Introduction

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), marking the most comprehensive overhaul of U.S. tax policy since the 2017 Tax Cuts and Jobs Act (TCJA). This landmark legislation brings significant changes with direct implications for single-family offices, high-net-worth investors, and closely held businesses. Among other provisions, the enacted OBBBA alters key rules surrounding estate and gift tax exemptions, bonus depreciation, Qualified Opportunity Zones (QOZs), Qualified Small Business Stock (QSBS), state and local tax (SALT) deductions, and international tax regimes.

This article provides an in-depth look at these critical changes, highlighting their practical implications for single-family offices, closely held businesses, and private investors. Understanding the nuances of these new provisions will be crucial in navigating this updated landscape, structuring effective investment vehicles, and implementing sound tax and wealth planning strategies moving forward.

Income Tax Planning and Investment Structuring: Key Changes and Implications

Individual Income Tax Rates Permanently Extended

The OBBBA permanently extends the individual income tax rates originally established by the TCJA, including the top marginal rate of 37%. Under prior law, these tax rates were scheduled to revert to pre-2018 levels after 2025. Additionally, the OBBBA leaves unchanged the federal corporate tax rate, which remains permanently fixed at 21% as established under the TCJA.

The permanent extension of individual rates, combined with the continued stability of the federal corporate tax rate, reduces uncertainty surrounding the rates established under the TCJA. This clarity will enable single-family offices and high-net-worth individual investors to pursue more predictable and effective long-term tax, investment, and estate planning strategies.

Expanded State and Local Tax Deduction

Under the TCJA, the SALT deduction is capped at $10,000 per year for all filers. The OBBBA increases the SALT deduction cap temporarily from the current $10,000 to $40,000 for married joint filers ($20,000 for married taxpayers filing separately). This enhanced deduction is effective from 2025 through 2029, after which it reverts to the original $10,000 cap starting in 2030.

Importantly, the OBBBA places no new restrictions on the widely used state pass-through entity tax (PTET) workaround. Under this strategy, a partnership or S corporation elects to pay state income taxes at the entity level, allowing individual partners or shareholders to claim corresponding credits. Earlier drafts of the legislation had proposed disallowing the PTET workaround specifically for owners of specified service trades or businesses (SSTBs), which would have significantly reduced its effectiveness for many family office investment partnerships. The final enacted law removed these proposed limitations, fully preserving the PTET strategy for all types of pass-through businesses.

The retention of the PTET workaround, combined with the increased SALT cap through 2029, provides welcome flexibility for family investors and single-family offices located in high-tax states. Family offices should proactively evaluate the timing of state tax payments and entity-level PTET elections to maximize deductibility under this temporarily expanded cap. With the cap scheduled to revert to $10,000 after 2029, absent further legislative action, the window to leverage these enhanced deductions may be limited.

Enhanced Pass-Through Deduction (Code Section 199A)

The final version of the OBBBA makes permanent the existing 20% pass-through deduction under Section 199A, but introduces several enhancements beneficial to closely held businesses and single-family offices. Specifically, the bill expands the wage and property-based phase-in thresholds significantly, now starting at $75,000 for single filers and $150,000 for joint filers, allowing broader utilization of this deduction.

Additionally, the OBBBA introduces a new “floor” deduction of $400 for materially participating business owners, thereby providing a minimum level of deduction even when typical thresholds are not fully met. These changes present meaningful opportunities for family offices and private investors who utilize qualifying pass-through entity structures, potentially enhancing after-tax cash flows and influencing entity and structuring decisions.

Expanded Qualified Small Business Stock Gain Exclusion

The OBBBA substantially enhances the tax benefits associated with investments in Qualified Small Business Stock under Internal Revenue Code Section 1202. Historically, investors have been able to fully exclude capital gains from QSBS held at least five years. The new law retains 100% exclusion for five-year holdings, while introducing valuable flexibility through partial exclusions for shorter holding periods: investors can now exclude 50% of gains from QSBS held for at least three years and 75% from QSBS held for at least four years.

Additionally, the OBBBA significantly increases financial thresholds tied to QSBS eligibility. For stock issued on or after July 4, 2025, the per-issuer gain exclusion cap is increased from $10 million to the greater of $15 million (indexed for inflation beginning in 2026) or ten (10) times the taxpayer’s aggregate adjusted basis in the stock. Furthermore, the gross asset limit that defines a “small business” for QSBS qualification purposes rises from $50 million to $75 million, assessed immediately following the stock issuance.

These enhancements significantly broaden the appeal of QSBS investments by accommodating larger investments and offering investors greater liquidity options without sacrificing substantial tax advantages. Single-family offices, venture investors, and closely held investment entities should revisit their venture capital and private equity strategies to capitalize on these changes, which apply to QSBS issued on or after the law’s enactment in 2025. Given the revised holding periods and indexed thresholds, careful documentation and timing strategies will be critical to fully realize these enhanced tax benefits.

QSBS also presents powerful estate planning opportunities. Because the $15 million exclusion cap is applied on a per-taxpayer, per-issuer basis, transfers “by gift” or “at death” to non-grantor trusts or individual beneficiaries can replicate the exclusion across multiple taxpayers, a strategy often referred to as “stacking.” Combined with the expanded lifetime gift and estate tax exemption described below, which was also increased to $15 million plus inflation adjustments per individual under OBBBA, it is now more feasible to fund trust structures with QSBS without incurring gift tax. Furthermore, lifetime transfers to non-grantor trusts may unlock additional $15 million caps. Proper structuring, valuation, and recordkeeping are essential, and ongoing qualification of the issuing corporation must be monitored throughout the holding period.

Enhanced and Expanded Opportunity Zones (OZs)

The OBBBA significantly enhances and expands the QOZ program, originally established under the TCJA. The legislation permanently institutes the OZ initiative, introducing recurring 10-year designations of new zones beginning July 1, 2026, and providing certainty to long-term investors.

Investors who desire to defer and/or exclude capital gains by investing into these OZs now receive more attractive tax benefits: investments held at least five years qualify for a 10% basis step-up, increasing to 30% for investments in “Qualified Rural Opportunity Funds” (such Funds must invest at least 90% of their assets in rural OZ properties or businesses). For properties located in entirely rural zones, the substantial improvement requirement would also be relaxed, decreasing from 100% to just 50% of the property’s original basis. Furthermore, the law allows investors to elect the 10-year gain exclusion any time up to 30 years after the zone’s designation date, providing a much longer horizon for tax-free exits.

The OBBBA also imposes detailed annual reporting on Qualified Opportunity Funds, with penalties of up to $10,000 per missed item for non-compliance. This underscores the need for rigorous record-keeping and timely filings.

Importantly, the OBBBA does not extend the existing QOZ program for existing gains that have been invested, beyond the program’s scheduled expiration date of December 31, 2026. Consequently, gains previously deferred under the initial round of OZs must be recognized by the end of 2026 unless further legislative amendments occur. The impending recognition of previously deferred OZ gains in 2026 presents family offices with a timely opportunity to explore targeted mitigation strategies, including strategic loss harvesting, charitable remainder trusts, leveraging bonus depreciation, or thoughtful use of pass-through entity taxes. Family offices should plan for this scheduled recognition event, evaluating strategies to manage the impending tax liabilities associated with prior OZ investments, while considering the enhanced benefits and limitations of the newly proposed OZ designations.

Limitation on Excess Business Losses Made Permanent (Code Section 461(l))

The OBBBA permanently extends the limitation on excess business losses (EBLs) for noncorporate taxpayers under Code Section 461(l). Originally introduced by the TCJA as a temporary measure, this limitation disallows business losses exceeding annually adjusted thresholds—currently approximately $313,000 for single filers and $626,000 for joint filers (indexed annually for inflation).

Critically, the final legislation maintains the existing treatment where disallowed EBLs convert to net operating losses (NOLs) that carry forward indefinitely, subject to the standard limitation of offsetting no more than 80% of taxable income in future years. Importantly, earlier proposals to implement annual retesting—potentially restricting the usability of these losses—were excluded from the enacted legislation. The EBL limit in most cases remains a one-year deferral rather than a permanent disallowance.

Consequently, investors in sports teams, “trader funds” that produce tax losses while seeking pre-tax investment returns, and other businesses that generate losses will appreciate the continuity and clarity provided by this provision. Strategic management of taxable income and deductions will remain important to maximize the utilization of NOL carryforwards in subsequent tax years.

Restored 100% Bonus Depreciation

The OBBBA permanently restores the 100% bonus depreciation provision initially established under the TCJA. Effective for qualified property acquired and placed into service after January 19, 2025, businesses can immediately expense the full cost of eligible assets in the year they are placed in service. Unlike previous iterations of bonus depreciation, which were temporary and phased down over time, this permanent provision removes uncertainty and facilitates long-term capital planning.

This provision is particularly valuable for family offices, many of which continue to favor real estate—and increasingly, infrastructure—as key asset classes due to their stable returns, diversification benefits, and inflation-hedging characteristics. By immediately deducting the full cost of eligible improvements, family offices can improve cash flow and boost the after-tax returns of qualifying real estate and infrastructure projects. In addition, this provision could have a positive impact on family offices that purchase airplanes for business use (whether fractional interests or whole aircraft).

Enhanced Interest Expense Deductions

The OBBBA permanently reinstates the EBITDA-based limitation for interest expense deductions, allowing businesses increased upfront deductibility of interest expense relative to current law, which uses EBIT as the basis for the limitation.

This provision particularly benefits family office investment structures that rely heavily on leverage, including real estate and other leveraged investment activities. Additionally, family offices frequently manage investors sensitive to unrelated business taxable income (UBTI), such as private foundations, individual retirement accounts (IRAs), charitable remainder trusts (CRTs), and donor-advised funds (DAFs). The reinstated EBITDA-based limitation may enhance the tax efficiency of leveraged blocker corporations utilized by these investors to access private equity, private credit, and other alternative investments while mitigating (or “blocking”) UBTI.

Immediate R&D Expense Deduction

Effective for tax years beginning after December 31, 2024, domestic research and development (R&D) expenditures are immediately deductible under the OBBBA. Under prior law, such expenditures were required to be capitalized and amortized over five years. Additionally, the law also includes a retroactive option permitting small businesses with average gross receipts under $31 million to elect immediate expensing for R&D expenditures made between 2022 and 2024, potentially unlocking substantial refunds or deductions for these prior years.

This provision provides family offices overseeing investments in innovation-oriented companies with significant upfront tax benefits, potentially enhancing after-tax returns, and encouraging increased allocations to growth and technology-focused investments.

International Tax Provisions

GILTI, FDII, and BEAT Changes

Under the TCJA, several international tax provisions were introduced to prevent erosion of the U.S. tax base and to encourage domestic economic activity. Specifically, Global Intangible Low-Taxed Income (GILTI) imposes a minimum U.S. tax on certain foreign earnings to discourage profit shifting to low-tax jurisdictions. Foreign-Derived Intangible Income (FDII) provides a lower U.S. tax rate on income derived from exports and services to non-U.S. markets, incentivizing businesses to maintain key assets and activities domestically. Additionally, the Base Erosion and Anti-Abuse Tax (BEAT) targets multinational companies making substantial deductible payments to related foreign parties, imposing a minimum tax to curb excessive profit shifting. The OBBBA maintains these frameworks but introduces notable adjustments in rates, credits, and qualifying income calculations, significantly affecting family offices with international operations or investments.

The law maintains the overall framework of GILTI and FDII, but adjusts their effective tax rates upward. Starting in 2026, the deduction for GILTI income is reduced to 40% (previously 50%), resulting in an effective tax rate of approximately 14% on such income. Similarly, FDII deductions decreased to 33.34% (previously 37.5%), aligning its effective rate with GILTI at around 14%. Significantly, the new law removes the Qualified Business Asset Investment (QBAI) exemption, effectively broadening the base of income subject to GILTI. Despite these changes, the foreign tax credit (FTC) limitation rules have become more taxpayer-friendly, with reduced restrictions on credit utilization, potentially offsetting increased taxes for many affected businesses.

The BEAT minimum tax rate increases modestly from 10% to 10.5%, effective 2026 onward. Importantly, the law preserves the ability for taxpayers to offset BEAT liability with credits, such as the R&D credit and certain renewable energy credits, maintaining significant opportunities to mitigate tax exposure.

Single-family offices with international operations or investments should carefully evaluate and potentially restructure global holdings and financing arrangements to optimize outcomes under these revised international tax rules. Strategic planning, including revisiting foreign tax credit positions and corporate structures, will be critical in navigating the enhanced complexity while capitalizing on available credits and deductions.

New Excise Tax on Remittance Transfers

The OBBBA introduces a new 1% excise tax on certain remittance transfers—cross-border transfers of funds typically conducted by individuals through financial service providers. While primarily targeting larger institutional remittance providers, this tax may indirectly impact family offices and high-net-worth individuals with regular or substantial international financial transfers, potentially increasing the cost of moving funds abroad.

Single-family offices managing cross-border financial transactions or remittances should closely assess the impact of this new excise tax. Evaluating alternative transfer structures or financial channels and carefully planning international cash flows will be important to minimize potential cost increases resulting from this measure.

Other Notable Changes and Their Strategic Implications

Permanent Elimination of Miscellaneous Itemized Deductions (Code Section 212)

The OBBBA makes permanent the TCJA’s suspension of miscellaneous itemized deductions, including Code Section 212 expenses, which include expenses incurred by an individual or trust for the production or collection of income or the management, conservation, or maintenance of property held for the production of income. This permanent disallowance extends the current Code Section 67(g) suspension, which was otherwise scheduled to sunset after 2025. While this change solidifies existing limitations, its practical impact is muted because, even without this extension, the prior-law Code Section 67(a) threshold—limiting deductions to those exceeding 2% of adjusted gross income—already significantly restricted the utility of these deductions for many taxpayers.

Estate and Gift Tax Exemption Permanently Increased

The expanded estate and gift exemption introduced by the TCJA was scheduled to sunset to approximately $7 million per individual in 2026. Under OBBBA, the estate and gift tax exemption will permanently rise to $15 million per individual (twice the sunset exemption), indexed for inflation, beginning January 1, 2026. For married couples, the OBBBA increases the combined exemption to $30 million, enhancing opportunities for tax-efficient wealth transfers and multi-generational planning.

The permanency of this increased exemption removes the uncertainty that has plagued estate planning since the enactment of the TCJA’s temporary provisions. Family offices can now implement larger-scale and longer-duration wealth transfer strategies with less concern regarding future near-term reductions in the exemption. This enhanced certainty may allow family offices to utilize sophisticated planning techniques — such as grantor retained annuity trusts, charitable lead annuity trusts, and other advanced wealth transfer structures — more effectively and flexibly, leveraging greater initial funding capacity to move future appreciation outside the taxable estate.

Changes to Charitable Contribution Deductions

The OBBBA introduces nuanced changes to charitable contribution deductions affecting high-income taxpayers and closely held businesses. Beginning in 2026, individuals who itemize deductions face a new annual floor, where charitable deductions are only permitted to the extent that they exceed 0.5% of adjusted gross income (AGI). This modest threshold slightly curtails the immediate tax benefit of smaller-scale donations for high-net-worth taxpayers, while still fully supporting substantial charitable giving.

Conversely, the law permanently maintains the enhanced 60% of AGI limit on cash contributions to public charities, preserving a generous incentive for large charitable donations. Additionally, it introduces a limited, permanent above-the-line deduction of up to $1,000 (single filers) or $2,000 (joint filers) for non-itemizers, encouraging charitable giving broadly across all taxpayer groups.

For closely held businesses structured as C-corporations, a new 1% taxable income floor applies, meaning charitable deductions are only allowed to the extent they exceed this threshold. This adjustment may encourage businesses to concentrate philanthropic activity strategically in certain tax years to maximize deductible amounts.

Single-family offices should revisit their philanthropic strategies, potentially consolidating smaller annual gifts into fewer, larger contributions to exceed these new thresholds and maintain tax efficiency.

Expansion of Code Section 529 Plans and Introduction of Trump Accounts

The OBBBA expands the flexibility and utility of Code Section 529 educational savings accounts by broadening the scope of qualified expenses. Eligible distributions now explicitly include tutoring, curriculum and instructional materials, and credentialing costs associated with recognized postsecondary credential programs, which may encompass certain apprenticeship certificates.

Additionally, the Act establishes new savings vehicles formally titled “Trump Accounts.” Each eligible child born after December 31, 2024, receives an initial federal contribution of $1,000. Families may contribute up to an additional $5,000 annually per beneficiary until age 18, with these accounts offering tax-deferred growth similar to traditional IRAs. Together, these enhancements provide family offices with expanded strategies for educational funding and multi-generational wealth planning, particularly valuable given the higher lifetime gift tax exemptions provided elsewhere in the legislation.

Repeal of Energy Tax Credit Transferability and Foreign Entity Restrictions

The OBBBA introduces significant changes to existing clean-energy incentives, including accelerated phase-outs and new eligibility restrictions. Certain consumer-focused credits, such as those for electric vehicles and residential energy improvements, will expire earlier than previously scheduled, with many repealed by the end of 2025 or 2026.

For larger-scale investments, the law retains clean-electricity production and investment credits (Sections 45Y and 48E), but these benefits are repealed for solar and wind facilities that (i) begin construction 12 months after enactment and are (ii) placed in service after December 31, 2027. Additionally, new “Prohibited Foreign Entity” restrictions are imposed, which include disqualifying projects involving “effective control” or material assistance from certain prohibited foreign entities, which is intended to significantly limit the procurement of equipment from China.

Further, while the law generally retains credit transferability provisions for certain clean-energy production credits, the new “Prohibited Foreign Entity” imposes certain restrictions on such transferability. Family offices and investors relying on transferability to monetize tax credits will need to reassess their renewable-energy strategies, focusing on carefully structuring project ownership and financing arrangements to ensure continued eligibility under these revised rules.

Proposed Amendment to Code Section 707(a)(2) and Disguised Sales

The OBBBA clarifies that partnership disguised-sale rules under Code Section 707(a)(2)—covering disguised sales of partnership interests and fees for services—are self-executing even absent final regulations.

Previously, Code Section 707(a)(2) applied only “under regulations prescribed by the Secretary,” prompting uncertainty regarding IRS enforceability in the absence of finalized regulatory guidance, particularly for disguised partnership interest sales and disguised fees for services. The OBBBA explicitly replaces that regulatory delegation language with “except as provided by the Secretary,” clearly establishing statutory authority and shifting interpretive authority toward the IRS and Treasury.

While many practitioners already regarded these rules as enforceable regardless of regulatory status, this statutory clarification formalizes IRS enforcement authority.

Modified Alternative Minimum Tax for High-Income Individuals

The OBBBA adjusts the Alternative Minimum Tax (AMT) framework for individuals, extending increased exemption thresholds and modifying phaseout mechanics. Notably, the AMT exemption amounts, significantly raised by the TCJA, are now permanently extended, offering continued relief for many taxpayers.

However, the law introduces an important change by increasing the phaseout rate at higher income levels from 25% to 50%. As a result, high-net-worth individuals with substantial income subject to AMT may experience accelerated reductions in their exemption, effectively increasing their AMT liabilities.

Single-family offices and high-income taxpayers should proactively revisit their AMT exposure under these adjusted rules. Careful tax planning, including strategic timing of income recognition and deductions, may help mitigate potential AMT impacts in light of the revised phaseout structure.

Important Exclusions and International Tax Developments

Notably, the OBBBA leaves unchanged several key tax-efficient planning tools utilized by single-family offices and sophisticated investors. The legislation does not alter the tax treatment of carried interest, Private Placement Life Insurance (PPLI), or Private Placement Variable Annuities (PPVA). Additionally, earlier proposals targeting the taxation of private foundations, litigation finance investments, and amortization deductions for owners of professional sports franchises were ultimately omitted. These strategies remain highly effective and continue to be attractive tools for family offices and high-net-worth individuals when properly structured and managed.

A significant proposal omitted from the final OBBBA legislation was Code Section 899, a controversial surtax provision targeting jurisdictions with so-called “unfair taxes,” such as digital services taxes and OECD Pillar 2 undertaxed profit rules. Initially proposed in the House bill, Code Section 899 would have imposed punitive withholding taxes—as high as 50 percent—on payments to entities from targeted jurisdictions. Its removal was reportedly driven by diplomatic progress, notably a pivotal June 28, 2025, G7 agreement where Canada, France, Germany, Italy, Japan, and the United Kingdom committed not to impose Pillar 2 top-up taxes on U.S.-parented multinational groups.

For global single-family offices and investors with international holdings, the elimination of Section 899 alleviates a potentially severe compliance burden and tax exposure. While this resolution provides immediate clarity, the broader international tax landscape remains dynamic, with Pillar 2 domestic minimum taxes set to take effect globally in 2025-2026. Family offices should closely monitor these developments and proactively structure their international investments to adapt to evolving global tax norms.

Conclusion

The One Big Beautiful Bill Act represents the most significant overhaul of U.S. tax policy affecting high-net-worth individuals, closely held businesses, and family offices since the Tax Cuts and Jobs Act of 2017. With its enactment, the legislation delivers substantial tax planning opportunities, such as enhanced pass-through deductions, permanent bonus depreciation, expanded estate tax exemptions, and significantly improved incentives for investment in Qualified Small Business Stock and Opportunity Zones.

At the same time, family offices and private investors must navigate new complexities introduced by permanent limitations on excess business losses, revised charitable deduction rules, and significant international tax regime adjustments. Strategic and proactive planning is essential to leverage the law’s considerable benefits while mitigating new compliance requirements and potential risks.