OBBBA in 2026: What Truly Matters, and What Doesn’t

With the One Big Beautiful Bill Act (OBBBA) of 2025 now fully implemented, the tax landscape heading into 2026 is largely defined. For ultra-high-net-worth families and business owners, several provisions are meaningfully favorable. For high-income individuals without business income, the results are more nuanced.

Despite widespread expectations, the Tax Cuts and Jobs Act did not sunset. Lower individual income tax rates remain in place, and elevated estate tax exemptions were preserved. At the same time, several highly publicized provisions provide limited benefit to affluent households once income-based phaseouts are applied. The sections below focus on the changes with genuine planning impact and those that are largely distractions.

Estate and Gift Taxes: A Durable Advantage for Affluent Families

One of the most consequential outcomes of OBBBA is the permanence of elevated estate and gift tax exemptions. In 2026, individuals may transfer up to $15 million during life or at death without incurring the 40% federal estate tax, while married couples may transfer up to $30 million. These thresholds will continue to adjust for inflation. The annual gift exclusion increases to $19,000 per recipient.

As a result, the urgency that once surrounded large pre-sunset gifting strategies has largely dissipated. Estate plans built around assumptions of a dramatic exemption rollback may now warrant review. In some cases, formula-based trusts may be allocating more assets than necessary to bypass structures or limiting flexibility in ways that are no longer optimal.

Bonus Depreciation Returns to 100%: A Meaningful Benefit for Business Owners

For business owners, one of the most impactful provisions of OBBBA is the restoration of 100% bonus depreciation. This allows qualifying capital expenditures to be fully expensed in the year they are placed in service, improving after-tax cash flow and enhancing planning flexibility.

This change is particularly relevant for closely held businesses, real estate operators, and professional practices making ongoing investments in equipment, technology, or infrastructure. When coordinated properly, bonus depreciation can interact favorably with income smoothing strategies, entity structuring, and long-term liquidity planning. For many business owners, this provision may outweigh several of the individual-focused tax changes receiving more public attention.

SALT Deduction: More Headline Than Help

While the state and local tax (SALT) deduction cap was technically increased from $10,000 to $40,000, the practical benefit for high-income households remains limited. The expanded deduction phases out rapidly once Modified Adjusted Gross Income exceeds $500,000, shrinking by $0.30 for every additional dollar of income. By approximately $600,000 of MAGI, the deduction effectively returns to the original $10,000 cap.

For residents of high-tax states, the planning reality is largely unchanged. While this environment may modestly affect the timing of strategies such as Roth conversions, these decisions are still best evaluated through a lifetime tax framework rather than short-term deductions alone.

Charitable Giving: A Higher Threshold for Tax Efficiency

OBBBA introduces a new 0.5% of AGI floor for cash charitable contributions, meaning deductions are only allowed to the extent that cash gifts exceed this threshold. For example, a taxpayer with $2 million in AGI would receive no deduction for the first $10,000 of cash contributions.

Importantly, this limitation applies to cash gifts, not to donations of appreciated securities, which remain deductible at fair market value (subject to existing AGI limits) without being subject to the 0.5% floor. As a result, donating appreciated assets continues to be one of the most tax-efficient ways to support charitable goals.

In addition, this environment increases the relevance of structured charitable vehicles. Donor-Advised Funds and Private Foundations allow families to consolidate multiple years of giving into a single high-impact contribution, exceed applicable thresholds, and retain flexibility around grant timing. For families with complex philanthropic goals, these structures can also integrate estate planning, family governance, and long-term legacy considerations.

Income Taxes: Stability with Subtle Trade-Offs

The top marginal federal income tax rate remains at 37%, avoiding a scheduled increase to 39.6%. However, a new limitation reduces the effective value of itemized deductions for taxpayers in the highest bracket by approximately 35%. While deductions remain available, their after-tax benefit is modestly diminished, affecting expenses such as mortgage interest and charitable contributions.

These changes do not require dramatic shifts, but they reinforce the importance of coordinating income, deductions, and asset location within a broader planning framework.

Highly Publicized Provisions That Don’t Move the Needle

Several provisions frequently highlighted in public discourse are subject to income phaseouts that exclude most higher earners:

• Auto loan interest deductions are fully phased out above $200,000 of MAGI

• Tips and overtime income deductions begin phasing out at $300,000 of MAGI

• The additional $6,000 senior deduction phases out beginning at $150,000 of MAGI, on top of existing age-based benefits

For most high-income households, these provisions are largely immaterial and should not meaningfully influence planning decisions.

The Bottom Line

OBBBA represents a clear positive for very affluent families and business owners, particularly in the areas of estate planning and business investment. At the same time, new constraints around charitable deductions and itemized expenses reinforce the importance of thoughtful structuring rather than reactive changes.

The true impact of the legislation is not found in headlines, but in how each provision interacts with long-term goals, income sources, and balance sheet complexity. As always, effective planning is less about chasing deductions and more about aligning tax strategy with durable wealth management principles.