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Understanding Personal Tax Implications of the OBBBA of 2025

Tax Policy Update

On July 4th, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA extends key provisions of the Tax Cuts and Jobs Act (TCJA) set to expire at the end of 2025 while introducing several new tax measures. Leaders across our Family Office and Tax Policy & Research groups have created an overview of the major provisions included and the potential impact on wealth planning.

Key takeaways

  1. Many personal tax provisions are extended.
    Many personal tax provisions from the TCJA that were scheduled to sunset in 2025 have been permanently extended—including the increased estate, gift, and generation-skipping transfer (GST) tax exemption levels, lower income tax rates, and higher alternative minimum tax (AMT) phaseouts.
  2. New provisions impact the tax benefits of charitable giving.
    New provisions limiting itemized deductions, particularly the charitable contribution deduction, will impact the tax benefits of donations.
  3. The income tax benefits of qualified small business stock (QSBS) were significantly expanded.
    These expanded provisions could provide opportunities for family-owned businesses.

Several major TCJA provisions being extended

Against a backdrop of uncertainty around a number of TCJA provisions scheduled to sunset at the end of 2025, the OBBBA permanently extends and/or enhances many of these provisions.

  • Estate, gift, and GST tax exemptions are increased to $15 million (from $13.99 million) per taxpayer for gifts made or deaths occurring in 2026 and will be adjusted for inflation beginning in 2027.
  • Income tax brackets for individuals, estates, and trusts will remain at TCJA levels in perpetuity.
  • The individual AMT exemption levels and exemption phase-out thresholds enacted under the TCJA are permanently extended.

Further parameters on charitable giving deductions

Beginning in 2026, new limitations on charitable deductions will directly impact potential tax benefits.

  • A new 0.50% adjusted gross income (AGI) floor will apply to charitable contributions for individual taxpayers who itemize deductions. For example, if an individual’s AGI is $10 million, they may only deduct donations of $50,000 or more.
  • The maximum value of each dollar of an itemized deduction is capped at $0.35 for taxpayers in the highest tax bracket (previously $0.37).

Expanded QSBS provisions could provide opportunities for family-owned businesses

The OBBBA enhanced the tax benefits of QSBS for stock acquired after July 4, 2025. Notable enhancements include:

  • New time-based gains exclusions. Taxpayers will be eligible to exclude 50% of gain after holding the stock for three years, 75% of gain after four years, and 100% of gain after five years. (Previously taxpayers were required to hold the stock for five years to qualify for the gain exclusion.)
  • Increased caps on gain exclusions. The per-issue limit on the amount of eligible gain is increased to $15 million (from $10 million) and will be adjusted for inflation.
  • Increased the gross asset limit on corporations. A corporation with gross assets under $75 million (to be adjusted for inflation) can qualify as a qualified small business. (Previously only corporations with gross assets under $50 million qualified.)

Read the Full Report

As you review the impact of this legislation on your wealth planning, consult with your tax professional and Goldman Sachs advisor.

Advisory services offered by Goldman Sachs & Co. LLC. (“GS&Co.”) and Goldman Sachs Wealth Services, L.P. (the “Adviser”) (collectively referred to here as “GS”), each a registered investment adviser and a subsidiary of The Goldman Sachs Group, Inc. Brokerage services are offered through GS&Co. or Mercer Allied Company, L.P. (“Mercer”) (a limited purpose broker-dealer and affiliate of the Adviser), both members FINRA/SIPC. This material is intended for informational and educational purposes only and is provided solely on the basis that it will not constitute investment advice and will not form a primary basis for any personal or plan’s investment decisions. The information provided should not be construed as personal financial planning, investment, tax or legal advice. No investment decisions should be made using this data. While it is based on information believed to be reliable, no warranty is given as to its accuracy or completeness, and it should not be relied upon as such. Information and opinions provided herein are as of the date of this material only and are subject to change without notice. Neither Goldman Sachs & Co. LLC nor the Adviser provide legal advice to their clients, and all clients should consult with their own legal advisor regarding any potential strategy, investment, financial plan, estate plan or with respect to their interest in any employee benefit or retirement plan. No part of this material may be i) copied, photocopied or duplicated in any form, by any means, or ii) redistributed without GS’s prior consent. This material is not an offer or solicitation with respect to the purchase or sale of any security in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation.
 

Prepared by Tax Policy & Research of Goldman Sachs Wealth Services, L.P and the GS Family Office of Goldman Sachs & Co. LLC as applicable.


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