As 2025 comes to a close, investors and their advisors face a complex and evolving tax environment shaped by the passage of the One Big Beautiful Bill Act (OBBBA) and shifting income, estate, and charitable planning thresholds. In November 2025, we hosted a virtual discussion featuring Jennifer Kowal, Managing Director and Senior Income Tax Strategist, and Terence Condren, J.D., CFP®, Managing Director and Senior Wealth Strategist, to explore actionable strategies for year-end tax optimization and forward-looking wealth planning.
Navigating New Tax Dynamics and Year-End Opportunities
Kowal opened the discussion by emphasizing the importance of timely charitable giving. Under the OBBBA, new rules take effect in 2026 that reduce the tax benefit of charitable deductions for high-income earners, via a 2/37 reduction mechanism (effectively capping the benefit at ~35%). 1 “A dollar given today is more valuable to you tax-wise than one given next year,” Kowal noted, underscoring the opportunity to front-load charitable contributions in 2025, particularly through donor-advised funds (DAFs) that allow flexible timing of distributions to charities while locking in deductions now.2
Condren added that DAFs continue to be an effective vehicle for families seeking both philanthropic impact and tax efficiency. “You can contribute this year, earn the deduction immediately, and determine your ultimate charitable recipients later,” he explained.2
The discussion also highlighted several actionable tax strategies:
- State and Local Tax (SALT) Deduction Adjustments: While the OBBBA temporarily increased the SALT deduction cap to $40,000, this benefit phases out for adjusted gross incomes above $500,000, effectively returning many high earners to the prior $10,000 limit.3
- Capital Gains and Loss Harvesting: Investors were encouraged to harvest losses before year-end to offset realized gains, while deferring gains into early 2026 where consistent with portfolio strategy.4
- Equity Compensation Planning: Kowal discussed optimizing incentive stock option (ISO) exercises to minimize exposure to the alternative minimum tax (AMT), noting that in certain high-income years, it may be possible to exercise ISOs with minimal additional AMT impact.5
Wealth Transfer and Business Planning Under the OBBBA
The OBBBA made permanent the expanded federal estate and gift tax exemption and generation-skipping transfer (GST) tax exemption, increasing it from $13.99 million to $15 million per individual starting in 2026.6 Condren emphasized that although the sunset risk has been eliminated, proactive wealth transfer remains advantageous: “The real benefit comes from using exemptions sooner to move high-growth assets into trusts, allowing future appreciation to compound outside the estate.”
Kowal and Condren also discussed opportunities for business owners and investors:
- Qualified Business Income (QBI) Deduction: Closely held businesses may benefit from reviewing compensation levels to ensure sufficient wages or tax basis to unlock the full 20% QBI deduction.7
- Bonus Depreciation and Section 179: The restoration of 100% bonus depreciation for assets placed in service after January 19, 2025, offers significant opportunities for accelerated expensing, particularly for qualified improvements and business-use assets. Section 179 elections (which now have higher limits which related back to tax years starting after 12/31/2024) may provide additional fine-tuning for depreciation strategies.8
- Qualified Small Business Stock (QSBS): The new law raises the asset eligibility threshold to $75 million and increases the per-taxpayer gain exclusion to $15 million for stock issued after July 4, 2025. Founders and early-stage investors were encouraged to document qualification criteria carefully.9
Key Tax Planning Considerations for 2026 and Beyond
The conversation concluded with forward-looking insights for 2026 planning. Kowal outlined the continued relevance of pass-through entity tax (PTET) elections, enabling certain state taxes to be paid at the entity level and deducted federally.10 She also noted that while the AMT exemption remains, its phase-out threshold will be frozen at $1 million in 2026 (and then adjusted for inflation in 2027 and thereafter), warranting modeling for future ISO exercises and income events.11Condren discussed the strategic use of net operating losses (NOLs) to offset future taxable income or to facilitate tax-efficient Roth IRA conversions, along with the renewed potential for Qualified Opportunity Zone (QOZ) investments beginning in 2027. “These structures take planning and coordination among client, advisor, and CPA,” he said. “But when executed well, they can unlock real flexibility across income, estate, and liquidity planning.”12
Conclusion
As tax policy continues to evolve, proactive year-end tax planning is essential for preserving after-tax wealth and aligning long-term financial objectives. The 2025 year-end period presents an important opportunity to reassess income, estate, and charitable strategies before new thresholds take effect.
For more information about IEQ Capital’s integrated tax and wealth strategy, or to learn how our team supports high-net-worth investors in complex planning environments, please contact your advisory team.
- Internal Revenue Service, “Charitable Contribution Deduction Limits,”
- The Wall Street Journal, “Charitable Giving and New Tax Rules,”
- U.S. Department of the Treasury, “State and Local Tax Deduction Limits,”
- FactSet Research Systems, “Tax-Efficient Investment Strategies for Year-End,”
- Internal Revenue Service, “Alternative Minimum Tax (AMT) Guidance,”
- Internal Revenue Service “Estate and Gift Tax Exemption Updates for 2026,”
- U.S. Small Business Administration, “Qualified Business Income Deduction Overview,”
- IRS, “Bonus Depreciation and Section 179 Expensing,”
- U.S. Department of the Treasury, “Qualified Small Business Stock (QSBS) Guidance,”
- California Franchise Tax Board, “Pass-Through Entity Tax Election Guidance,”
- IRS, “Alternative Minimum Tax Exemption and Phaseout Thresholds,”
- Barclays Research, “Opportunity Zones and Tax Deferral Outlook for 2026,”
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