By William Conron, CPA, Partner, Bhakti Shah, JD, CPA, Partner and Gemma Leddy, CPA, Partner
Marking the most significant tax reform since 2017, the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4. While many expected sweeping changes, the final bill includes a mix of extensions, clarifications and a few surprises. To help you cut through the complexity, our Private Client Services team highlights the key provisions most likely to affect high-net-worth individuals and family offices — and what they mean for your planning strategies.
Other key provisions of the OBBBA can be found in our recent article here.
Provisions Set to Expire in 2025: Here’s What Changed
Many provisions established with the Tax Cuts and Jobs Act of 2017 (TCJA) were set to sunset at the end of 2025. The following sunsetting provisions were addressed:
- Lifetime Estate Exemption – Increased to $15,000,000. The OBBBA permanently extends the federal estate, generation-skipping transfer and lifetime gift tax exemption to $15 million per taxpayer ($30 million for married couples). This increased exemption applies to estates of decedents dying and gifts made after December 31, 2025. The exemption amount will be inflation-adjusted annually beginning in 2027.
- Tax Rates – The highest tax rate for individuals remains at 37%.
- Qualified Business Income – Section 199A qualified business income 20% deduction for qualifying pass-through entities and REITS made permanent.
- Business Interest Limitation – Permanent relief on calculation of Business Interest Limitation to exclude depreciation and amortization from adjusted taxable income.
- Bonus Depreciation – Bill reinstates 100% Bonus Depreciation for qualifying property acquired after January 19, 2025.
What Stayed the Same
Other provisions received a lot of attention but, at the end of the day, survived the bill without any changes:
- Carried Interest Rules – Carried interest held more than three years receives long-term capital gain tax treatment.
- Pass-Through Entity Tax – State and local tax (SALT) workaround adopted by many states to address the SALT cap, still a respected federal deduction for businesses organized as an LLC or S Corp.
- Excess Business Losses – Limitation on Excess Business Losses of noncorporate taxpayers remain permanent. Excess losses continue to be converted to Net Operating Losses after initial limitation.
- Life Insurance – Changes to the tax treatment of Private Placement Life Insurance (PPLI) and Private Placement Variable Annuities (PPVA) were not included in the final bill.
- Section 899 – “The revenge tax” imposing additional taxes on income for foreign persons from investments made in the U.S. – was not included in the final bill.
- Proposed changes limiting amortization of goodwill for owners of professional sports franchises – Were not included in the final bill.
New and Enhanced Incentives
There are also some enhancements and long-awaited corrections to taxpayer-friendly provisions.
- Qualified Small Business Stock (QSBS) – Benefits of Qualified Small Business Stock expanded for stock acquired after July 4, 2025.
- Excludable gain per shareholder increased from $10,000,000 to $15,000,000.
- Opportunity for excluding gain for QSBS acquired after July 4, 2025 held less than five years.
- 50% exclusion for stock held three years.
- 75% exclusion for stock held four years.
- Qualified Opportunity Zones – Qualified Opportunity Zones will be a permanent incentive with increased benefits and a rolling five-year deferral period.
- 10% increase in basis if investment held five years.
- 30% increase in basis for qualified rural investments if investment held five years.
- Research and Experimentation Credit – Research and Experimentation Credit costs can once again be expensed when incurred. Companies that were required to capitalize costs in 2022-2024 will have the opportunity to accelerate the deduction of those costs.
Itemized Deduction Changes
Finally, there were some changes to itemized deductions:
- SALT Deduction Cap – Temporarily increased for tax years 2025–2029 from $10,000 to up to $40,000, indexed annually for inflation, but beginning to phase down (to $10,000) for married filing joint taxpayers with income above $500,000 ($250,000 married filing separately).
- Reduced benefit of itemized deductions – For taxpayers with income exceeding the threshold for the highest tax bracket.
- Gambling Losses – Now limited to 90% of gambling winnings.
- Introduction of 0.5% Floor – For charitable contributions.
Be Proactive: Evaluate Your Long-Term Strategy
With many of the TCJA provisions now extended or made permanent — and new incentives introduced — the landscape for tax, estate and investment planning has shifted significantly. This is a critical time for family offices and high-net-worth individuals to reevaluate their strategies. Whether you’re considering gifting before year-end, leveraging the enhanced QSBS or Opportunity Zone benefits or navigating the new SALT deduction changes, proactive planning will be key to maximizing benefits and minimizing exposure.
We Can Help
At PKF O’Connor Davies, our Private Client Services team works closely with individuals, families and advisors to develop integrated strategies that align with both your financial goals and the evolving tax environment. From estate structuring to business entity optimization and philanthropic planning, we bring deep technical expertise and personal attention to every aspect of your strategy. Now is the time to revisit your long-term plan — let us help you do it with clarity and confidence.
Contact Us
We will be providing more details over the coming weeks on many of the provisions listed above through additional thought leadership articles. If you have any questions, please contact your PKF O’Connor Davies client service team or:
Gemma Leddy, CPA
Partner-in-Charge
PKF O’Connor Davies Family Office
gleddy@pkfod.com | 646.699.2870
William Conron, CPA
Partner
wconron@pkfod.com | 914.381.8900
Bhakti Shah, JD, CPA
Partner
bshah@pkfod.com | 908.956.0464