The 2025 tax bill, dubbed as the One Big Beautiful Bill Act (OBBA) became law a year ago. Over the past twelve months, opinions on the law’s benefits or disadvantages have been divided principally along income lines, with affluent individuals and business owners generally profiting from the legislation’s restraint of individual marginal tax rates, liberalized rules for deducting certain business expenses, and decreased uncertainty around estate, gift, and other wealth-transfer taxes. On the other hand, those at lower income levels have expressed concerns about perceived reductions in certain public-assistance programs and the expiration of Affordable Care Act subsidies for private health insurance.
As we mentioned in a previous article, OBBBA creates potential opportunities for clients for certain tax – and estate planning considerations.
- Increased Lifetime Exemption: The federal lifetime estate and gift tax exemption was permanently increased by eliminating the sunset provision included in the 2017 Tax Cuts and Jobs Act (TCJA). For 2026, the exemption amount is $15 million per individual (or $30 million for married couples), a provision permanently indexed for inflation. The new, higher exemption may simplify estate planning for many estates.
- Permanency of Tax Rates: The OBBBA also permanently locked in the TCJA individual income brackets. The law maintains the top marginal individual income tax rate at 37%, preventing a reversion to the previous 39.6% rate. This primarily affects the top 2% of US taxpayers, or individuals earning over $640,000 and married couples with at least $768,000 in annual income.
- Increased standard deduction: Individual filers in tax year 2026 have a standard deduction of $16,100; for married couples the new deduction is $32,200.
- Higher State and Local Tax Deduction. One of the least popular provisions of TCJA was its cap on the deduction for state and local taxes (SALT deduction). OBBBA increased the cap on the SALT deduction for taxpayers with less than $500,000 in adjusted gross income (AGI) to $40,000 (up from $10,000 previously). Those above $500,000 in AGI are still bound by the $10,000 cap.
Many business owners have likewise benefitted from the law’s less-restrictive approach to deductible expenses. OBBBA restored and made permanent 100% bonus depreciation for short- lived asset investments. That helps companies lower their tax bills by enabling them to immediately deduct the full cost of many investments, rather than writing them off over several years. The law also made domestic research and development expenses immediately deductible, another boon to businesses that allows them to reduce their taxable income.
Items for Ongoing Review
Affluent individuals and families should continue to review and revise tax and estate planning strategies and structures to ensure that they continue to gain the maximum benefits available under OBBBA. In addition to leveraging the (presumably) permanently higher federal exemptions for estate and gift taxes, high-net-worth family organizations may also wish to consider utilizing grantor retained annuity trusts (GRATs) or irrevocable life insurance trusts (ILITs) to lock in these historically high exemption amounts. Remember that estate tax law can and does change (dozens of times in the last 110 years), so ongoing vigilance and communication with estate planning professionals is essential.
Business owners should take advantage of the significant tax write-offs currently available for business owners who invest in new equipment fleets, commercial vehicles, or specialized infrastructure. Also, the maximum Section 179 deduction limit is set at $2.5 million (indexed for inflation), making it much easier for profitable businesses to expense significant, immediate technology or equipment fleet purchases. High-earning business owners may also wish to leverage these depreciation and Section 179 rules to reduce actively earned income (W2 or 1099) by actively managing businesses such as equipment leasing or digital asset mining.
Those with philanthropic interests should remember the 0.5% of adjusted gross income (AGI) floor on charitable deductions. High-income earners will receive slightly reduced overall tax benefits from their charitable contributions, changing the math on direct giving. On the other hand, “bunching” donations via a donor-advised fund (DAF), when combined with the higher SALT deduction, may make itemization more advantageous in some cases.
Rothschild advisors can serve as valuable resources for those who wish to refine their tax planning, estate tax management, and other wealth strategies in light of current legislation. Our fiduciary obligation means that clients’ best interests are always considered ahead of everything else. Let us help you face the future with more confidence in your financial plan.
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