Authored by: Nicholas Brown, CFA, CFP
In the ever-evolving world of tax legislation, clarity and consistency are rare luxuries. Yet that is precisely what the One Big Beautiful Bill Act (the Act) aims to deliver—a sweeping tax reform package designed to bring permanence to key provisions of the Tax Cuts and Jobs Act (TCJA) and introduce several notable changes affecting high income earners, small business owners, and wealthy families.
As with any major legislative shift, the implications are nuanced and far-reaching. The permanence of previously temporary tax reforms may provide a welcome sense of stability, but it also underscores the importance of strategic, forward-looking financial planning. For families and business owners navigating complex wealth and tax dynamics, this legislation represents both opportunity and challenge.
This article breaks down what the Act entails and explores its most meaningful implications for high income earners, small business owners, and wealthy families. Over the next few weeks, we will publish more in-depth analysis for each group.
What Is the One Big Beautiful Bill Act?
The One Big Beautiful Bill Act is a comprehensive federal tax package that seeks to solidify and expand upon several expiring provisions of the TCJA, many of which were originally set to sunset in 2025. The Act proposes making certain tax cuts permanent, streamlining deduction rules, adjusting charitable giving incentives, and enhancing benefits for entrepreneurs and investors.
Critically, the legislation attempts to provide longer-term predictability for individuals and business owners—especially those with higher incomes or more complex tax situations. It is positioned as both a policy anchor and a growth stimulus, offering structural support for ongoing economic expansion while addressing long-standing calls for tax code simplification.
Impacts for High Income Earners
One of the most significant aspects of the One Big Beautiful Bill Act is its confirmation of the 37% top marginal income tax rate as a permanent fixture in the federal tax code. Originally slated to revert to 39.6%, this change offers short-term relief but removes the planning flexibility that often came with sunset provisions. For high income households—especially those earning well above $500,000 annually—this permanence requires a re-evaluation of long-term income deferral and charitable giving strategies.
Additionally, the Act introduces a reduction of itemized deductions by the lesser of two thirty-sevenths (2/37) of the itemized deduction amount or two thirty-sevenths (2/37) of the taxable income above the 37% bracket threshold. This is an obscure but impactful limitation that effectively trims the tax benefit for those who itemize heavily. This limitation functions similarly to a phaseout, subtly reducing the value of deductions as income rises.
Charitable donors will also want to take note of the newly imposed 0.5% floor on charitable contributions, which limits the deductibility of certain gifts unless they exceed a specific percentage of adjusted gross income. This provision could influence the structure and timing of major philanthropic efforts, particularly for families accustomed to making sizable end-of-year contributions.
The legislation does provide some offsetting provisions. Notably, it raises the cap on the State and Local Tax (SALT) deduction to $40,000, though it includes phaseouts at higher income levels, diluting its usefulness for top earners in high-tax states. High Income Earners with modified adjusted gross incomes (MAGI) greater than $500,000 will see the SALT deduction slow phase back down to the original $10,000 cap. The standard deduction is also increased, simplifying filing for those who do not itemize and marginally reducing taxable income for households across a broad range of incomes. The new standard deductions for 2026 are $31,500 for married individuals filing jointly, $23,625 for “head of household” filers, and $15,750 for all other filers.
Taken together, these changes demand a more sophisticated approach to tax management, one that aligns income recognition, deduction timing, and charitable giving with a new set of parameters.
Impacts for Small Business Owners
For business owners, the Act brings both welcome clarity and significant incentive. At the center is the permanence of the Section 199A deduction, often referred to as the Qualified Business Income (QBI) deduction. This 20% deduction for pass-through income—originally scheduled to sunset in 2025—is now enshrined in the code, offering enduring tax benefits for owners of partnerships, S corporations, and sole proprietorships.
The legislation also enhances the appeal of investing in entrepreneurial ventures through improvements to Qualified Small Business Stock (QSBS). Key changes include shorter holding periods to qualify for gain exclusion (3-5 years), expanded exclusion amounts ($15,000,000 from $10,000,000), and higher gross asset limits (increased to $75,000,000 from $50,000,000) for qualifying companies. These adjustments could accelerate liquidity planning for founders and investors alike, while reinforcing early-stage business activity.
Another notable provision is the extension of 100% bonus depreciation, allowing businesses to fully expense the cost of qualified property in the year it is placed in service. This continues to support capital investment and equipment upgrades without the previous concerns around phase-down schedules.
Changes to the deductibility of business interest expense also merit attention. While the cap on deductible interest (based on a percentage of EBITDA) remains, the Act adjusts certain thresholds and introduces more favorable terms for businesses with irregular income patterns or heavy debt loads. This could enhance flexibility in financing strategies, particularly in capital-intensive industries or growth-stage enterprises.
For entrepreneurs and family businesses, the message is clear: the time to revisit long-term growth strategies, entity structures, and liquidity timelines is now.
Impacts for Wealthy Families
Perhaps the most strategically significant aspect of the Act for wealthy families is the permanent increase in estate and gift tax exemptions. Originally doubled under the TCJA and set to sunset in 2025, the higher exemption thresholds are now codified indefinitely. This removes the ticking clock for ultra-high-net-worth families seeking to transfer wealth efficiently and opens the door to more comprehensive multi-generational planning.
The permanence of these exemptions simplifies the decision matrix around gifting strategies, irrevocable trust structures, and insurance planning. However, it also raises the bar for what qualifies as effective estate planning, pushing families to consider broader legacy goals, tax diversification, and family governance models.
In addition, the Act improves terms for investment in Opportunity Zones (OZs)—a key tool for those looking to defer capital gains and promote community reinvestment. Changes include longer deferral periods, increased exclusion percentages for held investments, and refinements to the qualification process, making OZs more accessible and potentially more lucrative for long-term investors.
These enhancements make it more appealing to integrate Opportunity Zone investments into broader portfolio strategies, especially for families focused on impact investing or place-based philanthropy.
Planning Considerations Moving Forward
The One Big Beautiful Bill Act, if enacted in its current form, will reset the foundation of tax planning for the next decade or longer. For high income earners, it underscores the need for detailed, proactive strategies that account for reduced deductions and adjusted charitable frameworks. For business owners, it rewards growth-oriented thinking and capital deployment. And for wealthy families, it enables deeper, more intentional legacy planning under a stable estate tax regime.
Yet permanence in the tax code does not equate to simplicity. These changes require a thoughtful, integrated approach that considers not only income and investment decisions, but also family goals, risk management, and intergenerational priorities.
At Granite Harbor Advisors, our team-based model ensures clients benefit from a coordinated strategy across public and private markets, estate structures, and risk management frameworks. We are committed to helping our clients understand the deeper implications of this legislation—and more importantly, act on them with clarity and confidence.
This article is provided for educational purposes only. Please consult with your own tax and legal professionals prior to implementing any tax strategies. Numbers referenced in this article are accurate as of date of publication and should be independently verified.