News

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The U.S. Congress recently enacted the One Big Beautiful Bill Act (OBBBA) and the President signed it into law in July 2025. This large legislation represents one of the most sweeping tax reform packages in years. For domestic taxpayers, it locks in the lower individual rates and higher standard deduction originally introduced in 2017, while also adding temporary boosts between 2025 and 2028, including extra standard deduction amounts and targeted deductions for tips, overtime pay, and auto-loan interest. Small businesses also benefit from enhanced expensing rules and a more favorable pass-through deduction. These changes deliver meaningful planning opportunities, especially for households and closely held enterprises.

The Act’s estate and gift provisions are equally significant. Beginning in 2026, the lifetime estate and gift tax exemption increases to $15 million per individual ($30 million per married couple), indexed for inflation. The annual gift tax exclusion rises as well, allowing individuals to transfer more wealth each year without using their lifetime exemption. Importantly, the legislation preserves and clarifies portability of the deceased spousal unused exclusion (DSUE), ensuring that married couples can continue to maximize available exemptions. These adjustments open the door for strategic wealth transfers and intergenerational planning over the next decade.

At the same time, the legislation carries tradeoffs. Federal revenue loss is projected in the trillions, and entitlement programs like Medicaid and SNAP face significant cuts. Critics argue that the bill skews benefits toward higher-income taxpayers and large corporations. Moreover, many of the “bonus” deductions expire after 2028, underscoring the importance of proactive planning while they are available.

For U.S. persons living abroad, OBBBA introduces notable changes. The foreign tax credit haircut for tested CFC income is reduced, easing double-taxation concerns for expatriates and multinational investors. Adjustments to the GILTI and FDII regimes refine the way U.S. shareholders are taxed on foreign earnings, while a new Section 899 is designed to counter discriminatory digital and diverted profits taxes imposed by other countries. Starting in 2026, however, U.S. expats will need to account for a 1% remittance excise tax on certain electronic transfers sent abroad, a potentially significant factor for families supporting relatives overseas.

Inbound investors will also see opportunities and challenges. The Act makes the Opportunity Zone program permanent beginning in 2027, tightening eligibility but enhancing capital-gain benefits for long-term real estate and development projects. For non-U.S. investors, this permanence provides new avenues for tax-advantaged entry into U.S. markets.

Key highlights for globally oriented taxpayers include:

· Increased estate and gift exemptions, higher annual exclusion, and continued DSUE portability;

· Reduced haircut on foreign tax credits and refined GILTI/FDII rules;

· Section 899 protections against foreign digital tax regimes;

· 1% excise tax on outbound remittances beginning 2026; and

· Permanent Opportunity Zone framework favorable for inbound investment.

Overall, the OBBBA offers substantial benefits for domestic taxpayers, but its most strategic implications may lie abroad—where U.S. persons and inbound investors must adapt quickly to maximize relief, minimize exposure, and seize new opportunities.