Experts at a global law firm examine the main provisions of the recent US tax and spending legislation, highlighting areas that will affect high net worth and UHNW private clients.

The following article, written for a wealth management professional audience, examines the details of the recently-enacted US legislation on tax, spending and debt. The authors are Mohsen Ghazi, Patrick J McCurry, and Thomas P Ward of global law firm McDermott WIll & Emery. The editors are pleased to share these views; the usual editorial disclaimers apply, so please join the conversation if you want to comment. Email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), the most significant US tax overhaul since the 2017 Tax Cuts and Jobs Act. The OBBBA includes critical changes impacting family offices, closely held businesses, and high net worth individuals.

I. Income tax and investment structuring
Permanent extension of individual rates: The OBBBA permanently extends the individual income tax rates from the TCJA, notably retaining the top rate of 37 per cent, reducing prior uncertainty regarding future rate hikes. The OBBBA also leaves the federal corporate tax rate unchanged, which remains permanently fixed at 21 per cent, as established under the TCJA. This clarity enables more confident long-term investment and estate planning decisions.

Expanded SALT deduction and PTET: The SALT deduction cap temporarily increases to $40,000 for married joint filers through 2029 before reverting to $10,000 thereafter. Importantly, the widely-used pass-through entity tax (PTET) workaround remains fully preserved, benefiting many family offices, especially in high-tax states. Family offices should strategically evaluate state tax payments and PTET elections to maximize temporary benefits.

Enhanced Pass-Through Deduction (Section 199A): The OBBA makes permanent the existing 20 per cent qualified pass-through deduction, with several beneficial enhancements. The income thresholds for phase-ins now begin at $75,000 for single filers and $150,000 for joint filers, with a new $400 deduction floor for actively participating owners. These enhancements offer substantial after-tax opportunities for qualifying flow-through businesses.

Qualified Small Business Stock (QSBS) Enhancement: QSBS tax advantages are significantly improved. The 100 per cent capital gains exclusion is retained for five-year holdings, with new partial exclusions (50 per cent at three years, 75 per cent at four). The per-issuer gain exclusion cap rises to the greater of $15 million (indexed for inflation from 2026) or ten (10) times the taxpayer’s aggregate adjusted basis. The gross asset test increases to $75 million. These updates facilitate greater flexibility and tax-efficient investment opportunities in early-stage companies. Family offices can leverage QSBS through strategic gifting and trust planning, enhancing multi-generational wealth transfer.

Enhanced and Expanded Opportunity Zones (OZs): The OZ program is permanently expanded with recurring 10-year designations beginning July 2026. Investments held at least five years qualify for enhanced basis step-ups (10 per cent standard, 30 per cent for Rural Opportunity Funds), and rural zone improvement requirements are eased. However, deferred gains from the original OZ program must be recognized by the end of 2026. Family offices should proactively consider tax-mitigation strategies such as loss harvesting, charitable remainder trusts, or bonus depreciation strategies.

Restored 100 per cent per cent bonus depreciation: 100 per cent bonus depreciation is permanently reinstated for qualified property placed in service after January 19, 2025. This provision significantly enhances the attractiveness of capital-intensive investments, notably real estate, infrastructure, and business aviation.

Enhanced interest expense deduction: The EBITDA-based limitation on interest expense deductions is permanently reinstated, increasing upfront deductibility relative to prior EBIT-based limits. This provision especially benefits leveraged investment structures such as private equity and real estate, as well as tax-sensitive vehicles like leveraged blockers.

Immediate R&D expense deduction: Effective after December 31, 2024, domestic R&D expenditures become immediately deductible. Small businesses (under $31 million in gross receipts) may retroactively elect immediate expensing for R&D expenditures from 2022 to 2024, potentially unlocking substantial tax savings. Family offices investing in innovation-driven sectors should leverage this provision strategically.

Limitation on Excess Business Losses (EBLs): The OBBBA permanently extends the limitation on excess business losses, disallowing business losses exceeding annually adjusted thresholds ($313,000 single/$626,000 joint, indexed annually). Thus, the EBL limit in most cases remains a one-year deferral rather than a permanent disallowance.  

Importantly, disallowed losses continue converting into net operating losses (NOLs) carried forward indefinitely to offset up to 80 per cent of future taxable income. Investors in active trading strategies and leveraged investments will appreciate the clarity provided, enabling strategic planning to optimize utilization of these carry-forward losses.

Estate and Gift Tax provisions: The federal estate and gift tax exemption permanently increases to $15 million per individual ($30 million per married couple), indexed for inflation beginning January 2026. This expansion enhances multi-generational wealth transfer opportunities, particularly through sophisticated trusts (GRATs, CLATs, dynasty trusts). Family offices should proactively adjust estate plans to leverage these expanded exemptions fully.

II. Other important provisions

Important exclusions
The final OBBBA notably preserves favorable tax treatment for carried interest, Private Placement Life Insurance (PPLI), Private Placement Variable Annuities (PPVA), and private foundations. The controversial “Section 899” surtax was ultimately excluded, significantly clarifying and simplifying international tax planning for global family offices and multinational investors. Additionally, earlier proposals targeting the taxation of private foundations, litigation finance investments, and amortization deductions for owners of professional sports franchises were ultimately omitted. 

III. Market insight and strategic considerations
In recent months, the OBBBA’s passage through Congress coincided with significant market responses, notably a steep decline in the US dollar (the sharpest first-half drop in over 50 years) and fluctuations in Treasury yields. Some market observers believe these trends may reinforce the growing importance of geographic diversification, currency exposure management, and proactive risk mitigation strategies.  

This updated tax landscape presents compelling strategic opportunities for family offices and high net worth investors.

About the writers:

Mohsen Ghazi (pictured below) is a partner at McDermott Will & Emery in Chicago who advises ultra-high net worth individuals, families, and family offices on tax-efficient structuring for investment funds and wealth transfer strategies, both domestically and internationally.
 

Patrick J McCurry (pictured below) is a partner in McDermott’s Chicago office specializing in the corporate and tax aspects of complex business and investment transactions particularly for single-family offices, private equity funds, partnerships, and strategic joint ventures.

Thomas P Ward (pictured below) is a partner in the firm’s tax department (Chicago), focusing on income tax, corporate, and compliance issues for high net worth individuals and business owners – especially around family office management companies, private investment funds, and incentive equity arrangements.