A Beautiful Bill by Any Other Name and What It Means for Individuals, Trusts and Estates

By Alexander M. Parthemer, LL.M., and Mark R. Parthemer, JD, AEP, ACTEC Fellow

“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.”

Jean-Baptiste Colbert’s observation from the 17th century feels remarkably current in light of recent rulings, regulations, and legislation. On July 4, 2025, President Donald Trump signed into law one of the most sweeping tax reform measures in recent memory. Passed through reconciliation, the legislation did not receive an official short title. Over time, however, commentators have given it several nicknames: the One Big Beautiful Bill Act, the Beautiful Bill, and BBB. Increasingly, practitioners and policymakers are calling it OB3, which is the name we will use here.

With OB3, the rules of the game for individuals, trusts, and estates have been significantly reshaped. The law extends and modifies provisions of the 2017 Tax Cuts and Jobs Act while adding new opportunities and complexities for high-net-worth families and their advisors. What follows is a review of provisions most relevant to high-net-worth individuals, families, and business owners.

Estate, Gift, and GST Tax Exemptions

OB3 makes permanent the elevated estate and gift tax exemptions that were scheduled to sunset at the end of 2025. Beginning in 2026, the unified credit will be set at $15 million per individual, indexed annually for inflation beginning in 2027. The generation-skipping transfer (GST) exemption is similarly increased and made permanent.

The permanence of these exemptions provides a degree of certainty that was lacking under prior law, reducing “sunset anxiety.” Techniques such as dynasty trusts, spousal lifetime access trusts (SLATs), and grantor retained annuity trusts (GRATs) can now be pursued without the looming risk of a drastic reduction in the exemption amount. In addition, even if an individual has fully used their gift exemption in 2025, the time is ripe to plan on how best to use the additional $1 million+ to be received January 1, 2026.

Income Tax Provisions

OB3 preserves several provisions introduced under the TCJA. Lower marginal tax rates remain in place, as does the elimination of personal exemptions. Alternative minimum tax relief is maintained. The standard deduction is further increased beginning in 2025, with indexing for inflation starting in 2026. The $750,000 mortgage interest cap continues, and miscellaneous itemized deductions remain suspended, except for educator expenses (which were increased). Although the PEASE limitation was not reinstated, a new provision now caps the benefit of itemized deductions at 35% (so, a taxpayer in the 37% tax bracket will receive a 2/37s “haircut” (5.4%) to their itemized deductions). This rule impacts individuals, trusts, and estates.

Charitable Giving

Charitable giving rules are reshaped under OB3. Beginning in 2026, non-itemizers may claim an above-the-line deduction of up to $1,000 ($2,000 for joint filers) for cash gifts to public charities. For itemizers, charitable contributions are deductible only to the extent they exceed 0.5 percent of modified adjusted gross income, with unused contributions carried forward. The 60 percent of AGI limit for cash contributions to public charities is made permanent. Corporations also now face a charitable floor: only contributions exceeding 1 percent of taxable income are deductible, subject to the existing 10 percent cap.

These provisions will likely influence both the timing and structure of charitable gifts, and traditional vehicles such as donor-advised funds, charitable remainder trusts, and charitable lead trusts will continue to play important roles. In fact, philanthropically inclined clients may want to take action before 2026 by bunching a large donation before the new rules kick in.

State and Local Tax Deduction

The state and local tax (SALT) deduction cap, long a source of contention, is increased to $40,000 beginning in 2025. This higher limit phases down (to the prior $10,000 cap) between $500,000 and $600,000 of adjusted gross income, and from 2026 through 2029 the cap rises by 1 percent annually. In 2030, it reverts to $10,000. The final legislation preserves a limited state-level pass-through entity workaround, rejecting earlier proposals to eliminate them.

For high-income taxpayers in states with significant income and property taxes, the SALT cap continues to present challenges, though entity-level workarounds remain viable planning options.

Qualified Opportunity Zones

OB3 makes the Qualified Opportunity Zone (QOZ) program a permanent feature of the Internal Revenue Code, ensuring that the regime introduced in 2017 remains part of the long-term tax landscape. The legislation also makes several structural changes that refine both the designation of zones and the operation of Qualified Opportunity Funds (QOFs).

Beginning in 2026, governors are required to re-designate eligible QOZs every 10 years, using updated census data. This recurring process replaces the static designations under prior law and is intended to keep the program aligned with evolving economic realities. Importantly, the prior “contiguous tract” rule is eliminated, narrowing eligibility to zones that more directly meet the statutory definitions of economic distress. These changes will likely shift the geographic footprint of QOZ investments over time.

With respect to tax benefits, OB3 modifies the timing and magnitude of gain deferral and basis adjustments. Capital gains invested in a QOF after 2026 may be deferred until the earlier of disposition of the investment or five years after the investment date. For investments held at least five years, a 10 percent step-up in basis is allowed. A more generous 30 percent basis increase applies to investments in qualified rural opportunity funds, reflecting an emphasis on channeling investment to rural communities.

Another notable change is the treatment of post-10-year dispositions. Under prior law, the QOZ program included a sunset provision that limited the availability of gain exclusion for investments disposed of after December 31, 2047. OB3 removes this fixed sunset and instead adopts a 30-year rolling horizon. Specifically, for QOF investments held for at least 10 years, taxpayers may elect to step up their basis to fair market value. If the investment is sold or exchanged before 30 years, the basis step-up equals the fair market value on the date of sale. If the investment is held for 30 years or more, the basis step-up is frozen at the fair market value on the 30th anniversary of the investment, and subsequent appreciation will be subject to tax upon disposition.

OB3 also addresses transparency and compliance. The statute codifies enhanced reporting requirements for QOFs, mandating disclosure of amounts invested, the nature of the underlying businesses (including NAICS codes), valuation data, and employment metrics. Failure to comply with these requirements can result in penalties, underscoring the importance of careful fund administration.

The permanence of the QOZ framework, coupled with these refinements, ensures that QOFs remain a central tool in capital gains planning. Investors may use them to defer recognition of gains and potentially exclude appreciation, while policymakers seek to direct capital into areas targeted for economic development.

Qualified Small Business Stock

OB3 expands the benefits of Section 1202 stock. For QSBS acquired after July 4, 2025, the exclusion increases to the greater of $15 million or 10x basis. A graduated exclusion was added: 50% after three years, 75% after four years, and 100% after five years. The gross asset test for qualifying as a qualified small business rises from $50 million to $75 million.

These enhancements make QSBS even more attractive. Founders, employees, and investors in eligible C corporations can access larger exclusions in shorter timeframes. For estate planners, gifting QSBS to family members or non-grantor trusts remains a highly effective way to multiply exclusions (i.e., stacking) or leveraging the 10x provision by creating larger basis (i.e., packing).

New Individual Deductions

OB3 introduces several temporary above-the-line deductions for tax years 2025 through 2028. These include:

• Up to $10,000 of auto loan interest on new U.S.-assembled passenger vehicles, phased out above $100,000 of AGI ($200,000 for joint filers).
• Up to $25,000 of tip income per eligible taxpayers in eligible industries, phased out beginning at $150,000 of AGI ($300,000 joint).
• Up to $12,500 of overtime pay for individuals and $25,000 for joint filers, subject to the same phaseout as the tip deduction. Note, the exclusion in only on the pay above the standard pay rate, such as the ½ for those being paid time and a half for overtime work.
• Additionally, seniors aged 65 and older are eligible for an extra $6,000 standard deduction through 2028 (instead of the “No Tax on Social Security”), subject to a phaseout at $75,000 ($150,000 for joint filers).

These deductions provide short-term relief but are scheduled to expire after 2028.

Education and Family Accounts

OB3 broadens 529 plans to cover a wider range of pre-K – 12th grade educational expenses, including testing, tutoring, therapies, dual enrollment, and credential programs and doubles the annual withdrawal amount to $20,000.

The law also introduces “Trump Accounts” for minors (anyone under age 18), which may be opened July 4, 2026, or thereafter. Benefits include a one-time $1,000 government contribution for children born between 2025 and 2028. Annual contributions are capped at $5,000, indexed from 2028, with up to $2,500 in employer contributions excluded from income (this can be from the account owner’s employment or the employment of a person to whom the owner is a dependent). Accounts must be invested in certain US index-tracking funds, and withdrawals after age 18 are taxed as though from a Traditional IRA funded with non-deductible contributions (this means the earnings are taxed as ordinary income and subject to the 10% early withdrawal penalty, unless any of the 23 exceptions apply). These accounts add another option for multigenerational savings; however, as written, since the beneficiary has no access prior to age 18 (i.e., no present interest), contributions would not qualify for annual exclusion.

Planning Considerations

OB3 requires a recalibration of strategies for individuals, trusts, and estates. Permanent estate tax exemptions allow for long-term planning with greater confidence. Charitable giving rules call for careful structuring of large gifts. SALT deductions remain challenging, but pass-through workarounds and trusts continue to mitigate exposure. The permanence of QOZs and the expansion of QSBS significantly broaden capital gains planning. Meanwhile, new deductions and savings accounts create fresh opportunities for families.

Conclusion

At over 870 pages in length, OB3 provisions span from long-term estate and transfer tax certainty to temporary relief for working families, while also reshaping charitable giving rules and capital gains strategies through QSBS and QOZ enhancements. For individuals and institutions alike, the law establishes a framework that will influence decisions on wealth transfer, philanthropy, and investment for years to come. The breadth of the changes ensures that OB3 will be a central reference point in tax planning and policy discussions well into the future.

The authors take sole responsibility for the views expressed herein and these views do not necessarily reflect the views of the authors’ employers or any other organization, group or individual.

© 2026 This article was originally published in the Winter 2026 issue of the Tax Section Bulletin, a Florida Bar Tax Section publication.

The information provided in this article does not, and is not intended to, constitute legal advice; it is for general informational purposes only. No reader of this article should act or refrain from acting on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction to ensure the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.

Alexander Parthemer focuses his practice in the areas of estate planning, probate and trust administration, tax planning, business planning, and transactional corporate law. Alex works with individual clients and families to develop personalized estate plans for asset protection and distribution while minimizing estate, gift, and generation-skipping transfer (GST) tax impact. His background in complex tax planning uniquely positions him to represent business owners and family offices in a wide range of corporate matters. Alex holds an LL.M. in Taxation from the University of Florida Levin College of Law.