By JACKSON KEENAN, CFP®
Key Takeaways
- Estate Planning Advantage: The estate and gift tax exemption has been permanently increased to $15M per individual, offering expanded opportunities for wealth transfer.
- Temporary Social Security Deduction: From 2025 to 2028, retirees with moderate income may qualify for a new deduction on Social Security income.
- Enhanced SALT Deductions: Raised to $40,000 (or $20,000 for married filing separately.)
- 100% Bonus Depreciation: Businesses can fully expense qualifying assets, with the deduction limit raised to $2.5 million.
Now that the One Big Beautiful Bill Act (OBBBA) has passed, many of our clients are asking what it means for their tax strategy and financial planning outlook. The legislation introduces several permanent and temporary provisions that may directly affect high-net-worth (HNW) families. Here’s a breakdown of the key elements most relevant to our clients:
1. Tax Policy Changes to Know
Tax Brackets Stay Put
The 2017 tax cuts have been extended, so the current seven tax brackets will remain in place. The top marginal rate will continue at 37%.
Estate & Gift Tax Exemption Increases
A major win for estate planning: the individual estate and gift tax exemption is now set at $15 million, or $30 million for married couples—indexed for inflation. This change is permanent, giving more flexibility in long-term wealth transfer planning.
Alternative Minimum Tax Relief
The higher AMT exemption thresholds are now permanently extended, potentially reducing the number of high-income earners who face this parallel tax system.
2. New (Temporary) Social Security Tax Deduction
While the headlines may say “no tax on Social Security,” the reality is more nuanced.
- For individuals age 65+: A $6,000 deduction is available if income is $75,000 or less.
- For married couples (both age 65+): A $12,000 deduction applies if joint income is $150,000 or less.
- Phaseout: These deductions begin to phase out above those thresholds and disappear entirely at $175,000 for individuals and $250,000 for couples.
- Timeline: This deduction is available only for tax years 2025 through 2028.
3. State and Local Tax (SALT) Deduction Expanded
High-income earners in high-tax states will want to pay attention to this change.
- The SALT deduction cap is raised to $40,000 (or $20,000 for married filing separately) for households with a MAGI under $500,000.
- Single and married filers now receive the same cap amount, which levels the playing field.
- The deduction phases out for income above that threshold at a rate of 30% of the excess MAGI.
- Beginning in 2026, the cap will increase 1% annually through 2029.
4. More Flexibility and Benefits from Health Savings Accounts (HSAs)
- HSAs can be used for Direct Primary Care (Concierge Fees) up to $150/month (single) and $300/month (family).
5. Accelerated Depreciation Changes
- Permanent 100% Bonus Depreciation: Businesses can claim 100% bonus depreciation on qualifying property placed in service after January 19, 2025. (The original amount was 40%.) This includes most assets with a recovery period of 20 years or less (such as machinery, equipment, computers, furniture, and certain land improvements), as well as improvements to the interiors of nonresidential buildings.
- Increased Limits: The deduction cap has increased from $1 million to $2.5 million, with phase-outs beginning at $4 million for property placed in service after December 31, 2024.
Final Thoughts
These provisions introduce both opportunities and new planning considerations. Some changes—like the estate tax exemption—offer clarity for long-term strategy, while others—like the Social Security deduction—are time-limited and require careful income management.
At MONTAG Wealth Management, our financial planning team is already working with clients to assess how the OBBBA affects their strategies. If you have questions about how these changes apply to your specific situation, I encourage you to reach out to your Senior Wealth Manager.
Source: H.R.1 – One Big Beautiful Bill Act 119th Congress (2025-2026)
Disclosure:
The information provided is for illustration purposes only. It is not, and should not, be regarded as “investment advice” or as a “recommendation” regarding a course of action to be taken. These analyses have been produced using data provided by third parties and/or public sources. While the information is believed to be reliable, its accuracy cannot be guaranteed. MONTAG employees do not provide legal or tax advice. For specific legal or tax matters, you should consult with your own legal and/or tax advisors. There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible.
