The One Big Beautiful Bill permanently raises estate and gift exemptions to $15 million per individual (indexed), locks in today’s top 37% income tax rate, expands SALT deductions, maintains favorable AMT thresholds , and enhances deferral and exclusion opportunities for opportunity zones and qualified small-business stock—all while introducing phased-in limits on itemized deductions and charitable giving floors, reshaping year-end planning, wealth-transfer strategies, and family-office tax optimization.
Contents
- Key Individual Tax Changes
- Private Foundations and Tax-Exempt Structures
- 2025 Planning Strategies
- Looking Ahead
The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, locks in and expands a range of tax provisions that matter most to high-net-worth individuals and family offices. From permanent increases in lifetime gift and estate exemptions to enhanced opportunities for deferring gains and sheltering income, these changes reshape year-end planning and long-term wealth strategies.
Why It Matters for High-Net-Worth Families—Many of the provisions originally set to expire at the end of 2025 are now permanent, reducing urgency around pre-2026 transactions. Yet new limitations on certain deductions and phased-in rules for benefits like charitable giving mean families must rethink timing and structure for gifts, business investments, and philanthropic commitments.
Key Individual Tax Changes
Expanded Estate, Gift, and Generation-Skipping Exemptions—Effective January 1, 2026, each individual’s unified exemption jumps to $15 million (or $30 million for married couples), indexed for inflation with no sunset. Families no longer face a looming drop back to lower levels, easing pressure to accelerate large transfers.
Income Tax Rates—All current brackets and the 37% top rate are now permanent, with continued annual inflation adjustments. The scheduled rise to 39.6% after 2025 was repealed, keeping high earners at today’s thresholds.
Alternative Minimum Tax (AMT) —Higher AMT exemptions under the 2017 Act remain in place for 2026 and beyond, but phase-out thresholds revert closer to their 2018 levels and phase out faster (50% instead of 25% of excess income). Families with AMT-sensitive items should evaluate acceleration into 2025 when overall exemptions and thresholds remain most favorable.
State and Local Tax (SALT) Deduction—The annual $10,000 cap on state and local tax deductions is temporarily lifted to $40,000 through 2029, phasing down for the highest earners. Importantly, pass-through entity tax (PTET) elections remain fully deductible at the federal level, allowing continued workarounds in SALT-capped states.
Qualified Opportunity and Small-Business Investments
- Opportunity Funds: Capital gains realized in 2025 can be deferred only through 2026, with new deferral rules kicking in for 2027 and beyond.
- Qualified Small Business Stock: The five-year holding requirement gives way to a tiered exclusion—50% after three years, 75% after four, and 100% after five. Lifetime gain exclusions rise from $10 million to $15 million per issuer, and the qualifying asset ceiling expands from $50 million to $75 million.
Itemized Deductions and Charitable Giving
- Pease-Style Limitation: Beginning in 2026, itemized deductions (including SALT and charitable gifts) will be trimmed by 2/37ths of the amount by which taxable income exceeds the top-bracket threshold, effectively reducing their value from 37% to 35% for top earners.
- Charitable Floor: A new 0.5% floor applies to all individual charitable deductions, though contributions to donor-advised funds still benefit from the permanent 60% of AGI limit for cash gifts. Those planning large donations should consider bunching into 2025 to maximize the current favorable rules.
- Scholarship-Granting Credit: Starting in 2027, individuals can claim a nonrefundable credit (up to $1,700) for cash donations to qualifying scholarship organizations, offering a dollar-for-dollar offset rather than a deduction.
Permanent TCJA Provisions—Key Tax Cuts and Jobs Act benefits are made permanent, including:
- The $750,000 mortgage interest cap
- The above-the-line charitable deduction for non-itemizers ($1,000/$2,000) beginning 2026
- Favorable AMT exemptions
- Retention of 20% pass-through business deduction (Section 199A) with a wider income phase-in range and a new minimum $400 deduction for smaller active businesses
Private Foundations and Tax-Exempt Structures
Large educational endowments shift to a tiered excise tax after 2025, exempting institutions with fewer than 3,000 students and imposing rates from 1.4% up to 8% on net investment income. Private foundation excise taxes remain at 1.39%, as earlier House proposals for change were dropped. Family offices operating through charitable entities should revisit structure to optimize tax efficiency under the new regime.
2025 Planning Opportunities
- Gift and Estate Moves: With the permanent $15 million exemption in place for 2026, families have breathing room—but should still complete major gifts by December 31, 2025, if they wish to lock in current higher exclusion without concern for indexing nuances.
- Charity Bunching: Accelerate donations into donor-advised funds or public charities before year-end to capture full 60% AGI deductions and avoid the new floors and Pease-style limitations in 2026.
- AMT-Sensitive Transactions: Consider realizing gains or accelerating AMT preference items into 2025, when higher thresholds and slower phase-outs still apply.
- Opportunity Zone Investments: Deploy 2025 gains into qualified funds by December 31 to defer recognition until 2026 and access basis step-ups under the enhanced rules set for 2027 onward.
- Qualified Small Business Stock: Review upcoming liquidity events—selling QSBS in 2025 before the new tiered exclusions begin can still leverage the old five-year rule if already held long enough, while new acquisitive opportunities should factor in the three- and four-year tiers.
Looking Ahead
By aligning complex provisions with timing, high-net-worth individuals and family offices can optimize deductions, preserve exemptions, and seize upgraded deferral and exclusion opportunities. Careful coordination with advisors now will ensure families maximize the benefits before newer limits reshape the landscape in 2026 and beyond.
Meagan Pritchard is a Director with ARB who specializes in providing comprehensive tax consulting, planning and compliance, and advisory services to businesses, private clients and family offices, individuals, trusts, and foundations. She collaborates with family offices, attorneys, wealth advisors, and insurance specialists to facilitate solutions to complex family tax issues and provides sophisticated tax planning services.
