Legislative changes often have a large impact on the families and households we serve. The recently enacted “One Big Beautiful Bill” (OBBB), signed into law on July 4, 2025, introduces several important tax provisions, particularly for high-net-worth individuals. Tax management is closely related to estate planning and asset management, so understanding these changes is essential for effective financial and estate planning, especially for High-Net-Worth Investors.
While the full legislation is detailed and complex, here’s a streamlined overview of the key points that we believe matter most.
- Estate and Gift Tax Exemption Increases
The federal estate and gift tax exemption has been raised to $15 million per individual, up from just shy of $14 million in 2025. This allows individuals to transfer more wealth to heirs without triggering federal estate or gift taxes, an important consideration for families planning multi-generational wealth transfers.
- Lower Federal Marginal Income Tax Rates
The OBBBA made permanent the lower federal income tax rates introduced under the 2017 Tax Cuts and Jobs Act (TCJA). Previously, these rates were scheduled to rise after 2025, but now they will remain in effect.
For high earners, this is particularly important: the top federal tax rate was reduced from 39.6% to 37%, which can result in significant tax savings and provides more certainty for planning future income and investments.
- Standard Deduction Adjustments
The standard deduction—the portion of income not subject to federal income tax—has increased. Here’s a side-by-side look for 2025:
Filing Status | 2024 Standard Deduction | 2025 Standard Deduction (OBBB) |
Single / Married Filing Separately | $13,850 | $15,750 |
Head of Household | $20,800 | $23,625 |
Married Filing Jointly / Qualifying Surviving Spouse | $27,700 | $31,500 |
These adjustments reduce taxable income for nearly every taxpayer and are particularly meaningful for households with moderate to high incomes.
- State and Local Tax (SALT) Deduction Changes
The SALT deduction allows taxpayers who itemize their deductions to deduct certain state and local taxes—such as property taxes and state income taxes—on their federal returns. Under the new law, the SALT cap has temporarily increased to $40,000 for individuals and $20,000 for married couples filing separately, effective from January 1, 2025, through December 31, 2029. This change can provide meaningful relief to individuals in high-tax states.
- $6,000 Deduction on Social Security Benefits
Starting in 2026, the OBBBA introduces a new provision allowing up to $6,000 of Social Security benefits to be excluded from taxable income for certain taxpayers.
This deduction can provide meaningful relief for retirees or households receiving Social Security, particularly for those whose other income would otherwise make a portion of benefits taxable. It also simplifies planning for retirement income by reducing the impact of taxation on Social Security.
- Floor on Charitable Deductions for Itemizers
Starting in the 2026 tax year, itemizers must exceed 0.5% of their adjusted gross income (AGI) before claiming a deduction for charitable contributions. In other words, the first 0.5% of AGI given to charity is not deductible.
Even with this new floor, itemizing may still provide a larger deduction for charitable gifts, since taxpayers can generally deduct up to 60% of their AGI, depending on the type of donation and the organization.
- Alternative Minimum Tax (AMT) Exemption Increases
The AMT exemption amounts have risen, which reduces the likelihood that high-income taxpayers are subject to this parallel tax system. This change can simplify tax planning for those with complex financial portfolios.
- Excise Tax on Remittance Transfers
A new 1% excise tax has been introduced on certain electronic transfers of funds from the U.S. to foreign countries, effective January 1, 2026. This may impact households that frequently send international transfers.
- Key Considerations for Business Owners
The OBBBA also introduces provisions that affect business owners, particularly those with pass-through entities or high-income small businesses:
- Qualified Business Income (QBI) Deduction: The law preserves certain benefits of the 20% QBI deduction for pass-through entities, providing potential tax savings for owners of S-Corps, partnerships, and sole proprietorships.
- Business Expense Deductions: Ordinary and necessary business expenses remain fully deductible, including those for salaries, equipment, and office costs.
- Enhanced Planning Opportunities: With the adjustments to marginal income tax rates and the estate/gift exemptions, business owners may find additional strategies to optimize cash flow, succession planning, and retirement funding.
For business owners, these changes may offer opportunities to reduce taxable income, plan for the future of their business, and align personal and business tax strategies more effectively.
What This Means for You
These changes have significant implications for tax planning, estate planning, and strategic financial decisions. Whether you’re considering lifetime gifts, charitable contributions, or planning for long-term wealth transfers, understanding these provisions allows you to make informed choices and optimize tax outcomes.
As advisors, our goal is to ensure that the families and households we serve are aware of these opportunities and can act strategically. Staying informed and proactive is key to maintaining financial flexibility and achieving both short and long-term goals. If you’d like to discuss how these changes may affect your situation, please reach out—we can help you develop a plan that fits your unique circumstances.
~ Stevie and the Purpose Planning Team