After One Big Beautiful Bill saga, business exit planning still mostly 'business as usual'

To describe the past few months' worth of news over the One Big Beautiful Bill Act, which has now officially been signed into law, one might consider butchering that famous Shakespearean phrase: "full of sound and fury, signifying not much."

That last part is certainly up for debate, especially for critics blasting the additional $3.3 trillion burden the bill would add to the deficit over the next decade, or the cuts it introduces into Medicaid. But the weeks leading up to the legislation's passage have definitely been furious.

For weeks after the House version the bill squeaked through by one vote in May, progress on the Senate version was stalled by holdouts objecting to its proposed Medicaid cuts and the cap on the SALT deduction. Last week, a marathon voting session in the Upper House ended in another deadlock, prompting Vice President JD Vance to cast a tiebreaking vote.

When all was said and done, the tax break package President Donald Trump approved in a splashy July 4 signing event at the White House didn't depart in any world-shaking way from his first signature 2017 Tax Cuts and Jobs Act.

In other words, it's now safe for advisors to tell their high-net-worth business owner clients not to panic over their exit planning – at least, not more than usual – while highlighting a couple of interesting opportunities.

"I think it's business as usual, where they use the same techniques they've always used," Jere Doyle, a senior vice president and estate planning strategist at BNY, said in an interview with InvestmentNews. "If there were drastic changes in the tax law, I'd give you a different answer."

A recently published BNY Wealth Study stressed tax as a crucial issue for private business owners, calling it "a constantly evolving area." In particular, it said techniques to minimize income tax, estate tax, and gift tax should be treated as a core part of the business sale process, which the report encouraged business owners to "begin planning early" for.

A bigger estate tax exemption

According to Doyle, one of the report's authors, many advisors and estate planning experts have spent the last three to four years urging clients to use their $14 million estate tax exemption from the TCJA, which would have reverted to $7 million assuming Trump's first-term tax cuts expired this year. But following the frantic and tense budget reconciliation process at Capitol Hill, small business owners will now have a more substantial $15 million exemption to work with.

Jenny Giemza, senior vice president at Wealthspire Advisors, notes that the extra $1 million of relief for business owners will take effect in 2026, with inflation-indexed adjustments to be applied moving forward. Married couples, she adds, could potentially shield an extra $2 million by using the portability provision of the exemption.

"This permanent increase offers significant planning opportunities for high-net-worth business owners looking to optimize succession strategies," she says.

Because many of Doyle's clients have businesses worth more than $15 million, he and his team go through numerous potential alternative strategies for them to shield their stock from estate taxes.

One option, he says, is to sell the stock to a grantor trust in exchange for a promissory note. Because the value of the note doesn't fluctuate with the markets, the business owner would be able to effectively freeze the value of their business within their estate, while any appreciation of the stock would accrue to the trust for the benefit of their children.

"That's been the bread-and-butter strategy to get the value of a business out of the estate before it appreciates," Doyle says.

Exploring C-corps and SGOs

For businesses organized as C-corporations whose holdings count as qualified small business stock, Doyle also sees an opportunity to exclude up to $10 million of capital gains on a business sale. If those business owners were to gift some stock to their children, he says they would each also enjoy their own $10 million exclusion, further amplifying the opportunity for estate planning.

"Some people don't qualify. But when we're talking to business owners, especially if they're going to do a startup, we mention that they may want to think about organizing your company as a qualified small business to take advantage of this huge exclusion," he says.

Philanthropic business owners could also potentially take advantage of the scholarship granting organization credit under the OBBA. According to Giemza, the one-for-one tax credit allows them to contribute the greater of $5,000 or 10% of their adjusted gross income, with a federal cap of $4 billion annually starting in 2027. Contributions could be made in cash or marketable securities, such as appreciated stock, to SGOs that offer scholarships to private or religious K-12 schools.

"Overall, this credit could offer significant tax-saving opportunities and philanthropic flexibility for high-income business owners looking to reduce the value of their estate, support educational causes, and leave a lasting legacy aligned with their values," Giemza says.