OBBBA Brings Long-Term Tax Planning Opportunities for High-Net-Worth Individuals and Families

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law—a sweeping piece of tax legislation that not only extends key provisions from the 2017 Tax Cuts and Jobs Act (TCJA) but also introduces new policies that reshape estate, income, and philanthropic tax planning.

For high-net-worth individuals and families, the OBBBA presents both permanence and new complexity in areas critical to legacy planning, wealth preservation, and strategic giving. Below is a summary of the provisions with the most meaningful impact on your financial plans:

Estate, Gift and GST Tax Exemption: Certainty Restored

The estate, gift and generation-skipping transfer (GST) tax exemption is now permanently set at $15 million per person starting in 2026, allowing wealth to be transferred tax free to the next generation. The exemption will be indexed for inflation beginning in 2027. For 2025, the exemption remains at $13.99 million.

• Planning opportunity: With the risk of a sunset to roughly $7 million now removed, families can more confidently structure multi-generational wealth transfer and gifting strategies over the long term.

Individual Income Tax Rates Made Permanent

The current individual tax brackets—10%, 12%, 22%, 24%, 32%, 35%, and 37%—are preserved permanently. The law also widens the thresholds for the lower four brackets, offering relief to lower-income brackets without affecting top-tier earners.

• Impact: This provides long-term visibility into rate planning for trusts,  individuals, and pass-through entities.

Standard Deduction Increases

Increased standard tax deductions for tax year 2025:

• Married filing jointly/surviving spouse: $31,500
• Head of household: $23,625
• Single/married filing separately: $15,750

These amounts will adjust for inflation in future years.

A new $6,000 deduction (“no tax on Social Security”) per person over age 65 with income under $75,000 (single) or $150,000 (joint) before phasing out at higher incomes, is added for 2025–2028, separate from the existing standard senior deduction.

Charitable Giving Enhancements

Philanthropy remains a vital component of many clients’ wealth strategies, and the OBBBA brings several  changes:

• Above-the-line deduction of up to $1,000 ($2,000 filing jointly) in cash donations available to non-itemizers.
• 60% AGI limit on cash donations made permanent.
• New 0.5% floor on itemized charitable contributions (e.g., if your AGI is $10M, only amounts exceeding $50K are deductible).
• Starting in 2027 a tax credit of up to $1,700 for contributions to scholarship-granting organizations.
• Planning note: While the AGI-based floor introduces new complexity, permanence of the 60% limit offers stability for charitable giving plans.

Alternative Minimum Tax (AMT): Exemption Amounts Permanently Increased

The AMT exemption levels will continue to adjust for inflation and the exemption  phase out thresholds revert to 2018 levels: $500,000 single / $1 million filing jointly in 2026.

• Impact: High-income earners have more clarity on whether they will incur additional taxes due to AMT.

SALT Deduction Cap Adjusted, With High-Income Limitation

• The cap increases from $10,000 to $40,000 in 2025 ($20,000 if married filing separately), rising by 1% annually through 2029.
• However, high-income taxpayers will see a 30% reduction in their SALT deduction on income exceeding $500,000 ($250,000 MFS), subject to a minimum deduction of $10,000.
• Planning consideration: The higher State and Local Tax (SALT) deduction  is limited for top earners.   To take advantage of the new higher deductions, taxable income should be managed by maximizing or accelerating deductions and timing taxable events where possible.

Home Mortgage Interest Deduction Permanently Preserved

The ability to deduct interest on up to $750,000 of indebtedness is now permanent. Premiums for mortgage insurance also remain deductible.

Interest paid on Home Equity Lines of Credits (HELOC) is not deductible.

New Car Loan Interest Deduction

Interest on new car loans (vehicles assembled in the U.S.) purchased between 2025–2028 is deductible up to $10,000/year for incomes under:

• $100,000 (single)
• $200,000 (joint)

Itemized Deductions Now Limited for High-Income Taxpayers

For those in the 37% bracket, the tax benefit of itemized deductions is now limited to 35 cents per dollar. The formula applies a reduction of 2/37 to the lesser of:

• Total deductions or
• Taxable income over the 37% threshold
• Planning impact: High earners will see reduced effectiveness of itemizing, reinforcing the importance of efficient deduction strategy.

HSA Eligibility Expanded

You may now contribute to an HSA even if enrolled in Medicare Part A , certain ACA plans (including Bronze and Catastrophic), or covered under a direct primary care service arrangement. Covered expenses now include:

• Fitness memberships
• Telehealth services
• Direct primary care membership fee up to $150/month for an individual or $300/month for a family
• Why it matters: HSAs remain a tax-advantaged vehicle for healthcare spending in retirement, with expanded eligibility and benefit scope.

529 Education Savings Plan Accounts – Flexibility Expanded

529 plans can now cover:

• Professional certifications
• Licensing and credentialing fees
• Testing and continuing education to obtain or maintain a recognized postsecondary credential.

The annual elementary/secondary education expense cap doubles to $20,000 starting in 2026.

ABLE account rules also improve:

• Additional contributions by disabled working individuals are made permanent
• Tax-free 529-to-ABLE rollovers are now permanently allowed

New Tax-Deferred Investment Accounts for Children

A newly created tax-deferred account (“Trump Accounts”):

• $1,000 government contribution at birth (for children born 2025–2028)
• Up to $5,000/year in contributions until age 18 by parents, family, employers and certain other entities
• Funds must be invested in a U.S. Equity Index Fund
• Distributions taxed as income, with access starting at age 18
• Planning idea: This may be a supplemental vehicle for education, housing, or entrepreneurial capital in early adulthood.

Smith + Howard Wealth Management: Guidance Through Change

OBBBA introduces long-term clarity in some areas, and new complexity in others. Our advisors are proactively reviewing the legislation’s impact on wealth transfer, income tax planning, charitable giving, and multi-generational strategy.

We encourage you to reach out to us to explore how these changes may affect your planning and to begin incorporating them into your 2025 and long-term strategies.

Written by Valerie Nichols and Michael Mueller.

Note: if you’d like to read an analysis of the full OBBBA, our colleagues at Smith + Howard have published one here.

Unless stated otherwise, any estimates or projections (including performance and risk) given in this presentation are intended to be forward-looking statements. Such estimates are subject to actual known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those projected. The securities described within this presentation do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in such securities was or will be profitable. Past performance does not indicate future results.