OBBBA Tax Changes 2026: What Wealthy Families Need to Know

The One Big Beautiful Bill Act, signed July 4, 2025, was the largest permanent tax change since the Tax Cuts and Jobs Act. This is a practical guide to what it changed and what it means for households with $2M–$20M in wealth.

Quick-reference: what OBBBA changed

1. Estate and gift tax: the $15M permanent exemption

This is the most broadly applicable change. The federal estate and gift tax exemption is now $15 million per person — permanently, indexed for inflation annually going forward. Married couples can shelter $30M from federal estate tax using portability.¹

Before OBBBA, the TCJA's elevated exemption was set to expire at the end of 2025, snapping back to approximately $7M per person. Estate attorneys had been recommending aggressive irrevocable trust strategies to "lock in" the higher exemption before the cliff. That urgency is now gone for most $2M–$20M families.

Practical implications:

• If your combined estate is under $30M, you will owe zero federal estate tax under current law. Basic planning (will, beneficiary designations, POA) still matters, but complex irrevocable structures are rarely warranted.
• QSBS exclusion (see §3 below), GRATs, and SLATs remain valuable tools — but for asset transfer efficiency and income-tax avoidance, not estate-tax avoidance at this wealth level.
• Families with business interests, closely held real estate, or large retirement accounts approaching $15M per person should still review their structure annually.

Full estate planning guide for $2M–$20M families →

2. QSBS exclusion raised to $15M

Under IRC §1202, gain from the sale of Qualified Small Business Stock held more than five years is partially or fully excluded from federal income tax. OBBBA raised the maximum exclusion cap from $10 million to $15 million (or 10× your adjusted basis, whichever is greater) for stock issued on or after July 4, 2025.² The gross asset limit for qualifying companies was also raised from $50M to $75M.

To qualify as QSBS, stock must be: issued by a domestic C-corporation, acquired at original issuance, held more than 5 years, and issued while the company's aggregate gross assets were ≤$75M (post-OBBBA). The company must also be an eligible trade or business (services firms such as law, health, finance are excluded).

QSBS mechanics and business-sale tax planning guide →

3. §199A QBI deduction made permanent at 20%

The §199A qualified business income deduction — which allows pass-through business owners (S-corporations, partnerships, sole proprietorships, LLCs taxed as pass-throughs) to deduct 20% of qualified business income from federal taxable income — was set to expire after 2025. OBBBA made it permanent.³

Practical implications for $2M–$20M business owners:

• At the 37% marginal rate, a $500K QBI deduction saves $37,000/year in federal tax. That recurrence is now guaranteed going forward.
• The W-2 wage limitation (generally 50% of W-2 wages, or 25% of W-2 wages + 2.5% of qualified property) applies above the taxable income phaseout range. Structuring owner compensation to optimize the W-2/distribution split remains important.
• Specified service trades or businesses (SSTBs) — which include financial services, law, health, and consulting — are excluded from the deduction at income levels above the phaseout range.
• The deduction applies at the individual level: it reduces taxable income but not self-employment income, NIIT base, or IRMAA MAGI.

Income tax reduction strategies for high earners → | Cash balance plans for business owners →

4. AMT: tighter phaseout range, same exemption

The Alternative Minimum Tax changes under OBBBA are less favorable for wealthy families than the headlines suggest. While the exemption amounts remain at $90,100 (single) / $140,200 (MFJ), OBBBA lowered the phaseout threshold from $1,252,700 to $1,000,000 MFJ and accelerated the phaseout rate from 25¢ to 50¢ per dollar of AMTI.⁴

In plain terms: the exemption now phases out twice as fast, starting $250,000 earlier for MFJ filers. A married couple with $1.4M in AMTI (not unusual after an ISO exercise year or a business sale) will lose their entire exemption — compared to only losing about half under 2025 rules.

Full AMT planning guide with 2026 bracket calculator →

5. SALT cap increase — but not for this income bracket

OBBBA increased the SALT deduction cap from $10,000 to $40,000 for tax years 2025–2029. On paper, that's meaningful for California, New York, and New Jersey residents paying $40,000+ in state income tax.⁵

The catch: the enhanced cap phases out starting at $500,000 of income, returning to $10,000 for taxpayers with income above $600,000. For most households in the $2M–$20M range, income regularly exceeds $500K — so the benefit largely disappears before you can use it.

Who actually benefits from the SALT increase in this audience:

• Households in a low-income year (business sold, sabbatical) where income drops below $500K temporarily.
• Income that's primarily long-term capital gains, which may be "stacked" at a lower income threshold depending on how MAGI is calculated for this purpose.
• Business owners who use the Pass-Through Entity Tax (PTET) workaround — the PTET still lets many pass-through owners deduct state tax at the entity level, bypassing the individual cap entirely.

State income tax relocation planning and savings calculator →

6. 529 K-12 annual limit doubled to $20,000

OBBBA doubled the annual 529 withdrawal limit for K-12 tuition from $10,000 to $20,000 per student per year starting in tax year 2026. The law also expanded qualified expenses to include tutoring, curriculum materials, and educational therapy fees — not just institutional tuition.⁶

Combined with 529 superfunding ($95,000 per donor / $190,000 per married couple using five-year election), this makes the 529 a more powerful tool for families with children in private K-12 schools. A $190,000 superfunding contribution per grandchild — done four times across four grandchildren — removes $760,000 from the estate without touching the $15M lifetime exemption.

529 strategies guide and growth projector →

7. Opportunity Zones: OZ 1.0 ends December 31, 2026; OZ 2.0 is permanent

OBBBA made Opportunity Zones a permanent feature of the tax code through OZ 2.0:

• OZ 1.0 (original program): Capital gains invested before December 31, 2026 receive tax deferral until December 31, 2026. Any deferred gain invested since 2018 in a Qualified Opportunity Fund will be recognized on your 2026 return. This is a firm December 31, 2026 deadline.
• OZ 2.0 (permanent program): Invest any capital gain in a Qualified Opportunity Fund, hold for 5 years, and defer the gain for that period. Hold for 10 years and any appreciation inside the QROF is excluded from income entirely. Rural Qualified Reinvestment Opportunity Funds (QROFs) also receive a 30% step-up on deferred gains at the 5-year mark.

The OZ 2.0 structure makes Opportunity Zone investing a perpetual planning tool for investors with concentrated gains from business sales, real estate, or stock portfolios.

Opportunity Zone planning guide and tax-deferral calculator →

8. Bonus depreciation: 100% restored for qualifying property

OBBBA restored 100% first-year bonus depreciation for qualifying property. The prior TCJA schedule had bonus depreciation phasing down: 80% in 2023, 60% in 2024, 40% in 2025. OBBBA brought it back to 100%.⁷

Key details:

• Equipment and personal property: 100% expensing for property placed in service after January 19, 2025.
• New structures (commercial/residential): 100% bonus depreciation applies if construction begins after January 19, 2025 and before January 1, 2029, placed in service before January 1, 2031.
• Bonus depreciation creates large deductions that can offset ordinary income in the year of purchase — valuable for business owners with high W-2 income or large S-corp distributions.
• The depreciation adds-back as a preference item for AMT purposes, which can create AMT exposure (see §4 above). Run the AMT calculation before taking large bonus depreciation deductions.

Real estate vs. stocks allocation guide → | Alternative investments for $2M–$20M investors →

OBBBA relevance checker

Select the situations that apply to you to see which OBBBA provisions are most relevant to your planning.

What to do with this information

OBBBA created both opportunities and new traps. The opportunities (permanent estate exemption, permanent QBI deduction, QSBS increase, OZ 2.0) are most valuable when planned for proactively. The traps (AMT phaseout moved closer, SALT benefit largely phased out at this income level) require awareness so they don't create surprise tax bills.

Specific action items for $2M–$20M households in 2026:

1. Review your estate plan: If your attorney was recommending aggressive trust structures to beat the 2025 sunset, some of that urgency is gone. GRATs and SLATs may still make sense for other reasons — confirm with your estate attorney.
2. QBI deduction is permanent — optimize your business structure: If you've been deferring business entity restructuring decisions pending the QBI sunset, that constraint is removed.
3. QSBS review: If you're a founder investing in or receiving startup stock, confirm whether new issuances qualify under the $75M gross asset and $15M exclusion limits.
4. AMT analysis for ISO holders and high-depreciation years: The OBBBA AMT phaseout change creates new exposure. Model your tentative minimum tax before exercising ISOs or taking large bonus depreciation deductions.
5. OZ 1.0 planning: If you have gains deferred since 2018 in an OZ fund, the December 31, 2026 recognition date is firm. Plan for the tax hit and evaluate OZ 2.0 as a replacement strategy.
6. 529 funding review: If you have K-12 children and have not yet superfunded a 529, the doubled $20K/year withdrawal limit makes this more attractive in 2026.

Income tax reduction strategies → | Capital gains tax strategies → | Full planning guide for wealthy families →

Sources

1. IRS Newsroom, IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill — confirms $15M estate/gift exemption, permanent and inflation-indexed. IRS.gov
2. Tax Foundation, Qualified Small Business Stock (QSBS) Exclusion — OBBBA raised exclusion cap to $15M for stock issued after July 4, 2025; gross asset limit raised to $75M. TaxFoundation.org
3. IRS Newsroom, One, Big, Beautiful Bill Provisions and Qualified Business Income Deduction — §199A 20% deduction made permanent. IRS.gov
4. Tax Foundation, 2026 Tax Brackets and Federal Income Tax Rates — AMT exemptions $90,100/$140,200; phaseout at 50¢/$ above $500K/$1M MFJ. TaxFoundation.org
5. Tax Foundation, FAQ: The One Big Beautiful Bill Act Tax Changes — SALT cap $40,000 for 2025–2029, phaseout from $500K–$600K income. TaxFoundation.org
6. Kitces, 2025 End-of-Year Tax Planning Under OBBBA — 529 K-12 limit doubled $10K→$20K, expanded qualified expenses. Kitces.com
7. IRS Newsroom, Treasury, IRS issue guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill — 100% bonus depreciation for qualifying property. IRS.gov

Values verified against 2026 rules as of June 2026. Tax law is complex and individual circumstances vary. Consult a qualified tax professional before acting on any information here.