After years of speculation about whether many current tax provisions would expire in 2026, Congress passed the One Big Beautiful Bill Act (OBBBA), providing clarity on tax policy in the coming years. This represents the most comprehensive tax bill in years, with implications that affect most taxpayers.

For high net worth families, the new law creates a complex landscape of permanent changes and temporary provisions that make it worth a conversation with a tax professional to determine their personal impact. Here is a brief overview of the major changes.

The Big Picture: What Just Became Permanent

The most significant impact of the OBBBA is making permanent many provisions from the 2017 Tax Cuts and Jobs Act that were scheduled to expire at the end of 2025. This eliminates some uncertainty that has been complicating estate and tax planning for years.

Key permanent extensions include:

• Reduced tax brackets: The current seven-bracket structure (10%, 12%, 22%, 24%, 32%, 35%, 37%) remains in place indefinitely
• Increased standard deduction: Raised to $15,750 for single filers and $31,500 for those married filing jointly in 2025
• Qualified Business Income (QBI) deduction: The 20% deduction for pass-through business income continues
• Increased estate and gift tax thresholds: Today’s high estate tax exemption stays in place, rising to $15 million per person in 2026

New Estate Planning Threshold: $15 Million Per Person

Perhaps the most significant change for wealthy families is the increase in the federal estate and gift tax exemption to $15 million per person starting in 2026. This represents an increase from the 2025 level of $13.99 million and creates new opportunities for wealth transfer planning.

For married couples, this means a combined $30 million exemption—effectively removing federal estate and gift tax concerns for many families who previously needed complex planning structures. In addition to providing additional room for gift transfers during one’s lifetime, this change may allow families to simplify existing estate plans that were designed around lower exemption amounts.

Charitable Giving Modifications

The new law also makes several permanent changes to charitable deduction rules:

For itemizers: Starting in 2026, charitable deductions will be subject to a new 0.5%-of-AGI floor, meaning itemized deductions are only allowed to the extent contributions exceed 0.5% of AGI. This effectively reduces the tax benefit of charitable giving of all itemizers, with a progressive reduction based on income.

For standard deduction filers: A new charitable deduction of up to $1,000 for single filers ($2,000 for joint filers) is available even when taking the standard deduction starting in 2026. This deduction is not subject to the 0.5% floor that applies to itemizers.

These changes can create a planning opportunity to accelerate charitable giving into 2025 before the floor takes effect, and they’ll provide a new regime to navigate in 2026 and beyond.

Temporary Provisions: Strategic Opportunities with Expiration Dates

Enhanced SALT Deduction Through 2029

The state and local tax (SALT) deduction limitation has been one of the most controversial aspects of recent tax policy, particularly for those in high-tax states. The OBBBA provides temporary relief by increasing the SALT deduction limit to $40,000 starting in 2025. From 2026 to 2029, that limit will increase by a fixed 1% each year, with the cap reverting to $10,000 in 2030.

However, not all households will benefit. The expanded deduction includes a phaseout provision reducing the deduction back down to $10,000 once modified adjusted gross income (MAGI) crosses $500,000, with the deduction phased down fully to only $10,000 once MAGI exceeds $600,000 in 2025.

This creates a delicate situation for those with MAGI in the phaseout range, with marginal tax rates of over 45% possible.

Importantly, this enhancement won’t restrict the use of Pass-Through Entity Tax (PTET) elections that many states have implemented, which can provide substantial tax savings for business owners.

New Deductions for Specific Income Types (2025-2028)

The legislation introduces several targeted deductions:

• Auto loan interest deduction: Up to $10,000 annually for interest on qualifying new auto loans (excluding used vehicles), with income phaseouts starting at $100,000 for single filers and $200,000 for joint filers
• Qualifying tips and overtime wages: Deductions of up to $25,000 for tips and $12,500/$25,000 (single/joint) for overtime wages, with phaseouts starting at $150,000/$300,000 (single/joint)
• Senior citizen deduction: A $6,000 deduction ($12,000 for joint filers where both spouses are 65+) for taxpayers age 65 and older, phasing out for incomes over $75,000/$150,000 (single/joint)

It’s important to note that the “senior deduction” doesn’t make Social Security tax-free, as some early reports suggested. Social Security remains taxable for most high-income individuals. This is simply an additional deduction available to older taxpayers.

Trump Accounts: A New Savings Vehicle

For families with children born in 2025-2028, the OBBBA introduces “Trump accounts,” a new type of IRA that can be opened for children from birth until they turn 18, without requiring earned income. The government will provide an automatic $1,000 contribution for eligible children under a pilot program.

These accounts allow up to $5,000 in annual contributions (indexed to inflation starting in 2027) and are limited to investments in broad-based U.S. equity index funds with fees no higher than 0.1%. Distributions aren’t allowed until the beneficiary turns 18, at which point the account functions more like a traditional IRA. While details are still to be clarified with final regulations, this creates a new type of account available as a savings vehicle for children, which has pros and cons over other vehicles like 529 college savings plans, UTMA accounts, and custodial IRAs and Roth IRAs.

Other Permanent Changes

Alternative Minimum Tax Adjustments

The AMT exemption amounts from TCJA are permanently extended, but significant changes to the phaseout rules take effect in 2026. The AMT exemption phaseout thresholds will be reduced to $500,000 for single filers and $1,000,000 for joint filers. Additionally, the phaseout rate increases to 50% (from the current 25%), potentially creating high marginal tax rates for taxpayers in the phaseout range. These changes will moderately increase AMT exposure for certain taxpayers.

529 Plan Expansions

529 accounts will receive enhanced flexibility under the new law:

• K-12 limits: The qualified distribution limit for K-12 costs increases to $20,000 starting in 2026 (from the current $10,000)
• Expanded qualifying expenses: Beginning immediately in 2025, 529 funds can be used for curriculum materials, textbooks, tutoring (if provided outside the home by qualifying unrelated tutors), standardized test fees, dual enrollment programs, and educational therapy for students with disabilities

Business and Investment Opportunities

Qualified Small Business Stock (QSBS): The OBBBA increases the maximum capital gain exclusion from $10 million to $15 million for QSBS acquired after July 4, 2025. It also introduces partial exclusions for holding periods of less than 5 years.

Opportunity Zones: While capital gains deferred under the original program will still be taxable as of December 31, 2026, the program is receiving a permanent extension with rolling five-year deferral cycles starting in 2027. New opportunity zones will be designated every 10 years beginning in 2026, with slightly more restrictive qualification criteria.

What This Means for Planning

Immediate Considerations

Estate planning review: With the new $15 million exemption starting in 2026, existing estate plans may need adjustment. Some complex structures designed around lower exemptions might be simplified, while others may benefit from increased gifting.

Charitable strategy reassessment: The changes to charitable deductions require a reevaluation of current giving strategies, particularly for families making substantial annual donations.

Business structure evaluation: The permanent QBI deduction, combined with SALT deduction enhancements, may create opportunities to optimize business structures and state tax planning.

Review tax withholding: Review 2025 withholding and estimated tax payment amounts, given SALT and other immediate changes.

Temporary Opportunity Windows

SALT planning until 2030: Families in high-tax states should maximize the benefits of enhanced SALT deductions during the temporary period while planning for potential changes in 2030.

New deduction optimization: The temporary deductions for auto loans, tips, overtime, and senior citizens create planning opportunities for families who can structure income or expenses to maximize these benefits.

This report is general in nature, has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. All tax information presented is for illustrative purposes only and is based on current federal tax law, assumed average tax rates and may include current state and local taxes. However, federal, state, and local tax laws are complex. In addition, state and local tax laws differ substantially from state-to-state. Tax treatment is subject to change by law, in the future or retroactively. You should therefore consult with your tax, legal and accounting advisors before relying upon the information contained in this report to make investment, tax, financial planning and/or estate planning decisions.