Key One Big Beautiful Bill Act implications for family offices and high-net-worth investors

Income tax and investment structuring

Permanent extension of individual rates: The OBBBA permanently extends the individual income tax rates from the TCJA (notably retaining the top rate of 37%), reducing prior uncertainty regarding future rate hikes. It also leaves unchanged the federal corporate tax rate, which remains permanently fixed at 21% as established under the TCJA. This clarity enables more confident long-term investment and estate planning decisions.

Expanded state and local tax (SALT) deduction and pass-through entity tax (PTET): The SALT deduction cap temporarily increases to $40,000 for married joint filers through 2029 before reverting to $10,000 thereafter. Importantly, the widely used PTET workaround remains fully preserved, benefiting many family offices, especially in high-tax states. Family offices should strategically evaluate state tax payments and PTET elections to maximize temporary benefits.

Enhanced pass-through deduction (Section 199A): The OBBA makes permanent the existing 20% qualified pass-through deduction, with several beneficial enhancements. The income thresholds for phase-ins now begin at $75,000 for single filers and $150,000 for joint filers, with a new $400 deduction floor for actively participating owners. These enhancements offer substantial after-tax opportunities for qualifying flow-through businesses.

Qualified small business stock (QSBS) enhancement: QSBS tax advantages are significantly improved. The 100% capital gains exclusion is retained for five-year holdings, with new partial exclusions (50% at three years, 75% at four). The per-issuer gain exclusion cap rises to the greater of $15 million (indexed for inflation from 2026) or ten (10) times the taxpayer’s aggregate adjusted basis. The gross asset test increases to $75 million. These updates facilitate greater flexibility and tax-efficient investment opportunities in early-stage companies. Family offices can leverage QSBS through strategic gifting and trust planning, enhancing multigenerational wealth transfer.

Enhanced and expanded opportunity zones (OZs): The OZ program is permanently expanded with recurring 10-year designations beginning July 2026. Investments held at least five years qualify for enhanced basis step-ups (10% standard, 30% for rural opportunity funds), and rural zone improvement requirements are eased. However, deferred gains from the original OZ program must be recognized by the end of 2026. Family offices should proactively consider tax-mitigation strategies such as loss harvesting, charitable remainder trusts, or bonus depreciation strategies.

Restored 100% bonus depreciation: The 100% bonus depreciation is permanently reinstated for qualified property placed in service after January 19, 2025. This provision significantly enhances the attractiveness of capital-intensive investments, notably real estate, infrastructure, and business aviation.

Enhanced interest expense deduction: The earnings before interest, taxes, depreciation, and amortization (EBITDA)-based limitation on interest expense deductions is permanently reinstated, increasing upfront deductibility relative to prior earnings before interest and taxes (EBIT)-based limits. This provision especially benefits leveraged investment structures such as private equity and real estate, as well as tax-sensitive vehicles like leveraged blockers.

Immediate research and development (R&D) expense deduction: Effective after December 31, 2024, domestic R&D expenditures become immediately deductible. Small businesses (under $31 million in gross receipts) may retroactively elect immediate expensing for R&D expenditures from 2022 – 2024, potentially unlocking substantial tax savings. Family offices investing in innovation-driven sectors should leverage this provision strategically.

Limitation on excess business losses (EBLs): The OBBBA permanently extends the limitation on EBLs, disallowing business losses exceeding annually adjusted thresholds ($313,000 single/$626,000 joint, indexed annually). Thus, the EBL limit in most cases remains a one-year deferral rather than a permanent disallowance. Importantly, disallowed losses continue converting into net operating losses (NOLs) carried forward indefinitely to offset up to 80% of future taxable income. Investors in active trading strategies and leveraged investments will appreciate the clarity provided, enabling strategic planning to optimize utilization of these carryforward losses.

Estate and gift tax provisions: The federal estate and gift tax exemption permanently increases to $15 million per individual ($30 million per married couple), indexed for inflation beginning January 2026. This expansion enhances multigenerational wealth transfer opportunities, particularly through sophisticated trusts such as grantor retained annuity trusts (GRATs), charitable lead annuity trusts (CLATs), and dynasty trusts. Family offices should proactively adjust estate plans to fully leverage these expanded exemptions.

Other important provisions

Important exclusions: The final OBBBA notably preserves favorable tax treatment for carried interest, private placement life insurance (PPLI), private placement variable annuities (PPVA), and private foundations. The controversial “Section 899” surtax was ultimately excluded, significantly clarifying and simplifying international tax planning for global family offices and multinational investors. Additionally, earlier proposals targeting the taxation of private foundations, litigation finance investments, and amortization deductions for owners of professional sports franchises were ultimately omitted.

Market insight and strategic considerations

In recent months, the OBBBA’s passage through Congress coincided with significant market responses, notably a steep decline in the US dollar (the sharpest first-half drop in more than 50 years) and fluctuations in Treasury yields. Some market observers believe these trends may reinforce the growing importance of geographic diversification, currency exposure management, and proactive risk mitigation strategies. This updated tax landscape presents compelling strategic opportunities for family offices and high-net-worth investors.