President Trump’s “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025, marks the most sweeping tax reform since the 2017 Tax Cuts and Jobs Act (TCJA). While broad in scope, many provisions are particularly relevant to high-income and high-net-worth individuals. Here are 10 impactful changes to know about:
1. Tax Rates and Brackets Made Permanent
The bill makes permanent the individual tax brackets from the 2017 tax law, including the top federal income tax rate of 37%. Inflation adjustments will continue to use the chained CPI formula. This certainty allows for more effective multi-year tax planning, particularly around Roth conversions, trust distributions, and timing of capital gains, charitable giving, or bonuses.
2. Estate & Gift Tax Exemption Increased to $15 Million in 2026
The federal estate and gift tax exemption rises to $15 million starting in 2026, with future inflation adjustments. This opens additional room for high-net-worth families to transfer assets tax-efficiently using strategies such as SLATs, GRATs, IDGTs, and lifetime gifting strategies.
3. SALT Deduction Cap Temporarily Raised—with Income Limits
The State and Local Tax (SALT) deduction cap increases from $10,000 to $40,000 through 2029—but phases out entirely for taxpayers with AGI above $500,000, whether filing single or joint. This provision may offer partial relief for high-income earners in high-tax states who are able to manage AGI strategically.
4. Charitable Giving Deduction Changes
Starting in 2026, itemized charitable deductions are only available for contributions that exceed 0.5% of AGI. Additionally, standard deduction filers can now claim a limited above-the-line deduction: $1,000 (single) or $2,000 (joint). This framework continues to reward meaningful, intentional giving—particularly when coordinated through strategies like donor-advised funds, appreciated asset donations, and bunching.
5. Expanded Senior Standard Deduction (Age 65+)
Taxpayers aged 65 or older are now eligible for an additional $6,000 standard deduction, with phase-outs beginning at $75,000 AGI (single) and $150,000 (joint). This provision applies through 2028. While many high-income retirees may exceed the limits, those relying on municipal bonds, Roth IRAs, or other tax-advantaged income sources could benefit from the expanded deduction.
6. Child “Trump Account” Introduced
Each child born from 2025 through 2028 will receive a $1,000 government-seeded investment account. Parents and grandparents can contribute up to $5,000 annually, with tax-deferred growth. These accounts may support long-term goals like education, housing, or early retirement and can play a useful role in family wealth transfer and education planning.
7. 529 Plan Enhancements
The law expands the flexibility of 529 education savings plans by allowing up to $20,000 per year to be used for K–12 tuition expenses. Previously, the limit was $10,000 per year. Additionally, funds can now cover broader apprenticeship and credentialing program expenses. The provision allowing conversion of unused 529 funds into Roth IRAs (up to $35,000 lifetime per beneficiary) was introduced prior to OBBBA and remains unchanged. These updates improve the long-term utility of 529s and increase opportunities for multigenerational education and skills training planning.
8. Qualified Business Income (QBI) Deduction Made Permanent
The valuable 20% deduction on qualified business income for owners of pass-through entities—such as partnerships, S-corporations, and sole proprietorships—has been made permanent under the OBBBA. However, this deduction phases out for certain specified service trades or businesses (SSTBs), like law, accounting, consulting, and financial services, especially at higher income levels. For other businesses, the deduction may also phase out as income rises, limiting the benefit for very high earners. For high-net-worth individuals earning income through family partnerships, real estate ventures, or other pass-through entities, this permanence offers stability and confidence in long-term tax planning, while reminding taxpayers to consider the potential impact of phase-out rules.
9. Itemized Deductions Capped at 35% for Top Earners
A new cap limits the benefit of itemized deductions—including charitable contributions, mortgage interest, and state taxes—to 35% of AGI for the highest-income taxpayers. This provision reduces the after-tax value of deductions for ultra-high earners and reinforces the need to evaluate the timing, structure, and overall tax efficiency of deductions within broader wealth plans.
10. Increased Standard Deduction
Starting in tax year 2025, the standard deduction rises to $15,750 for single filers and $31,500 for married couples filing jointly, with annual inflation adjustments thereafter. Taxpayers who are age 65 or older remain eligible for additional standard deductions ($2,000 for single, $1,600 per qualifying spouse for married couples filing jointly), as applicable. The new $6,000 tax deduction (see #5 above) may also apply, subject to income limits. This increase elevates the baseline deduction which may influence high-net-worth taxpayers’ decisions on whether to itemize in years with lower deductible expenses or charitable giving.
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