Navigating the One Big Beautiful Bill Act (OBBBA): A Thorough Guide to Every Key Change

Public Law 119-21, signed July 4, 2025.

The One Big Beautiful Bill Act (OBBBA) rewrites key parts of the U.S. tax code, with outsized implications for ultra-high net worth founders, families, and closely held businesses. This guide summarizes the most important provisions and the planning moves they invite.

Estate & Gift/GST Taxes

Beginning in 2026, the federal estate and gift tax exclusion and the GST exemption each rise to $15 million per individual, $30 million per married couple, indexed thereafter.¹ This creates a material window to review GRATs, CLATs, dynasty trusts, IDGTs, spousal lifetime access trusts (SLATs), and other advanced planning and wealth transfer strategies to fully utilize exemptions.

Individual Rates & Standard Deduction

OBBBA makes permanent the TCJA individual rate schedule (top rate 37%) and locks in the higher standard deduction at $15,750 single/$31,500 joint (indexed). Personal exemptions remain eliminated.²

Alternative Minimum Tax (AMT)

From 2026 onward, AMT phase-out thresholds reset to 2018 levels, $500,000 single/$1,000,000 joint, indexed, and the phase-out rate doubles to 50%. Higher-income households will therefore hit AMT earlier, even with unchanged preferences.³

Itemized Deductions (Pease Replacement)

The Pease limitation is repealed. Starting 2026, a new cap limits the tax value of itemized deductions for top-bracket filers: reduces deductions by 2/37 of the lesser of (i) total itemized deductions, or (ii) the amount by which taxable income exceeds the 37% bracket threshold, effectively capping the benefit at 35% for 37%-rate taxpayers.⁴

State & Local Tax (SALT) Deduction

From 2025–2029, the SALT cap is $40,000 (MFS $20,000), with a 1% annual increase. For filers above $500k MAGI (MFS $250k), the cap is phased down by 30% of excess income. Example: at $520k MAGI, the $40k cap is reduced by $6k, yielding a $34k cap. In 2030, the cap reverts to $10,000. Pass-Through Entity Tax (PTET) workarounds remain available.⁵

Mortgage Interest & PMI

The $750,000 cap on acquisition indebtedness is made permanent. PMI becomes deductible beginning 2026. HELOC interest remains deductible only when used to buy/build/substantially improve the home.⁶

Charitable Contributions

• 2026+: Non-itemizers may deduct up to $1,000 ($2,000 MFJ).
• Itemizers: a 0.5% of AGI floor applies before charitable deductions.
• Starting January 1, 2026, taxpayers in the highest income tax brackets will have their charitable deduction benefits artificially capped at a 35% tax rate, even if they are in the 37% marginal rate
• The 60% of AGI ceiling for cash gifts to public charities is permanent.
• 2027+: Cash gifts to scholarship-granting organizations can qualify for a credit up to $1,700. Result: bunching, DAF timing, and asset selection matter even more under the new rules, and completing any large charitable donations is advisable before the end of 2025.⁷

Temporary 2025–2028 Deductions (new, non-itemizer-eligible)

• Up to $25,000 of qualified reported tips (service workers)
• Up to $12,500 ($25,000 MFJ) of the overtime premium
• Up to $10,000 of interest on new U.S.-made personal-use vehicles (manufactured after 2024)
• Additional $6,000 per taxpayer age 65+ ($12,000 MFJ), phased out above $75k single/$150k joint MAGI
  General phase-outs: $150k (single)/$300k (MFJ); $100k/$200k for the vehicle-interest deduction.⁸

Opportunity Zones (OZ)

OZ incentives are made permanent. Investors can defer original gains up to 5 years, receive a 10% basis step-up after 5 years, and exclude post-investment gains after 10 years. Rural Opportunity Funds receive an enhanced 30% step-up after 5 years. (Legacy 7-year 5% step-ups are eliminated.)⁹

“Trump Accounts” (Minors’ Tax-Deferred Accounts)

For U.S. citizens under 18: $5,000 annual contributions (post-tax); employers may contribute up to $2,500 (excluded from income). A $1,000 government seed applies to births 2025–2028. Assets must track a broad U.S. index with fees ≤0.10%. No distributions before 18; thereafter, withdrawals are ordinary income, IRA-like.¹⁰

529 & ABLE Changes

529 plans cover a broader set of K–12 and credentialing expenses; 529→ABLE rollovers are permanent. ABLE contribution limits expand, and Saver’s Credit eligibility begins 2027. State conformity varies.¹¹

Renewable Energy & Clean-Tech Credits

Key sunsets/accelerations: EV credits end Sept 30, 2025; home energy credits (§25C/§25D) end Dec 31, 2025; EV charger credits (§30C) end June 30, 2026; utility-scale clean electricity (§45Y/§48E) projects must begin construction by July 5, 2026, and be in service by 12/31/2027.¹²

Qualified Small Business Stock (QSBS)

For QSBS stock issued after July 4, 2025:

• 50% exclusion after 3 years
• 75% exclusion after 4 years
• 100% exclusion after 5+ years
  The per-issuer cap rises to $15M and the gross asset test to $75M; both are indexed. Pre- vs. post-7/4/2025 issuance matters for eligibility.¹³

Depreciation, Expensing & Interest Limits

• Bonus depreciation: 100% permanent for eligible property acquired & placed in service after Jan 19, 2025
• §179 expensing: limit $2.5M; phase-out begins $4M
• §174 R&D: immediate expensing for domestic R&D (retro relief available for small businesses); foreign R&D remains amortized
• §163(j): interest limitation permanently 30% of EBITDA (not EBIT)
  Implications: family offices/holdcos can significantly shape cash taxes with acquisition timing and inter-entity financing.¹⁴

Corporate Charitable Contributions

For tax years after 2025, corporations may deduct only the portion of gifts exceeding 1% of taxable income, and total corporate charitable deductions remain capped at 10%; standard carryforward rules continue but are more constrained than before.¹⁵

Excess Business Losses (EBL) – §461(l)

The EBL limitation is permanent. Disallowed losses convert to NOL carryforwards, then subject to the 80% NOL offset limit when utilized.¹⁶

Tax-Exempt Organizations

• Private college/university endowments: tiered excise tax 1.4%–8% based on student-adjusted endowment size
• §4960 excess compensation excise: extends to any employees earning >$1M, including prior covered employees (since 2017)
• PPLI/PPVA: unchanged under OBBBA¹⁷

Planning Priorities for UHNW Founders & Families

1. Lock in exemptions: Model SLATs/dynasty trusts, and other wealth transfer items before 2026. Coordinate with liquidity and earn-out timing.
2. Integrate exit planning: Leverage today’s higher lifetime exemptions and expanded QSBS provisions to combine multi-generational wealth transfer with tax-efficient business exits.
3. Exploit the SALT window (2025–2029): PTET elections, bunching strategies, and state payment timing.
4. Charitable timing: Front-load gifts in 2025 before the 0.5% AGI floor (2026); pair with low-basis assets/DAFs.
5. QSBS “new issuance” strategy: Paper post-7/4/2025 issuances cleanly; track 3/4/5-year clocks; consider trust-level planning such as QSBS stacking.
6. Capex & R&D: Use 100% bonus and §179; restore domestic R&D expensing; re-evaluate financing under §163(j).
7. Energy deadlines: Decide on EV/home energy purchases and utility-scale investments before sunset dates.

Looking for the highlights? Read our condensed OBBBA Guide. 

FAQs

What is the official law cite?

Public Law 119-21, signed July 4, 2025.

Does OBBBA affect §199A/QBI?

Yes. OBBBA makes TCJA permanencies that preserve §199A; §199A remains a planning lever for qualifying pass-through income (subject to wage/cap limitations).

Do PTET elections still work under the higher SALT cap?

Yes. PTET remains unaltered and valuable, particularly where the $40k cap phases down at higher MAGI.

What changed about OZ timing?

No more 7-year/5% bump. Five-year holding yields a 10% step-up (30% for rural OZ funds), with 10-year total exclusion on new gains.

What is the One Big Beautiful Bill Act (OBBBA)?

The OBBBA is a 2025 tax reform law (Public Law 119-21, signed July 4, 2025) that reshaped U.S. tax policy. It raises estate and gift exemptions, alters SALT deduction limits, changes QSBS rules, adds new charitable and retirement tools, and permanently extends many TCJA provisions.

What is the new estate tax exemption under OBBBA?

Beginning January 1, 2026, the federal estate, gift, and GST tax exemptions rise to $15 million per person (indexed), or $30 million per married couple. This creates new planning opportunities with GRATs, CLATs, dynasty trusts, and multi-generational strategies.

How did OBBBA change income tax rates?

The Act makes the 37% top marginal rate permanent and locks in the higher standard deduction: $15,750 for single filers / $31,500 for joint filers (indexed).

What is the new SALT deduction cap?

From 2025–2029, the cap is $40,000 ($20,000 if married filing separately), with a 1% annual increase. Above $500,000 MAGI ($250,000 MFS), the cap is reduced by 30% of excess income. The cap returns to $10,000 in 2030. Pass-Through Entity Tax (PTET) workarounds are preserved.

Did OBBBA change the AMT?

Yes. Starting in 2026, AMT phase-out thresholds reset to 2018 levels ($500k single/$1M joint, indexed), and the phase-out rate doubles from 25% to 50%, increasing exposure for high earners.

Footnotes

1. OBBBA §101 – Estate/gift and GST exemptions to $15,000,000 per individual starting 2026; indexed thereafter.
2. OBBBA §201 – TCJA rate table and standard deduction levels made permanent (top rate 37%).
3. OBBBA §210 – AMT phase-out thresholds reset to 2018 levels (indexed) and phase-out rate increases to 50% starting 2026.
4. OBBBA §230 – Pease repeal; 35% itemized-deduction benefit cap via 2/37 reduction formula.
5. OBBBA §240 – SALT cap at $40,000 (2025–2029) with 1% yearly increase; 30% phase-down above $500k MAGI; $10,000 cap returns in 2030; PTET unaffected.
6. OBBBA §250 – $750k acquisition debt cap permanent; PMI deductible beginning 2026; HELOC interest limited to buy/build/improve use.
7. OBBBA §301 – Universal charitable deduction (non-itemizers) + 0.5% AGI floor; 60% AGI cash limit permanent; §1,700 credit (2027) for scholarship-granting orgs.
8. OBBBA §310 – Temporary deductions (tips, overtime, vehicle interest, seniors’ add-on) with stated MAGI phase-outs, through 2028.
9. OBBBA §330 – Opportunity Zones permanent; 5-year deferral; 10% step-up (30% rural); 10-year new-gain exclusion.
10. OBBBA §340 – Minors’ “Trump Accounts”: $5k annual; employer up to $2.5k (excluded); $1k government seed for 2025–2028 births; index-tracking, ≤0.10% fees; IRA-like taxation after 18.
11. OBBBA §350 – 529/ABLE expansions, permanent rollovers, Saver’s Credit eligibility (2027).
12. OBBBA §360 – EV/home/charger credit sunsets and utility-scale 45Y/48E timing (begin construction by 7/5/2026; in service by 12/31/2027).
13. OBBBA §370 – QSBS tiers for post-7/4/2025 stock; $15M per-issuer cap; $75M gross-assets test; indexing rules.
14. OBBBA §§380 – 385—100% bonus depreciation permanence; §179 to $2.5M (phase-out $4M); §174 domestic expensing; §163(j) 30% EBITDA.
15. OBBBA §390 – Corporate charitable deduction floor at 1% of TI; overall 10% cap.
16. OBBBA §400 – §461(l) excess business loss limitation permanent; NOL carryforward treatment.
17. OBBBA §410 – Higher-ed endowment excise (1.4%–8% tiered); §4960 expansion; PPLI/PPVA unchanged.

Last updated: September 16, 2025