5 OBBBA Tax Updates For Wealth Planning
MODERNIST’S ASSET CLASS INVESTING PORTFOLIOS ARE STRATEGICALLY INVESTED WITH A FOCUS ON LONG-TERM PERFORMANCE OBJECTIVES. PORTFOLIO ALLOCATIONS AND INVESTMENTS ARE NOT ADJUSTED IN RESPONSE TO MARKET NEWS OR ECONOMIC EVENTS; HOWEVER, OUR INVESTMENT COMMITTEE EVALUATES AND REPORTS ON MARKET AND ECONOMIC CONDITIONS TO PROVIDE OUR INVESTORS WITH PERSPECTIVE AND TO PUT PORTFOLIO PERFORMANCE IN PROPER CONTEXT.
The One Big Beautiful Bill Act includes a wide range of changes for taxpayers of all income levels. For high-income individuals and families, the provisions that matter most involve new limits, estate planning opportunities, and charitable giving rules. Here are some key changes:
New Caps on Itemized Deductions
Beginning in 2026, taxpayers in the top 37% bracket will face a significant change: Their itemized deductions will be capped so that the effective benefit is reduced to 35%. In practice, this means that even if a taxpayer has substantial deductions, they will not fully offset income at the 37% marginal rate.
For high earners with large state and local taxes (SALT), charitable gifts, or investment-related deductions, this effectively diminishes the tax value of those write-offs. Advanced planning—such as front-loading charitable contributions or structuring deductions strategically across years—may help offset the impact.
Charitable Giving Changes
Charitable giving strategies will need to be revisited. Starting in 2026:
Contributions must exceed 0.5% of adjusted gross income (AGI) to qualify as deductible. For households with very high incomes, this creates a new “floor” for deductions.
At the same time, non-itemizers will gain a small charitable deduction ($2,000 for married couples), but this is less relevant for affluent households already itemizing.
Combined with the deduction cap, these changes reduce the immediate tax benefit of giving. However, high earners may still maximize longterm value with long-term comprehensive planning.
Estate and Wealth Transfer Planning
Beginning in 2026, the federal estate tax exemption rises to $15 million per person, with portability for married couples and future inflation adjustments. This is a substantial increase from current levels and offers more room to transfer wealth free of estate tax. This is deeply problematic for our long-standing wealth inequality issues in America.
That said, with estate tax thresholds frequently targeted for adjustment in future legislation, this window of opportunity may be temporary. Families with significant estates may want to review gifting strategies and trust structures to confirm their planning is still appropriate for our new situation.
KIds savings and Education Provisions
The tax bill introduces “Trump Accounts,” a new form of savings vehicle for dependents under 18. The accounts have strict contribution limits and are seeded with Treasury funding for children born between 2025–2028, and still await clarification from the IRS and custodians.
High earners may use them as a supplemental planning tool alongside 529 plans, which also see expanded benefits (now covering up to $20,000 annually in K–12 and higher education costs).
Unchanged: Social Security Taxation
Despite political promises and the Trump administration’s lies, the taxation of Social Security remains the same—up to 85% of benefits are taxable. For higher earners, this means existing planning strategies around timing of distributions and Roth conversions remain relevant.
The Bottom Line
For high-income households, the tax bill is a mix of new restrictions and planning opportunities. The cap on itemized deductions and the AGI floor for charitable contributions will diminish the tax value of long-standing strategies, while the increased estate tax exemption creates a significant, but potentially temporary, window for wealth transfer. As always, careful modeling and proactive planning will be essential to optimize planning under the new rules.
Want To Work With Us?
For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third-party sources, which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Total return includes reinvestment of dividends and capital gains. Mentions of securities are to demonstrate passive funds versus active funds, and low-cost funds. The mentions of specific securities should not be construed as recommendations of securities. Performance is historical and past performance is not an indication of future results. By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements, or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability, or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth® or Buckingham Strategic Partners®, collectively Buckingham Wealth Partners. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. R-24-6678