Navigating the One Big Beautiful Bill Act: Key Wealth Planning Opportunities for 2025 and Beyond

The recently enacted One Big Beautiful Bill Act (OBBBA) brings significant changes to estate planning, charitable giving, and investment strategies. Redpath's Wealth Advisory team shares how these provisions create new opportunities while removing the urgency that defined recent tax planning.

Estate and Gift Tax Exclusions: Less Panic, More Planning

The OBBBA makes permanent the higher estate, gift, and generation-skipping transfer tax exemptions at $15 million per individual ($30 million for married couples), indexed for inflation beginning in 2027. The top tax rate remains at 40% for amounts exceeding these thresholds.

What this means in practical terms is that the higher exemption amount—now permanent—allows you to consider transferring assets without triggering gift or estate tax. It creates more room for strategic lifetime giving, like funding irrevocable trusts, family partnerships, and making large direct gifts to get assets out of your taxable estate.

How This Affects Your Planning

This permanence shifts the planning timeframe. Previously, the exemption was set to be cut nearly in half, creating what I'd describe as a real sense of panic among some of our clients. They had big decisions to make in a short timeframe, and the pressure was intense.

Now, with that pressure off, we're seeing a shift in conversations. We've moved from a tax avoidance perspective to more of a wealth stewardship approach. The question becomes: How can you use your money in a positive way while you're still here? How can you enjoy your life now while optimizing what you're paying in taxes and leaving a legacy that's more intentional—rather than being reactive and just trying to avoid taxes?

If you have assets that are appreciating—business interests, land, real estate, stocks—you can move those items out of your taxable estate now. This strategy allows future appreciation to occur outside the estate, maximizing wealth transfer to your heirs while you maintain control over your current financial needs.

Your Next Steps

While the federal pressure has eased, it’s important to start these conversations now with your advisors. Here's what we're discussing with clients:

• Focus on your personal situation, not tax deadlines. It really depends on your individual circumstances. What is your health like? What are your plans for the next five to ten years? What do you see happening with your family? These are very personal decisions that vary at the individual level.
• Consider living inheritance strategies. Most people tend to be concerned with helping their heirs while they're still alive. They're not just considering what's going to happen after they pass on, but how they can help their family now while they're still here.
• Don't forget state taxes. We haven’t received any guidance yet from the states on how they will comply with these changes. Yes, focusing at the federal level and federal tax opportunities is important, but there is that other piece where you have state tax to consider. We likely won't know the full picture for another one to two years.

Charitable Contributions: Strategic Giving in a New Framework

Beginning with the 2026 tax filing season, clients will see major deduction changes for charitable contributions. High income earners could take steps to maximize donations in 2025 before the new rules take effect. Here’s a list of what’s changing: 

1. Starting in 2026, if you itemize your deductions, contributions must exceed 0.5% of your adjusted gross income to be deductible. For a couple with an AGI of $500,000, the first $2,500 in charitable gifts won’t be deductible.
2. Deduction value will be capped at 35% for those in the top income tax bracket (37%). A $50,000 donation, which previously yielded a tax savings of $18,500, will now result in only $17,500 of tax savings.
3. Non-itemizers will be allowed a $1,000 “above the line” deduction to reduce taxable income for cash donations to qualified charities ($2,000 for married filing jointly taxpayers).

The following strategies can help maximize your tax efficiency:

• Capital gains avoidance remains crucial. We're seeing people wanting to donate appreciated assets instead of cash because they'll get a deduction for the fair market value of that asset and avoid paying capital gains tax. This works best for publicly traded stock, ETFs, or mutual funds that you've held for at least a year.
• Bunching contributions has become essential for many of our clients. Your charitable gifts might not actually be giving you a tax benefit if you're limited to the $10,000 SALT deduction and don't have mortgage interest anymore. We encourage people to group maybe two or three years of giving into one year—perhaps giving $30,000 to a donor-advised fund in 2025 instead of $10,000 each year. You can itemize in that one year, get the larger tax benefits, and then take the standard deduction in the following years.
• Qualified Charitable Distributions offer unique benefits if you're taking required minimum distributions. You can give those directly to charity—it still counts for taking your RMD, but it's not included in your taxable income. This can lower your AGI and help reduce your Medicare premiums and the amount of Social Security that may be taxable. It's great for people who don't need those RMDs for their day-to-day living expenses.

Action Items for Your Charitable Planning

For those in the top tax bracket, the upcoming phase-out and deduction cap mean less tax savings per charitable dollar, beginning in 2026. 

Charitable giving is mainly philanthropic and highly personal, but the tax benefits can be a helpful secondary factor. With the tax rules changing, be strategic so that your generosity goes as far as possible. 

For those who normally itemize, be more intentional about what you're giving. Appreciated assets like stock, land, or real estate will beat cash as far as tax efficiency most of the time.

Making contributions to a donor-advised fund makes the bunching strategy cleaner. You can put a lump sum in that fund and then make smaller distributions as you're ready to over the next two to five years, but you get that full deduction immediately.

Qualified Opportunity Zones: A Balanced Approach

The OBBBA makes the Opportunity Zone program permanent while establishing new zones to be designated in 2027. You can exclude gains on investments held over 10 years, and the program can be integrated into your broader estate planning strategy.

Finding the Right Balance

Given that the law just came out, and there's a lot of conversation around interest rates and economic growth, people are understandably hesitant. But it's a balancing act. 

You can invest in somewhat stable projects right now and then have the potential to roll into a new project in 2027—but jumping in too early could be risky. Maybe the project will have low returns or it won't turn out as expected. But waiting too long, when it's already boomed and appreciated, means you won't see as much of a gain on your investment.

Preparing for Opportunities

Start scouting where these potential zones will be. Look at demographic trends and local development plans. Pay attention to city and county updates on where new projects are planned. Build relationships with developers, fund managers, and bankers who can help you gain insight into where these opportunities are going to be best found. When these places are designated, you'll be in a better position to move quickly.

Remember, Opportunity Zones aren't just about deferring capital gains. They allow for tax-free growth of that investment and can help you move assets out of the taxable estate into a trust. They can help with controlling wealth transfer over generations while assets sit there for 10 years, making them an important tool in succession planning alongside your trust and gifting strategies.

Moving Forward: It's Personal

The OBBBA gives us breathing room, but that doesn't mean we should wait indefinitely. Start these conversations with your advisors now.

Every situation is unique. We have a lot of really personal conversations about health, longevity, and family. Some people don't want to leave all their money to their children—they'd rather give it to charity. We need to sit down and have conversations about what's important to you and what your values are. Then we can come up with options to guide the choices you make.

With tax pressure reduced (because we have the increased exemption made permanent), you can keep more wealth inside your estate for personal control while taking the time to make thoughtful, values-based decisions about your legacy.