The One Big Beautiful Bill’s Impact on High-Net-Worth Tax Strategies

On July 4, President Trump signed the One Big Beautiful Bill (OBBB) into law, introducing a wide range of changes to the tax code and various government spending initiatives. To help make sense of what this means for you, we’ll be breaking down the key provisions and their implications in a series of blog posts.

This article highlights two key provisions that affect high-net-worth individuals: the temporary expansion of the SALT deduction cap and the permanent increase in estate, gift, and generation-skipping transfer (GST) tax exemptions.

SALT Deduction Limit Increases Under OBBB

One of the most impactful changes for individual taxpayers is the temporary increase to the state and local tax (SALT) deduction cap, effective for tax years beginning after December 31, 2024.

The SALT deduction allows individual taxpayers to deduct certain taxes paid to state and local governments, including income taxes, general sales taxes (if elected in lieu of income taxes), real property taxes, and personal property taxes. However, this deduction is only available to those who itemize deductions on their federal income tax return.

Previously capped at $10,000 per year ($5,000 for married filing separately), the deduction has been significantly expanded under the OBBB for five years:

Updated SALT Deduction Limits:

  • 2025: $40,000 ($20,000 if married filing separately)
  • 2026: $40,400 ($20,200)
  • 2027: $40,804 ($20,402)
  • 2028: $41,212 ($20,606)
  • 2029: $41,624 ($20,812)
  • 2030 and after: $10,000 ($5,000)

Phaseout for High-Income Taxpayers: The increased deduction is reduced by 30% of the amount by which modified adjust gross income (AGI) exceeds $500,000 ($250,000 if married filing separately) in 2025 and indexed annually through 2029.

Importantly, the deduction cannot fall below the original $10,000 cap, and pass-through entity tax (PTET) workarounds remain available in states that allow them.

Strategic Considerations for SALT Planning

With the expanded deduction window limited to five years, timing is key. Taxpayers may benefit from:

  • Bunching payments such as property taxes or estimated state taxes into high-cap years
  • Aligning income recognition with years when the deduction is most favorable
  • Monitoring phaseout thresholds to avoid losing benefits due to high AGI

Estate, Gift, and GST Provisions Under OBBB

The OBBB also makes a permanent change to federal wealth transfer taxes, which include estate taxes, gift taxes, and generation-skipping transfer (GST) taxes. These taxes apply to transfers of wealth during life or at death that exceed the basic exclusion amount. When an estate exceeds the basic exclusion amount, that excess is taxed at a Federal rate of 40 percent.

New Basic Exclusion Amounts:

  • 2026 and beyond: $15 million per individual ($30 million for married couples), indexed for inflation
  • GST exemption: Also set at $15 million per individual ($30 million for married couples), adjusted annually

This increase provides long-term certainty for estate planning, replacing the temporary higher exclusions under the Tax Cuts and Jobs Act (TCJA), which were set to expire in 2026.

Strategic Considerations for Estate Planning:

The higher exclusion opens the door for more robust planning strategies:

  • Large lifetime gifts to reduce taxable estates and move appreciation outside the estate
  • Trust structures such as Grantor Retained Annuity Trusts (GRATs), Spousal Lifetime Access Trusts (SLATs), and dynasty trusts
  • Multigenerational planning using the expanded GST exemption

Taxpayers should consider updating estate plans to reflect the new thresholds and take advantage of the increased flexibility.

Maximizing Your Tax Strategy Under OBBB

The OBBB presents both temporary and permanent opportunities for high-net-worth individuals. Whether optimizing deductions or planning for legacy wealth, now is the time to revisit your tax strategy.

HTB’s tax professionals are here to help you navigate these changes with confidence. Reach out with questions or to schedule a planning session tailored to your goals.

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