By Lynn Evans
The rumors and rhetoric swirled for weeks, and the One Big Beautiful Bill Act (OBBBA) finally passed into law just in time to meet President Trump’s July 4 deadline. The 940-page bill makes a significant impact on everything from the price of chickpeas to Qualified Business Income (QBI) and SALT deductions.
In an effort to make good on campaign promises, the bill makes substantial changes to the tax code, and many of the implications of OBBBA on affluent families, business owners, and executives are favorable, including maintaining lower-income tax rates and increased exemptions. This means now is a smart time to look at how your business, personal finances, and estate plan are structured. Not because Congress says so, but because these rules shape how much you get to keep, how much goes to taxes, and how your family is set up for the next generation.
Tax Cuts and Jobs Act (TCJA) Provisions Made Permanent
One of the primary goals of this administration was to extend or make permanent some of the most popular 2017 TCJA changes, which were set to expire in 2025. One of the most important of these was preserving the marginal tax brackets. With the passage of OBBBA, the highest marginal tax rate stayed at 37%, rather than reverting back to the pre-TCJA rate of 39.6%. The other rates were also maintained, and OBBBA provided that income thresholds for each tax bracket will be adjusted annually for inflation.
A few important expiring TCJA provisions favorable to business owners were also addressed under OBBBA. First, the Qualified Business Income (QBI) deduction, which is a 20% deduction on pass-through income from qualifying trades or businesses, was made permanent. This deduction, available to non-corporate owners of pass-through entities such as sole proprietorships, partnerships, or S corporations, is subject to limitations, both at the business and individual level.
Second, business owners considering purchases of eligible equipment or property for the business will continue to enjoy the benefits of 100% bonus depreciation, meaning you can deduct the cost when it occurs, rather than over five, seven, or even fifteen years. Increases under OBBBA to businesses’ ability to deduct asset purchases under Section 179 can also provide incentives for owners to reinvest capital in businesses.
Finally, changes were made under OBBBA to the gain exclusions on the sale of Qualified Small Business Stock (QSBS), also known as §1202 stock. Prior to 2025, individuals who owned QSBS shares for at least five years could exclude a portion of the capital gains when the QSBS was sold. The amount of the exclusion depended on when the shares were acquired. OBBBA expanded these rules, increasing the maximum exclusion from $10 million to $15 million and broadening the definition of a Qualified Small Business, while also providing a limited exclusion when QSBS is sold after owning the shares for only three or four years. These changes allow for many more planning opportunities for QSBS owners.
Other Key Individual Tax Changes
Initially, one of the major hurdles to Congress’s ability to pass meaningful income tax reform, the State and Local Tax (SALT) deduction cap was increased in the final bill from $10,000 to $40,000 for households earning up to $500,000. This limit will be increased annually by 1% through 2029, after which it reverts back to $10,000.
The SALT deduction can be a powerful tool for reducing federal taxable income, but how you use it depends on where you live. In high-income tax states like California, where rates can reach 13.3%, income tax deductions may offer the greatest benefit. In states like Utah, which has a flat income tax of 4.55% and sales tax rates up to 8.85%, the balance between the two becomes more nuanced. Meanwhile, states like Nevada have no income tax but can impose sales taxes up to 8.35%. Since you can only deduct either income or sales tax in a given year, not both, strategic planning is essential to making the most of the SALT deduction.
Importantly, and despite the increased SALT limitation, OBBBA did not remove the ability to use Pass-Through Entity Tax (PTET) payments to deduct additional state taxes on business income flowing to taxpayers. A partnership or S-Corporation that has net business income may make state tax payments on behalf of its owners. These payments are deductible by the owner, but do not count toward the owner’s SALT deduction limitation.
Looking to 2025 and Beyond
Reviewing your estate plan is now more essential than ever, thanks to OBBBA’s permanent lift to the lifetime estate tax exemption. The exemption increased to $15 million per individual ($30 million for married couples) and will be indexed for inflation starting in 2026. With proper planning, this increase can result in an outsized impact for business owners where a potential liquidity event is on the horizon, especially when combined with some of the opportunities discussed above.
Also favorable to affluent individuals and families is the Generation-Skipping Transfer (GST) tax exemption, which was raised in lockstep with the estate tax exemption to $15 million per individual. It is always critical to keep this in mind when planning for your grandchildren, great-grandchildren, and beyond, to preserve more wealth within your family and continue your legacy.
Unfavorable Changes to Bear in Mind
Unfortunately, the new and extended tax cuts were not free. Many of the provisions were paid for with other adjustments that are less favorable to affluent taxpayers. This included the elimination or phasing out of many alternative energy credits, as well as permanently removing miscellaneous itemized deductions.
Owners of businesses with substantial losses will continue to see the deductibility of these losses capped at $250,000 under the Excess Business Deduction limitation. This cap, which was made permanent under OBBBA, will now be indexed for inflation beginning after 2026. Losses above this cap will be carried over under the Net Operating Loss (NOL) rules.
OBBBA also impacted the ability of homeowners to deduct mortgage interest. The Act permanently eliminated the ability of homeowners to deduct interest on home equity loans. Additionally, owners can only deduct interest on mortgages for home purchases up to $750,000. With average home prices across the United States at nearly $530,000, this is likely to impact a wide range of taxpayers.
A Few More Highlights Worth Knowing
- Regarding charitable donations, OBBBA made permanent the increased deductibility of itemized cash gifts of up to 60% of AGI; if you give more than that, you are allowed to carry it over for up to five subsequent years.However, OBBBA also added a floor to charitable gifts: taxpayers may only deduct charitable donations above 0.5% of AGI (1.0% for corporate taxpayers).
- For taxpayers in the highest bracket, OBBBA also revived and revised what were previously known as the Pease limitations. Prior to 2018, these provisions reduced overall itemized deductions by as much as 80%. Under OBBBA, individuals in the 37% tax bracket may see a 2% reduction in itemized deductions, effectively capping the benefit of itemized deductions at 35%.
- Despite many discussions and proposals, the corporate tax rate remains unchanged at 21%.
- High-growth industries, including life sciences and technology, can again expense research and development (R&D) costs in the year they occurred, rather than being required to capitalize and amortize these costs over five years.
So, What Do You Do Now?
The bottom line: these changes open doors. But like most things in tax and wealth planning, the value comes down to how you apply them to your situation, your balance sheet, your company, and your goals for your family.
At Solidarity Wealth, we spend a lot of time helping clients navigate exactly these kinds of shifts. That means coordinating with CPAs, estate attorneys, and other specialists to set you up not just for today, but for the future.
If you’re curious how these updates might impact your personal, business, or estate planning strategy, or want a second opinion on whether you’re leaving money on the table, let’s talk. You can contact us at info@solidaritywealth.com or call 385-374-1665 to set up a conversation.
About Lynn
Lynn Evans is the Director of Family Office Services and a Tax Advisor at Solidarity Wealth. He advises some of the Mountain West’s most successful families, technology entrepreneurs, and executives on complex individual, fiduciary, and business income tax matters, estate and gift tax planning, and fiduciary administration.
Prior to joining Solidarity Wealth, Lynn served as a senior trust advisor at a large national private bank and as a senior tax manager for a large international CPA firm, specializing in complex tax issues for individuals, businesses, trusts, and estates.
Lynn holds a Bachelor of Arts in Accounting and a Master of Accountancy with an emphasis in tax from the University of Utah, as well as a Juris Doctor with a focus on Business Law and Estate Planning from Albany Law School. He is a member of the American Bar Association and currently serves on the executive board of the Salt Lake Estate Planning Council, where he continues to engage with and contribute to the wealth management community. Outside of work, Lynn enjoys spending quality time with his wife and four children. A dedicated outdoorsman, he loves hiking, camping, and skiing, and is always eager to hone his home improvement skills or attend music performances and sporting events. To learn more about Lynn, connect with him on LinkedIn.
Solidarity Wealth is a registered investment adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Solidarity Wealth and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Solidarity Wealth unless a client service agreement is in place.
