KPMG Personal Tax Planning Guide

What’s New

The past year has been characterized by a wave of regulatory guidance from the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS), providing clarity and uncovering new complexities in areas such as the modified state and local tax (SALT) deduction and the permanent 20 percent qualified business income deduction. Key developments critical for personal tax planning include:

• New regulatory guidance: Significant regulations have been issued interpreting key provisions of the OB3, particularly concerning the phase-down of the increased SALT deduction.
• Economic shifts: A changing economic environment, characterized by shifts in interest rates and market performance, has altered the effectiveness of certain long-standing estate and investment planning strategies.
• End of Deferral for Qualified Opportunity Zones (QOZ): All remaining gains previously deferred under the QOZ program must be recognized on December 31, 2026.
• Increased Gift/Estate and Generation-Skipping Transfer Tax Exemptions: Under OB3, the lifetime gift/estate and generation-skipping transfer tax exemptions were increased to $15 million per donor for 2026, with annual inflation adjustments beginning in 2027.
• Scrutiny of Qualified Small Business Stock (QSBS) Exclusion Stacking: The Treasury and the IRS have indicated an intent to study the use of trusts to multiply QSBS exclusion benefits and may potentially issue restrictive guidance; transfers of QSBS to trusts for estate planning reasons may remain permissible but the specifics should be considered carefully.

Looking Ahead

With the core components of the individual tax code now firmly established, sweeping reform appears unlikely in the immediate future. However, this stability does not preclude change. The legislative focus in Washington has pivoted to more targeted proposals, which could alter or eliminate specific planning opportunities currently available.

Prudent planning, therefore, involves a dual approach: implementing long-term strategies based on the current “permanent” law, while remaining nimble enough to react to future legislative shifts. We recommend that individuals consider acting to capitalize on today’s opportunities and lock in the benefits of the current law, especially in their estate and gift planning. 

At the same time, we also recommend that individuals watch legislative developments closely, as well as how political, economic, and other factors might affect tax policy, and be prepared to react quickly from a tax planning perspective. You can follow unfolding implementation of the new law, as well as future legislative developments by checking KPMG LLP's TaxNewsFlash and TaxNewsFlash Legislative Update sites. For KPMG’s analysis and observations of the OB3 provisions most relevant to individuals, families, and their closely held businesses, please see the booklet entitled KPMG reports: Tax subtitle for “One Big Beautiful Bill Act.”