The H.R. 1: One Big Beautiful Bill was signed into law by President Trump on July 4, 2025. This bill brings long-awaited clarity and permanence to key provisions of the Tax Cuts and Jobs Act (TCJA), while introducing new measures aimed at middle-class families and working individuals. Here are the highlights of how the bill impacts high-net-worth families and investors.

The OBBBA makes permanent the individual income tax rates introduced by the Tax Cuts and Jobs Act that were previously set to expire at the end of 2025. The federal income tax rates remain at the same levels as the 2024 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The top marginal tax rate of 37% applies to single filers with taxable income of $626,350 or more ($751,600 or more for married couples filing jointly).

Capital gains tax remains unchanged at 0%, 15% and 20%. The top marginal capital gains tax rate remains 20%.  

The OBBBA brings much-needed certainty to estate and gift tax planning for high-net-worth families. The OBBBA makes permanent the estate and gift tax exemption introduced by the Tax Cuts and Jobs Act that were previously set to expire at the end of 2025.

For 2025, the gift and estate tax exemption has increased to $15 million, which will be indexed for inflation starting in 2026. Annual exclusion gifts remain at $19,000 per recipient for 2025.

The increased standard deduction from the Tax Cuts and Jobs Act of 2017 has been made permanent in the One Big Beautiful Bill Act of 2025. Standard deductions for all taxpayers are as follows for tax year 2025:

• • Single/MFS – $15,750
  • MFJ – $31,500
  • Head of Household – $23,625

Additionally, those taxpayers age 65 and older get an additional $1,600 per qualifying taxpayer added to the Standard Deduction as follows for tax year 2025:

• • Single/MFS – $17,750
  • MFJ – $33,100
  • Head of Household – $25,625

High-net-worth families with complex estates often use Trusts for estate planning and asset protection. With the expansion of the SALT deduction for tax years 2025-2029, Trusts may also be a good vehicle for tax planning to maximize the SALT deduction for Trusts that own real estate. More guidance on the MAGI limitations will be needed as it pertains to Trust taxpayers. Summarized below is the SALT deduction expansion introduced in the OBBBA.

State and Local Tax Deduction (SALT)

The state and local tax deduction, also known as SALT is a deduction available to those taxpayers that itemize deductions. Prior to the OBBBA enactment, the SALT deduction was limited to $10,000 per return ($5,000 if MFS). However, the OBBBA enhances the SALT deduction by increasing the deduction cap from $10,000 to $40,000 for eligible taxpayers.

The state and local tax deduction allows taxpayers to deduct the following state and local taxes:

• • State and Local Income Taxes including W-2 state withholding, estimated tax payments and state taxes paid for a prior year (if paid during the current year)
  • Real Estate Taxes on personal residence, second home and/or land
  • Personal Property Taxes

The SALT deduction enhancement only applies to tax years 2025-2029.

Eligible taxpayers to claim the enhanced SALT deduction are those households modified adjusted gross income of less than $500,000 ($250,000 MFS). This deduction is not subject to a phase-out. Ineligible taxpayers will still be able to claim a SALT deduction capped at $10,000 per year.

The One Big Beautiful Bill Act of 2025 enhanced the tax benefits for investments in qualified small business stock. Qualifying investors will be able exclude more gain than warranted under the previous law.

Qualifying small business stock is defined as originally issued stock from a domestic C-Corporation acquired at its original issuance. The issuing corporation must be a C-Corporation with aggregate assets ≤$50 million at the time of issuance and immediately after and must use at least 80% of its assets in the active conduct of a qualified trade or business.

Non-corporate investors who own qualified small business stock (QSBS) can qualify for tax-free gains on the sale of the stock if certain criteria is met. For QSBS acquired after September 27, 2010, up to 100% of the gain may be excluded from Federal tax if held for 5 years. The maximum gain eligible for exclusion is the greater of $10 million or 10x the taxpayer’s basis in the QSBS.

Under the OBBBA, additional gain exclusion tiers apply to QSBS acquired after the bill enactment date (July 4, 2025). The following graduated exclusion system applies:

• • 50% of gain is excluded after a 3-year holding period
  • 75% after 4 years
  • 100% after 5 years

Additionally, for QSBS acquired after the enactment date, the cap increases from $10 million to $15 million. Starting in 2027, the annual cap will be indexed for inflation. This gain exclusion enhancement is a big win for small business investment.

If you have questions about how this topic will impact you, Team LittleOwl CPA is here to help. Schedule a discovery call today!