to find accounts, documents, and next steps

2. Financial Reality Planning

• Guidance for handling healthcare costs, tax benefit expirations, and caregiving responsibilities

• Ways to preserve your family’s lifestyle despite rising living costs in Hawaiʻi

3. Long-Term Adaptability

• Regular plan reviews to adjust for new laws, family changes, or asset growth

• Systems to update your asset inventory and keep everything aligned

Next Steps for Honolulu and Hawaiʻi Families

The One Big Beautiful Bill may offer a short-term boost, but it also adds complexity and uncertainty. The best way to protect your family in this new environment is with a thoughtful, customized plan.

I work with families across Hawaiʻi to build Life & Legacy Plans that go beyond documents — and actually work when your loved ones need them most.

FAQs

Q: If my estate is under $15 million, do I still need a plan?

Yes. Estate planning isn’t just about avoiding estate taxes — it’s about making sure your assets, healthcare wishes, and loved ones are taken care of with clarity and ease.

Q: Do these new tax benefits apply to Hawaiʻi residents?

Yes, they apply federally — but how much you benefit may depend on your income, family situation, and how soon you act. Proper planning can help you maximize them before they expire.

Q: What happens if I don’t update my plan before these benefits end?

You could miss out on significant tax savings and expose your family to unnecessary legal and financial risks — especially during transitions or emergencies.

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This article is brought to you by the Law Office of Keoni Souza, a boutique estate planning firm located in Honolulu, Hawaiʻi, proudly serving families on Oʻahu and across the Hawaiian Islands. At our firm, estate planning is about more than documents — it’s about creating lasting peace of mind for you and the people you love. Through our unique Life & Legacy Planning Process, we guide you to make informed, empowered decisions that protect your wealth, your wishes, and your family’s future. To get started, contact our Honolulu office today to schedule your Family Wealth Planning Session. Mention this article to learn how you can receive this $750 session at no charge.

Disclaimer: The information on this website is for informational purposes only and should not be considered legal advice. For guidance tailored to your specific situation, please consult an estate planning attorney licensed in the State of Hawaiʻi. Use of this website or communication through this site does not create an attorney-client relationship with the Law Office of Keoni Souza, LLC.