Personal tax planning for individuals and families

Many taxpayers took advantage of gain deferral under the qualified opportunity zone (QOZ) rules between 2017 and 2025. Gains from those QOZ investments will mature in 2026, causing many significant capital gains.

If this applies to you, or if you have capital gains from investments this year, consider selling other loss investments to offset those gains.

Beginning in 2026, charitable deductions will be subject to a 0.5% floor and an overall itemized deduction cap, which may significantly reduce the tax benefit of your contributions. Consider accelerating your 2026 charitable contributions into 2025 to maximize your deduction this year.

• Be mindful that charitable contribution carryovers from 2025 into 2026 will be subject to the new floor and limitations. Generally, plan to avoid excess carryovers to preserve the full benefit of 2025 contributions.
• The charitable deduction depends on whether your itemized deductions exceed the standard deduction and may be affected by carryovers from a prior year.
• If you are over age 70½ and own an individual retirement account (IRA), you may be able to make a charitable gift directly from your IRA of up to $108,000 for 2025. This can also help to avoid the contribution floor in 2026.

There are a number of opportunities to make gifts without paying gift tax. Be sure to evaluate whether any of these may help to decrease your overall gift tax liability.

• You can make gifts up to $19,000 (for 2025) to anyone without any gift tax consequences. Married couples may double this amount. Ensure that the check is cashed before year-end and that it gives the donee a current interest in property.
• Payments for the education of others are not subject to gift tax as long as they are made directly to the educational institution.
• Payments for medical expenses are also not subject to gift tax as long as they are paid directly to the provider of the services.
• 401(k) contributions: If you have a 401(k) retirement plan, consider maximizing your contribution for the year (up to $23,500, or $31,000 if over age 50, for 2025).

What did OBBBA change?

• Starting in 2026, OBBBA creates a floor on deductible charitable contributions for itemizers equal to 0.5% of adjusted gross income (AGI).
• Contributions below the floor are carried forward to the extent the taxpayer has other charitable carryforwards from the tax year.
• The 60% of AGI limit for charitable contributions made to public charities has been permanently extended.
• Changes to the ordering rules allow taxpayers to combine cash and property gifts to maximize their deduction at 60% of AGI beginning in 2026.

Learn more: New tax law introduces big changes for exempt organizations and donors

What did OBBBA change?

• Permanently eliminated the miscellaneous itemized deductions: These include tax preparation fees, investment advisory fees, unreimbursed employee expenses and legal fees
• Introduced a new overall limitation on itemized deductions: Effective 2026, itemized deductions are reduced by 2/37 (two-thirty-sevenths) of the lesser of either total itemized deductions, or taxable income (without considering itemized deductions) that exceeds the 35% rate bracket; this limitation will also affect trusts and estates
• Increased the state and local tax deduction (SALT) cap to $40,000 (single and married filing joint)/$20,000 for married filing separately (MFS) for tax years beginning in 2025 until 2029:
  • The increase is fully phased out for adjusted gross income amounts greater than $600,000 ($300,000 MFS), with a phaseout that begins at $500,000 ($250,000 MFS)
  • Taxpayers with AGI over the fully phased-out limit will receive a deduction of $10,000; these amounts are set to increase by 1% annually, and the SALT cap is eliminated after 2029

What did OBBBA change?

• Permanently extended and modified the QOZ program, including the introduction of a rolling 10-year redetermination of QOZ designations beginning Jan. 1, 2027.

Learn more: OBBBA rekindles opportunity zones: What it means for real estate 

What did OBBBA change?

There were three significant modifications to the QSBS exclusion:

1. Tiered exclusion: Allows taxpayers who have held stock in a qualified company a 50% exclusion for shares held for three years, a 75% exclusion for shares held for four years, and a 100% exclusion for shares held for five years.
2. Increased per-issuer limitation: Raises gain exclusion cap from $10 million to $15 million (indexed for inflation) for stock acquired after enactment while still leaving available the 10-times-basis limit if greater.
3. Increased gross asset test: The exclusion can be available for corporations that have up to $75 million in gross assets (indexed for inflation), up from $50 million.

Learn more: OBBBA expands QSBS exclusions: What it means for businesses and investors

What did OBBBA change?

• OBBBA made the 20% QBI deduction permanent, offering long-term certainty for pass-through business owners.

Learn more: Permanent QBI deduction provides some tax planning certainty

Learn more: The One Big Beautiful Bill Act: 5 key items for individual taxpayers

OBBBA set the estate, gift and generation-skipping transfer (GST) tax exemptions permanently at $15 million per individual (or $30 million for married couples) starting Jan. 1, 2026, with inflation adjustments beginning in 2027.

However, keep in mind that no tax law is truly “permanent;” it is crucial to keep estate planning top-of-mind, as future administrations could enact changes to the exemptions.

This perceived certainty can make it easy to avoid daunting decisions about your estate plan; however, waiting may mean that an unforeseen event transfers your assets in ways you don’t desire.

Planning today is about fostering responsible stewardship and preparing the next generation to inherit not just wealth, but also the knowledge to preserve and expand it for generations to come.

One principle remains clear: A thoughtfully crafted estate plan is essential regardless of the current or future tax law. Embrace the opportunity to build a legacy of responsible wealth transfer.

Learn more: Navigating the uncertain future of the estate/gift and GST exemptions

Certain generation-skipping transfers could be subject to an additional 40% tax. You may avoid this tax by utilizing your generation-skipping tax (GST) exemption of $13,990,000 in 2025—it increases to $15 million in 2026, with an inflation adjustment thereafter. The GSTT should be a significant consideration in tax planning for transfers to beneficiaries at least two generations younger than the donor.

The GST exemption can be allocated to transfers during life or at death to protect assets from GSTT. This allows you to safeguard your wealth and minimize tax exposure, ensuring a more efficient wealth transfer across generations.

Learn more: Beware and be aware of the generation-skipping transfer tax

If you are contemplating transferring a business interest as part of a business succession plan or ahead of a liquidity event, you should immediately consider potential estate planning opportunities.

• Valuation discounts may decrease after a letter of intent is executed. These discounts can be helpful for estate planning purposes because:
  • More units/shares may be transferred by gift under your gift tax exemption
  • Any future appreciation will accrue outside your taxable estate
• Working with qualified appraisers to determine the proper value of your business interest and coordinate this valuation with the timing of the transfer is important to protect and execute on the planning.
• Cash flow is as much a part of estate and gift planning as tax savings or asset protection. After a gift, the cash flow from that portion of the business will likely no longer accrue to you. This means you must be comfortable with your decision.
• Transaction structure and cash flow projections heavily influence the efficiency and operating viability of any estate plan involving closely held businesses. Not understanding these aspects of your strategy can result in an ineffective plan or headaches down the road.
• Business succession agreements, such as stockholder agreements or buy-sell agreements, are a key part of any succession plan, especially for interests that you may wish to hold on to for your remaining lifetime.
  • In Connelly v. United States, the U.S. Supreme Court addressed whether a company with a redemption-type buy-sell funded by life insurance should reduce the company's value by the redemption liability for purposes of the federal estate tax (essentially excluding the value of the life insurance in the valuation). The court concluded that the company’s value was not reduced by the redemption obligation.
  • The result was a surprise tax bill for the heirs and a large reduction in the assets transferred to future generations. If your business has a redemption-type buy/sell agreement funded by life insurance, review your agreement and consider making changes to avoid unintended results.

Transferring a business interest can be time-consuming. There are often multiple strategies to analyze. Upon choosing a strategy, attorneys need to draft documents, appraisers need to prepare valuation reports, and tax professionals need to review the plan for tax reporting and often for cash-flow purposes. If you are thinking of transferring a business interest for estate planning purposes, start these discussions as soon as possible.

Learn more: Estate planning after the sale of a business interest