On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. The legislation addressed the looming expiration of the 2017 Tax Cuts and Jobs Act (TCJA) provisions, made several of those changes permanent, and introduced new provisions affecting individuals and businesses.
For business owners planning a sale or beginning to think seriously about an exit, the OBBBA creates meaningful shifts in the planning landscape. Capital gains rates did not change, but the provisions that did shift, particularly around estate taxes, pass-through business deductions, and charitable giving, are worth understanding before a transaction closes.
This is not tax advice. Every business owner’s situation is different, and the interaction between the OBBBA and a specific transaction requires coordination with a CPA and tax attorney experienced in business exits.
For a broader look at the financial picture following a business sale, our post on what happens to your wealth the day you sell your business covers the full post-close planning landscape.
What the OBBBA Did and Did Not Change
The OBBBA primarily addressed the expiration of TCJA provisions that were set to sunset at the end of 2025. Without legislative action, individual tax rates would have increased, the standard deduction would have been cut roughly in half, and the estate tax exemption would have dropped substantially. The OBBBA prevented those scheduled increases and, in several cases, made the more favorable provisions permanent.
For business owners, the most relevant changes fall into three categories: the estate tax exemption, the pass-through business deduction (Section 199A), and the rules around charitable giving.
Federal capital gains tax rates were not changed. The rates of 0%, 15%, and 20% remain in place depending on income level, and the net investment income tax (NIIT) of 3.8% is also unchanged. If your planning assumptions were built around potential capital gains rate increases, those increases did not occur under this legislation.
The Estate Tax Exemption: A Major Shift
The most consequential change in the OBBBA for many business owners is the treatment of the federal estate tax exemption.
Under the TCJA, the federal estate tax exemption had been roughly doubled, to approximately $14 million per individual in 2025. Without legislative action, that exemption was scheduled to fall by about half in 2026, returning to pre-TCJA levels of approximately $7 million per individual.
The OBBBA made the expanded exemption permanent and increased it to $15 million per decedent in 2026, indexed for inflation going forward. According to the Tax Foundation, this change substantially reduces the number of estates subject to the federal estate tax.1
Many business owners carry estate plans structured around the assumption that the exemption would decline significantly in 2026. Those plans may now warrant a review. Business owners with estates approaching or exceeding the prior anticipated threshold may find that certain strategies, such as irrevocable trusts or other transfer vehicles, no longer carry the same urgency they did under the scheduled sunset.
For business owners whose estate value is substantially above even the new $15 million threshold, the change may be less impactful, and estate planning strategies designed to reduce taxable estate value remain relevant. But for owners in the range where the exemption sunset would have created meaningful exposure, the permanence of the higher exemption provides welcome certainty.
Estate planning decisions made now should account for the permanent structure of the OBBBA exemption. A post-sale review with an estate planning attorney is still an important step, regardless of where an estate falls relative to the threshold.
For more on how estate planning integrates with long-term wealth preservation, see our post on the role of estate planning in wealth preservation.
The Section 199A Pass-Through Deduction Made Permanent
Business owners structured as S-corporations, partnerships, limited liability companies, or sole proprietorships have been able to deduct up to 20% of qualified business income (QBI) under Section 199A of the tax code, a provision introduced by the TCJA. That deduction was also set to expire at the end of 2025.
The OBBBA makes the Section 199A pass-through deduction permanent. The 20% deduction on qualified business income will remain available to eligible pass-through business owners.
For business owners considering a sale, the permanence of 199A affects how pre-sale years are modeled and whether exit timing was partly driven by the scheduled expiration. The 199A deduction has meaningfully reduced the effective tax rate on pass-through business income for owners who qualify. With that deduction now permanent, urgency around timing an exit to capture it before expiration is no longer a factor.
The 199A deduction applies to ongoing business income, not to gain recognized on the sale of a business. The deduction can be relevant in the years leading up to a sale, but it does not reduce the capital gains or ordinary income generated by the transaction itself. The tax treatment of sale proceeds depends on deal structure, entity type, and asset allocation, not on 199A eligibility.
If the structure of your business entity was partly informed by 199A considerations, the permanence of the deduction is relevant context for any pre-sale restructuring conversations with your CPA.
For more on how pre-sale planning decisions affect exit outcomes, our post on why business owners should start exit planning earlier than they think covers the planning timeline in more depth.
Charitable Giving: What Changed
The OBBBA introduced two significant changes to charitable giving that are relevant for business owners making large gifts in the same tax year as a business sale.
First, the law created a new income floor for itemized charitable deductions. Taxpayers who itemize can no longer deduct the first 0.5% of their adjusted gross income in charitable contributions. For a seller with $10 million in taxable income in the year of a sale, this means the first $50,000 in charitable giving is not deductible as an itemized deduction. For larger transactions, this floor becomes proportionally more material.
Second, the OBBBA created a new $1,000 charitable deduction (or $2,000 for joint filers) available to all taxpayers, including those who take the standard deduction rather than itemizing. This is a modest benefit that does not significantly affect high-income sellers, but it reflects the overall structure of the new law.
For business owners planning large charitable contributions in the year of a sale, including contributions to donor-advised funds (DAFs) or charitable remainder trusts (CRTs), the 0.5% income floor is a new variable to discuss with a CPA. The charitable giving strategies that have historically been attractive in high-income years remain available, but the calculation of their deductible value is slightly different under the OBBBA.
For a closer look at how different giving vehicles work, our post on whether your charitable giving is working as hard as it can covers the options in more detail.
What Did Not Change: Capital Gains and the NIIT
Given the volume of attention the OBBBA received, a few things warrant direct clarification for business owners planning an exit.
Federal long-term capital gains tax rates were not modified. The rates of 0%, 15%, and 20% remain in place, applying to assets held more than one year. For many sellers with significant taxable gains, the federal long-term capital gains rate may be 20%, plus the 3.8% Net Investment Income Tax (NIIT), if applicable.
The net investment income tax (NIIT) of 3.8% was also not changed. For sellers above the applicable income thresholds, the NIIT may still apply to gains from a business sale, depending on the nature of the transaction.2
Deal structure, asset allocation, and the type of entity being sold continue to drive the tax treatment of a business sale in ways that the OBBBA did not alter. The interplay between capital gains, ordinary income, and installment sale treatment remains as it was. If you were planning around potential changes to capital gains rates, those changes did not occur.
The Bigger Picture: Planning Under Permanent Law
The most significant effect of the OBBBA may not be any single provision, but the certainty the legislation creates. Since 2017, significant portions of the tax code affecting individuals and businesses were set to expire on a defined schedule. Planning during that period required advisors to model scenarios under two different sets of rules and counsel clients through meaningful uncertainty about which framework would apply.
With the OBBBA, many of those provisions are now permanent. The estate tax exemption, the pass-through deduction, the individual tax rates, and several other key provisions are no longer scheduled to sunset. For business owners working with their advisory team on exit timing and structure, that permanence allows for more reliable modeling and more confident planning decisions.
That does not eliminate complexity. Tax law will continue to evolve, and certain OBBBA provisions remain temporary. But for the provisions most relevant to business owners, the shift from temporary to permanent law is a meaningful change in the planning environment.
For a look at how to approach exit timing and structure more broadly, our post on planning the right exit covers the pre-sale preparation landscape.
What Business Owners Should Do Now
If you are planning a business sale in the next one to five years, the OBBBA is worth discussing with your advisory team in the context of a few specific questions.
Estate plan review: If your estate plan was structured in anticipation of the TCJA exemption expiration, the permanent higher exemption may affect the structure, cost, or priority of certain planning vehicles. A review with your estate planning attorney is a reasonable near-term step.
Business structure and 199A: If your current business structure was partly informed by the scheduled expiration of the 199A deduction, the permanence of that deduction changes the picture. Discuss with your CPA whether any structural changes made for that reason remain appropriate.
Charitable giving planning: If you intend to make significant charitable contributions in the year of a sale, factor the new 0.5% income floor into your planning discussions. The basic strategies remain available, but the deductible value is calculated differently.
Capital gains and deal structure: For the provisions that did not change, such as capital gains rates and the NIIT, the pre-OBBBA planning considerations remain valid. Deal structure, asset allocation, entity type, and installment sale options all continue to matter.
None of this planning is best done reactively. The most useful conversations happen before a transaction is underway, when there is still flexibility to affect outcomes.
For more on what the fiduciary standard means when working with a wealth advisor at this level of complexity, see our post on what the fiduciary standard means when you have significant assets at stake.
Connect with Moran Wealth Management
Navigating the implications of new tax legislation in the context of a business exit requires coordination across tax, legal, and financial planning. The OBBBA changed some of the foundational variables. Understanding how those changes interact with your specific situation is a conversation worth having before a transaction is underway.
At Moran Wealth Management, our advisors work with business owners who are preparing for an exit, managing proceeds after a close, and building long-term wealth plans that account for the evolving tax environment. We do not provide legal or tax advice, but we coordinate closely with clients’ CPAs, estate planning attorneys, and tax advisors to support a cohesive planning process.
To learn more about how we work with business owners, visit our Business Owners page or schedule a conversation with our team.
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Frequently Asked Questions
No. Federal long-term capital gains tax rates were not changed by the OBBBA. The rates of 0%, 15%, and 20% remain in place. The NIIT of 3.8% was also not modified. If you were planning around potential capital gains rate changes, those changes did not occur under this legislation.
The OBBBA permanently increased the federal estate tax exemption to $15 million per individual in 2026, indexed for inflation. The exemption was previously scheduled to fall to approximately $7 million in 2026. Business owners whose estates were approaching or exceeding the prior anticipated threshold may find that the changed exemption affects how their estate plan is structured, particularly around trust strategies and transfer vehicles designed to reduce taxable estate value.
Section 199A allows eligible owners of pass-through businesses, including S-corporations, partnerships, and sole proprietorships, to deduct up to 20% of qualified business income when calculating taxable income. The OBBBA made this deduction permanent. It applies to ongoing business income and does not reduce capital gains or ordinary income generated at the time of a sale.
The OBBBA introduced a 0.5% income floor on itemized charitable deductions, meaning the first 0.5% of adjusted gross income in charitable contributions is no longer deductible for itemizers. For high-income sellers making large gifts in the year of a sale, this floor is a new variable to incorporate into planning discussions with a CPA. The basic charitable giving strategies, including donor-advised funds and charitable remainder trusts, remain available.
It depends on how your plan was structured and in anticipation of what. If your estate plan incorporated strategies designed around the scheduled reduction in the TCJA exemption, it may warrant a review in light of the permanent higher exemption. A qualified estate planning attorney can assess whether the structure remains appropriate given the changed law. Consult your attorney before making any changes.
Exit timing depends on many factors beyond the tax code, including business value, market conditions, personal goals, and financial readiness. The OBBBA provides more certainty about the tax planning environment, but that certainty does not by itself dictate a specific exit timeline. A conversation with your advisory team, including your CPA, attorney, and wealth advisor, is the appropriate