After the passage of the “One Big Beautiful Bill” Act , family offices and family businesses should be happy about three main provisions in the new bill.

The greatest worry family offices and family businesses had was seeing a new tax bill raise the top income bracket beyond 37 per cent. It didn’t happen. 

Lawmakers talked about going beyond the 40 per cent tax rate, with an additional tax on our highest income earners, commonly called a surtax on income. This was killed.

Most family businesses operate as pass-through entities, which means they pay more in taxes than corporations, which are subject to a 21 per cent tax rate. Educating lawmakers on Capitol Hill about this basic unfairness between the tax rate on pass-through organizations versus corporations is a major win for family office customers, and family businesses.

With the bill’s passage, the top tax rate remained unchanged and is permanent at 37 per cent. 

Estate tax exemption raised
The second important win for family offices and family businesses focuses on the estate tax, sometimes called the “death tax.”

The fight against the estate tax has been ongoing for a long time, and it’s always on the radar of our lawmakers. With the passage of the bill, the good news is that the estate tax lifetime exemption has increased to $15 million per person, from $14 million. This is permanent, too. 

No capital gains tax increase
The third big win is the capital gains tax. 

Capital gains taxes are always in the crosshairs of Congress. They’re always looking to raise taxes on capital gains, such as real estate, shares in companies, and the other valuable investments family businesses make to invest in their futures. 

With the new bill, assets held for one year or less, short-term Capital Gains, have rates from 10 per cent to 37 per cent, while long-term Gains, assets held over one year, have better rates, from zero to 20 per cent. Unfortunately for family businesses, corporations again get taxed at the much lower flat rate of 21 per cent. 

There is now no increase to capital gains taxes. This is a big win. 

Passing-through
There are other important wins in the bill for family offices and family businesses. As mentioned earlier, since a large majority of family businesses are pass-through entities, the one work-around that lawmakers came up with to level the playing field is something called the 199A provision, which offers an additional 20 per cent tax break to Pass-Through entities, which helps. 

The good news is Congress listened to family office and business leaders and the 20 per cent deduction for Pass-Through entities was made permanent in the OBBB Act. 

Restoring R&D expenses
Another important win was making sure Congress restores all research and development expensing so family businesses can write down, over time, the cost of expensive equipment and projects important to long term investing. 

Working with lawmakers, the new tax bill now restores full expensing for domestic research and development costs starting in 2025, offering a welcome reversal of the Tax Cuts and Jobs Act’s capitalization requirement. 

But it’s complicated and family business managers will need to know what domestic expenses are retroactive, what can be accelerated, and which ones can be amortized over the long term. 

No matter, the new R&D expensing provisions are a big win for family-owned businesses of all sizes. What’s more, they are retroactive for eligible family businesses, which could unlock refunds for 2022–2024 returns. 

Nothing is permanent 
But of course, nothing is ever permanent in Washington, DC. 

Every election brings new tax proposals and new concerns for the nation’s number one private employer, family-owned businesses. And the question of tariff rates remaining or increasing remains unanswered and ever changing. 

The key for family offices and family businesses is to make their voice heard on Capitol Hill and to make sure lawmakers help our nation’s 32 million family-owned businesses, the strongest economic engine in our country.

About the author
Pat Soldano is president of Family Enterprise USA and the Policy Taxation Group. Both are non-partisan organizations advocating for family enterprises of all size and are also organizers of the Congressional Family Business Caucus and the Family Enterprise USA Annual Family Business Survey.