High-net-worth individuals have unique opportunities and face distinct challenges in tax planning. The One Big Beautiful Bill Act (OBBB) altered, expanded and limited a variety of tax provisions, creating a new financial landscape for tax year 2025. Make the most of your year-end planning to take advantage of opportunities to reduce your tax liabilities while increasing your potential deductions.

One Big Beautiful Bill Act Opportunities for Businesses

The One Big Beautiful Bill Act introduced several provisions directly impacting businesses. These changes offer significant financial planning opportunities that business owners or investors should explore to strategically maximize tax efficiency.

No Tax on Overtime or Tips

What this means for you: Businesses should consult with payroll providers to determine next steps.

There have been significant changes to 1099 limits, overtime pay and tip pay in the OBBB. While the 1099 changes won’t take effect until 2026, the payroll changes for overtime pay and tip pay are retroactive to January 2025. It takes time and effort to update the payroll to resolve those changes by December 31, 2025. The IRS is expected to have a revised W-4 form starting in 2026.

There will be no changes to the 2025 Form W-2. As a result, employers and other payors will not be required to separately account for cash tips or qualified overtime compensation on those forms or the written statements furnished to individuals for 2025. The IRS has released 2025 guidance for new tip and overtime deduction calculations in Notice 2025-69. Consult with your payroll department or provider to ensure your systems are fully prepared.

Bonus Depreciation

What this means for you: Taxpayers are able to once again take 100% bonus depreciation on assets acquired after January 19, 2025.

The OBBB fully restored 100% bonus depreciation for assets acquired after January 19, 2025, qualifying them for the full reinstated amount. Any assets acquired or assets with contracts that started before January 20, 2025, will be subject to the former lesser 40% bonus depreciation.

Qualified Business Income (QBI) Deduction

What this means for you: The QBI deduction will no longer sunset in 2026, giving eligible taxpayers more opportunities to reduce their tax liability.

Originally set to expire in 2026, the QBI deduction was made permanent by the OBBB. The legislation also introduced a minimum QBI deduction of $400 in 2026 for taxpayers with at least $1,000 of QBI in a business. They must also materially participate in an active trade or business.

Section 179D Sunset

What this means for you: Eligible taxpayers can deduct more construction costs, for a limited time.

The 179D deduction will sunset in 2026. Any construction projects beginning after June 30, 2026, will no longer qualify for the 179D deduction. If possible, try to accelerate any qualifying projects to secure your 179D deduction before the sunset.

The Section 179 expense limit was expanded to $2.5 million with a $4 million phase out for properties placed into service after December 31, 2024. This deduction remains limited by taxable income. It can’t be taken when a business is operating at a net loss.

IRC Section 174 Restoration

What this means for you: Domestic research and development expenditures no longer need to be capitalized and amortized over a 5-year period.

The full deduction for domestic Section 174 expenditures has been restored. All taxpayers, regardless of the size of their business, can elect to deduct any domestic research and development expenditure.

Under the Tax Cuts and Jobs Act (TCJA), businesses were required to capitalize and amortize R&D costs over a 5-year period. This restoration is retroactive to 2022 through 2024 tax years. It won’t require a special election in order to deduct domestic R&D expenditures for 2025 tax returns and onward.

Opportunity Zones

What this means for you: New Opportunity Zones are due to arrive at the end of 2026, which present new planning opportunities for investors.  

New Opportunity Zones are due to be announced for 2027, with current zones due to sunset at the end of 2026, earlier than the original TCJA sunset of 2028. New Opportunity Zones will be selected by state governors and new incentives were included to encourage investment in rural areas.

Eligibility requirements have also changed, so some census tracts currently eligible for the tax break won’t be included in the new round.

Pass-Through Entity Tax

What this means for you: High-earners who meet the SALT cap phase-out should model it against pass-through entity tax.

To maximize federal tax deductions, consider utilizing Pass-Through Entity Tax where eligible. This is especially useful for LLC, partnership or S corporation owners who want to bypass the $40,000 SALT cap at the owner level.

Business owners in high-tax states, partners facing high marginal tax rates or small business owners with significant state income tax liabilities should work with a tax advisor to model the results before opting in.

For taxpayers whose modified adjusted gross income (MAGI) is higher than $500,000 SALT deduction phase-out, compare the effect of the SALT cap phase-out against PTET as a strategy to manage your federal tax liability.

Evaluate your current year entity structure with a tax advisor or CPA to find avenues to optimize it in light of the increased SALT cap and permanent qualified business income (QBI) deduction.

OBBB Provisions Impacting Individual Tax Planning for 2025

Beyond business-specific provisions, the OBBB also presents significant changes directly affecting tax planning strategies for individuals in 2025, particularly those in higher tax brackets and high-income earners.

Education Savings 529s Plans

What this means for you: Increased flexibility gives taxpayers more opportunities to withdraw and spend 529 funds for more educational benefits.

The OBBB introduced expanded flexibility for 529 education savings plans, making them an even more attractive vehicle for funding a wider variety of educational expenses without requiring federal tax payment on amounts withdrawn.

• Increased K-12 Withdrawal Limit: The OBBB expanded the definition of qualifying education expenses from $10,000 per year on elementary or secondary education to a $20,000 per year maximum limit.
• Expanded K-12 Qualified Expenses: The expanded definition of “qualified expenses” allows taxpayers to include non-tuition related K-12 costs, including:
  • Tutoring or educational classes outside the home
  • Online educational materials
  • Books or other instructional materials
  • Fees for nationally standardized tests
  • Dual enrollment fees for college courses taken while in high school
  • Curriculum materials
  • Specialized strategies that support students with disabilities
• More Qualified Higher Education Expenses: More taxpayers can now enjoy tax-free withdrawals for workforce and on-the-job training as well as continuing education programs. These costs can include tuition, books, exam fees, supplies for specified programs and other miscellaneous fees. Programs may include:
  • Programs listed on state or federal Workforce Innovation and Opportunity Act lists
  • Programs listed in the Veteran Affair’s WEAMS database
  • Continuing education fees required to keep a credential active
  • Programs preparing students for industry-recognized licensing exams

AMT Exemption and Phase Out Limit

What this means for you: The reset on the exemption phase-out threshold in 2026 means the AMT is more tax advantaged in 2025.  

The TCJA created more taxpayer-friendly alternative minimum tax (AMT) rules for 2018 through 2025, but the OBBB brings changes to the rates, exemption and phase-out rule. Working with a tax advisor can help you determine what your best strategy should be in order to lower your tax liability.

• AMT Rates: The maximum AMT rate for 2025, 28%, triggers when taxable income calculated under AMT rules exceeds the inflation-adjusted threshold of $239,100 for married couples filing jointly or $119,550 for single filer. If a taxpayer falls below that threshold, the AMT rate falls to 26%.
• Exemption Phase-Out Rule 2025: For 2025, the exemption phase out begins when alternative minimum taxable income exceeds $626,350 for a single filer or $1,252,700 for a married couple filing jointly. The applicable exemption is reduced by 25% of the excess of your alternative minimum taxable income over the applicable phase-out threshold.

Although the exemption phase-out threshold was made permanent by the OBBB, it resets in 2026 back down to $500,000 for a single filer and $1 million for a married filing jointly. There will be annual inflation adjustments for 2026 and after. The OBBB also increases the exemption phase-out percentage from 25% to 50% in 2026.

Federal Estate and Gift Tax Exemption

What this means for you: The sunset for the federal estate and gift tax exemption is over, which could lead to further tax savings.  

Effective January 1, 2026, the federal estate tax and gift tax exclusion will increase from $13,990,000 in 2025 to $15 million in 2026. Unlike with the TCJA, there’s no sunset. The exclusion amount is subject to an annual cost-of-living adjustment.

Consider making gifts before the end of 2025 and again next year to achieve maximum tax savings. 

Charitable Contributions

What this means for you: Careful planning is needed to make tax-advantaged charitable contributions in 2025 and 2026.

Many notable changes are impacting charitable contribution deductions due to the OBBB. Before the OBBB passed, deductions were subject to maximum deductibility limits that ranged from 20 to 60% of adjusted gross income (AGI), depending on several factors:

• Whether the donation was in cash or another type of property
• Whether the donation was made to a public or non-public charitable organization
• Whether the value of the donation was calculated using the donor’s cost basis or the property’s fair market value.

The OBBB creates a new floor of .5% of AGI for charitable contributions that can be taken as itemized deductions on Schedule A. Essentially, a taxpayer itemizing their deductions must first subtract .5% of their AGI from their qualifying contribution. The total amount of contributions must exceed .5% of AGI in order to be deductible.

Example: A taxpayer with $100,000 of AGI can only deduct contributions above ($100,000 x .5%) $500.

In 2026, overall itemized deductions for taxpayers in the 37% federal tax bracket will be reduced. Those taxpayers will see their total itemized deductions reduced by 2/37. This essentially reduces the amount of tax savings realized for every dollar of itemize deductions from $0.37 to $0.35 for those in the maximum tax bracket.

The overall itemized deduction limit is taken after the .5% of AGI floor, further reducing itemized deductions for taxpayers in the 37% tax bracket.

Example: A taxpayer with $750,000 of AGI in the 37% federal marginal tax bracket plans to make a $75,000 contribution in 2026. In that case, the contribution would first be reduced by the .5% rule, reducing the contribution to $71,250, then again by the 2/37 reduction, dropping it further to ($71,250 -(2/37 x $71,250)) $67,399.

In comparison, making the same contribution in 2025 rather than waiting for 2026 would allow the taxpayer to deduct the full $75,000 contribution, enabling total potential tax savings ($75,000 x .37 = $27,750 vs. $67,399 x .37 = $24,938) of $2,812.

Consider moving up charitable donations planned for next year and instead include them in your current year-end planning.

SALT Tax Deduction

What this means for you: Taxpayers can temporarily take advantage of an increased cap to deduct SALT from federal taxes.

Be aware that the SALT tax deduction cap has temporarily increased, taking it from $10,000 to $40,000 for 2025. It will sunset in 2030, with annual 1% increases scheduled to take place between 2027 and 2029. This deduction is available to taxpayers with MAGI at or below $500,000.

The SALT deduction phase-out for high earners begins when MAGI exceed $250,000 for single filers or $500,000 for married couples filing jointly. Once those limits are exceeded, taxpayers can expect to see their SALT cap reduced by 30% of the excess income. The deduction can’t fall below the TCJA limits of $10,000, or $5,000 if married filing separately.  

Maximizing your SALT Deduction

Consult with your tax advisor to determine whether the following strategies, or an alternative, would be the right fit for your circumstances:

• Accelerate property tax payments in December 
• Bundle together multiple years of personal property taxes if applicable 
• Make payments toward your state tax bill before year-end 

High-income individuals also have a few strategies to reduce their tax burden: 

• If possible, defer income near your phase-out thresholds 
• Look into Roth conversions in years where you have lower than usual income 
• Try to time your capital gains realizations strategically around threshold limits 

Child Tax Credit

What this means for you: Qualifying families can access increased tax savings.  

The Child Tax Credit was permanently increased to $2,200 per qualifying child, as adjusted for inflation. The phase-out threshold rate of $200,000 for single filers and $400,000 for married filing jointly, was also made permanent.

The OBBB also adjusted the refundable part of the credit for inflation each year. The maximum refundable credit for 2025 is $1,700 per child.

Senior Deduction

What this means for you: Potential tax savings for seniors under the income-limited threshold.

Effective 2025 through 2028, individuals aged 65 and older can claim an additional $6,000 deduction. This is in addition to the current additional standard deduction for seniors under existing law.

This deduction is eligible per single filer, with married couples filing jointly eligible for $12,000, as long as both spouses qualify. This deduction is income-limited. There is a deduction phase out for taxpayers with MAGI over $75,000 for single filers and $150,000 for joint filers.

The 2025 tax year, especially with the changes brought by the One Big Beautiful Bill, presents opportunities for tax savings. Proactive engagement and strategic collaboration with your financial advisory team can help lower your tax liability. Take the time now to have these critical discussions and take action.

If you’d like to have all the tax changes OBBB is introducing in one easy guide, download below.