One Big Beautiful Tax Bill (OBBB Act): Key Changes, Planning Implications, and What High-Net-Worth Families Should Do Now
The One Big Beautiful Tax Bill (OBBB Act), signed into law on July 4, 2025, makes large portions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent, introduces new individual and business tax benefits (some retroactive to 2025 and many effective in 2026), significantly expands business expensing, and materially increases long-term federal deficits—creating meaningful planning, timing, and regulatory considerations for high-net-worth individuals, family offices, and operating businesses.
OBBB Act: Top Headline Changes
TCJA Provisions Made Permanent
The seven ordinary income tax brackets and several core TCJA features were permanently extended instead of expiring at the end of 2025. This reduces near-term tax uncertainty for income, estate, and business planning.
Standard Deduction Increases
The standard deduction was increased and indexed for inflation. For example, married filing jointly is approximately $31,500 for 2025, with continued upward adjustments into 2026.
Charitable Deduction for Non-Itemizers (Effective 2026)
A new above-the-line charitable deduction returns for taxpayers who do not itemize:
~$1,000 (single)
~$2,000 (joint)
This introduces a timing consideration for donors deciding whether to give in late 2025 or defer gifts into 2026.
100% Bonus Depreciation & Retroactive Expensing
Bonus depreciation was reinstated, with certain provisions applying retroactively to January 2025. This creates immediate corporate tax relief, with substantial deductions expected to be claimed in 2025.
Expanded Business Tax Provisions
The Act includes:
Enhanced pass-through deductions for small businesses
Adjustments to R&D expensing and depreciation
Modifications to business interest limitations
Tweaks to foreign-profit regimes
Expanded and partially permanent Qualified Opportunity Zone features
New and Modified Individual Credits
Changes include:
Increases to certain credits (including reported child tax credit increases)
Special treatment for tips and overtime income (temporary or phased provisions)
Targeted working-family offsets
Many of these provisions phase in over time or expire.
SALT Cap Relief and State Interactions
Temporary increases and income-based phaseouts provide partial SALT relief. State responses will vary, making state-level tax planning increasingly important.
Timing Matters
Some provisions apply to tax year 2025 (including retroactive changes), while many major individual provisions take effect January 1, 2026—making transaction timing critical.
High-Level Planning Implications
For High-Net-Worth Individuals and Families
Timing is critical.
With some benefits starting in 2026 and others retroactive to 2025, taxpayers with liquidity events, large charitable plans, or variable income should carefully model transaction timing.
Reduced marginal-rate uncertainty.
Making TCJA rates permanent improves predictability for long-term planning, though political risk remains.
Estate and wealth transfer planning.
Changes may affect estate tax projections and the cost-benefit analysis of gifting versus retaining assets. Trust structures such as ILITs, GRATs, and dynasty trusts should be reviewed under updated assumptions.
For Businesses and Operating Companies
Immediate cash-tax relief.
Bonus depreciation and expensing provisions boost near-term cash flow, particularly for capital-intensive businesses. IRS guidance and audits are expected to follow.
Pass-through advantages.
Enhanced deductions favor many closely held and family-owned businesses, requiring updated entity-level modeling.
Fiscal and Market Considerations
Higher deficits and political risk.
Independent estimates project a substantial long-term fiscal cost, increasing the likelihood of future policy offsets or revisions.
Sector-level impacts.
Capital-intensive industries (manufacturing, energy) may benefit disproportionately, while changes to clean-energy incentives could alter capital flows.
Practical Planning Moves to Consider Now
(General planning observations—not personalized tax advice.)
Immediate scenario modeling: Compare 2025 vs. 2026 outcomes for business sales, equity compensation exercises, carried interest, and major gifts.
Charitable timing analysis: Model deferring gifts into 2026 to utilize the new non-itemizer deduction, balanced against estate and state-tax considerations.
Capital expenditure planning: Evaluate accelerating or deferring capex based on bonus depreciation impact.
Entity structuring review: Reassess pass-through vs. C-corporation economics under the new rules.
Withholding and estimates: Adjust for permanent brackets and evolving credit structures.
Monitor IRS guidance: Regulations and transitional rules will materially affect implementation.
Risks and Open Questions
Regulatory clarity: Key provisions require IRS and Treasury guidance.
Political revisions: Deficit pressure may drive future legislative changes.
State-level responses: SALT and state tax policy remain fluid.
Quick Takeaway for Investment Committees and Family Offices
The OBBB Act locks in lower federal individual rates and delivers substantial business expensing benefits—supporting long-term planning but increasing fiscal and political tail risk. Immediate action should focus on 2025 vs. 2026 scenario analysis, entity modeling, and transaction timing.