Tax and estate consultant Gary Phillips, based in New York, says as tax season approaches, the mood is upbeat among his clients.
The reason? The extension of a series of tax breaks approved by the Republican-led Congress this past summer as part of President Trump's "One Big Beautiful Bill" that mainly benefit high-net-worth and high-income people.
"We have a lot of happy clients," says Phillips, who handles taxes, trusts and estates at Cole Schotz P.C. "There's more certainty now."
The changes approved by lawmakers in July lock in a friendlier tax climate for affluent Americans with lower rates and generous exemptions. While middle-income households may see some modest relief, the lion's share of the benefits will flow to those with substantial earnings, investment income, or large estates.
"By definition," says Joseph Rosenberg, a senior fellow at the nonpartisan Urban-Brookings Tax Policy Center, "these are very wealthy people who benefit."
But what is the definition of "wealthy"? Zane Sanchez, a tax manager with the accounting and business advisory firm Snyder Cohn, says it could be considered anyone making more than $200,000 or $250,000 for married couples filing jointly. "That's around the point where a lot of these provisions start to kick in."
Below is a look at six key provisions in the bill that largely favor upper-income individuals and families:
Lower tax brackets
During the first Trump administration, Republicans in Congress passed the Tax Cuts and Jobs Act of 2017 (TCJA), which temporarily reduced the top marginal tax rate from 39.6% to 37%. This change was originally set to expire at the end of 2025.
But now, the 37% top rate is set to continue indefinitely, applying to income above $626,350 for single filers and $751,600 for married couples filing jointly.
While many middle-income taxpayers will also benefit slightly from the permanent extension of lower TCJA rates, Rosenberg notes that "higher-income households benefit the most by far."
Pass-through exemption for business owners
Owners of pass-through entities — including sole proprietorships, partnerships, S corporations, and LLCs — will continue to enjoy the 20% pass-through deduction, which Congress has now made permanent.
Because income from these businesses "passes through" to the owner's personal tax return, this deduction effectively reduces the top tax rate for qualifying business income from 37% to 29.6%, says Tony Nitti, a national tax partner at EY Private, a unit of the company formerly known as Ernst & Young that focuses on advising entrepreneurs, private businesses, and their owners.
Sanchez calls the pass-through deduction a major win for entrepreneurs and high-net-worth people and suggests that for business owners it might matter more than the 37% income tax bracket.
Bonus depreciation
"Not everybody can go out and buy a private jet — but if you can, now that private jet is deductible in year one," Nitti says.
He's referring to the extension of bonus depreciation, a tax incentive that allows businesses to immediately deduct 100% of the cost of qualifying assets — such as machinery, vehicles, computers and equipment — instead of depreciating them over several years.
Originally introduced under the TCJA, this provision is now permanent.
A private jet used for business? Check. A fleet of new delivery vehicles? Check. Replacement gas pumps? Check.
Large businesses have the most to gain from this change, but it will also help small and midsize businesses.
Doug Kantor, general counsel for the National Association of Convenience Stores, says most convenience stores are franchises, often owned by small operators. For example, about half of the country's 7-Elevens — the biggest company in the industry — are "small mom-and-pop businesses," he says.
For them, he says, being able to fully depreciate qualified assets can be the difference between turning a profit or not. "It can also be the difference between making that investment and putting it off even when you know you need it," he says.
Erica York, vice president of federal tax policy with the right-leaning Tax Foundation, says "this really matches up with the cash flow of the business. You spend $1,000 on a new machine — you get to deduct that $1,000 upfront immediately."
What is the advantage of taking the full deduction in a single year? Young notes that we've all just lived through a period of particularly high inflation. "We know what it feels like to see our money lose value over time."
Higher federal deductible for state and local taxes
This provision primarily benefits high-income households in high-tax states, such as New York and California, who itemize, pay at least $10,000 in state and local taxes, but still earn less than $500,000 per year. It substantially increases the federal deduction for state and local taxes from $10,000 to $40,000. This higher limit is set to expire in 2029.
Higher exemption for estate and gift tax
Starting next year, wealthy Americans will get a higher lifetime exemption for estate and gift taxes. The exemption has been made permanent at $15 million per individual and $30 million per married couple — up from the previous $13.99 million and $27.98 million limits.
Democrats have long argued that the estate tax helps curb intergenerational wealth concentration and had pushed to cut the exemption in half. Instead, the new law expands it.
"It basically shrinks the universe of people who'll ever have to pay estate tax," Nitti says.
Higher exclusion on some capital gains
Another benefit for the wealthy is an increased exclusion for capital gains from the sale of qualified small business stock (QSBS) issued after July 4, 2025.
The previous cap of $10 million has been raised to $15 million for companies with assets up to $75 million. To receive the full 100% exclusion, investors must hold the stock for five years. Selling after three years allows a 50% exclusion, and selling after four years qualifies for 75%.
Phillips says if you sold $10 million of qualifying stock with the entire amount treated as a taxable gain, "you wouldn't owe any federal capital gains tax. That's about a $2 million savings right there."
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