Tax planning for high-net-worth individuals operates across multiple simultaneous fronts: income tax at the top marginal rates, the 3.8% net investment income tax layered on top, a SALT cap that limits state tax deductions, estate and gift tax on every dollar above the exemption, and in many cases cross-border complexity. OBBBA changed the landscape significantly - the estate exemption is now $15 million permanently, SALT is capped at $40,000 with a phaseout, and bonus depreciation is back at 100%. This guide covers the main planning areas and the strategies that actually move the needle.
Top federal income tax rate: 37% (ordinary income above ~$750K MFJ)
Long-term capital gains rate: 20% (income above ~$583K MFJ) + 3.8% NIIT = 23.8% combined federal rate
Estate and gift tax exemption: $15,000,000 per person ($30M combined for married couples with portability), permanent under OBBBA
Annual gift exclusion: $19,000 per donee (2026, indexed)
SALT cap: $40,000 (phased down above $500K AGI for MFJ, down to $10K floor)
NIIT threshold: $250,000 (MFJ) / $200,000 (single) - not indexed for inflation
OBBBA permanently set the estate and gift tax exemption at $15 million per person, inflation-adjusted going forward. This is the highest exemption in US history. For married couples using portability, the combined exemption is $30 million. The top estate tax rate remains 40%.
For estates below $15 million ($30M for couples), federal estate tax is not a near-term concern. Planning focus shifts to income tax efficiency - minimizing capital gains on inherited assets (the step-up in basis under IRC §1014) and managing distributions from inherited IRAs. For estates above these thresholds, the estate tax remains a significant planning driver.
The 3.8% NIIT under IRC §1411 applies to the lesser of net investment income or the excess of MAGI over the threshold ($250,000 MFJ / $200,000 single - not inflation-adjusted). For high earners with investment income, the NIIT is effectively an additional top rate that applies on top of the 20% capital gains rate, producing a 23.8% combined federal rate on long-term capital gains and a 40.8% rate on ordinary investment income at the top bracket.
The $40,000 SALT cap (phased down to $10,000 for AGI above $500K MFJ) applies to individual returns. For business owners with pass-through income, the PTET election shifts state income tax to the entity level where it is deductible without limitation. This is the primary SALT planning tool for S-corp and partnership owners.
For HNW individuals in high-tax states (New York, California, New Jersey), the PTET benefit can be substantial. A New York-based S-corp owner with $2 million of pass-through income at a 10.9% state rate can eliminate approximately $218,000 of New York state tax from federal taxable income via the PTET - saving approximately $80,000 in federal tax at the 37% rate. See the SALT Planning Guide for detailed mechanics and state-by-state rules.
A contribution to a DAF produces an immediate charitable deduction in the year of contribution (subject to AGI limits - generally 60% of AGI for cash, 30% for appreciated property). The fund can invest the contributed assets and distribute grants to qualifying charities over time. The primary benefit: contributing appreciated securities eliminates capital gains that would otherwise be recognized on a sale, while the full fair market value is deductible. Bunching multiple years of charitable giving into one year maximizes the Schedule A deduction in that year.
A CRT provides an income stream to the grantor (or other non-charitable beneficiary) for life or a term of years, with the remainder passing to charity at the end. The grantor receives a partial charitable deduction at funding, avoids immediate capital gains on appreciated assets contributed to the trust, and receives an income stream. The income stream is taxed as it is distributed - ordinary income tiers are distributed before capital gains tiers. Best for donors with highly appreciated, low-basis assets who want income rather than a lump-sum charitable deduction.
Taxpayers over age 70.5 can direct up to $105,000 per year (2026, indexed) from an IRA directly to a qualified charity. The distribution satisfies the RMD requirement but is excluded from gross income entirely - it does not count as AGI. This is more tax-efficient than taking the RMD and then donating cash, because the QCD reduces MAGI and therefore reduces IRMAA Medicare surcharges, NIIT exposure, and the taxability of Social Security benefits.
Business owners approaching a sale need to plan well in advance - ideally 3 to 5 years before exit. Key considerations:
Entity structure review. C-corporations selling assets pay corporate tax plus shareholder-level tax on dividends. S-corporations and partnerships generally pay only one level of tax, often at the 20% long-term capital gains rate plus NIIT. A §338(h)(10) election or §336(e) election may allow a stock sale to be treated as an asset sale, potentially benefiting both buyer and seller.
QSBS planning (IRC §1202). Gain on qualified small business stock (C-corporation, held more than 5 years, original issuance) can be excluded from federal income tax up to $10 million or 10x basis, whichever is greater. For founders who have not yet issued QSBS, converting to a C-corporation and issuing new stock restarts the 5-year clock. NIIT does not apply to §1202 excluded gain.
Installment sales. Spreading recognition of gain over multiple years through an installment sale (IRC §453) keeps MAGI below NIIT thresholds in each year and may keep capital gains in lower rate brackets. The tradeoff is credit risk on the buyer's installment obligation and the loss of use of the after-tax proceeds.
For US citizens and residents with foreign assets, accounts, or income, the compliance obligations are extensive regardless of where the assets are held. FBAR (FinCEN 114) reporting applies to foreign financial accounts exceeding $10,000 in aggregate. Form 8938 (FATCA) applies at higher thresholds. Foreign trusts trigger Form 3520 and 3520-A. CFCs trigger Form 5471 and potential Subpart F / NCTI inclusions.
Pre-immigration planning - for non-US persons considering US residency - is a particularly high-value planning area. Once a person becomes a US tax resident, worldwide income is taxable. Assets with unrealized gains can be restructured before the trigger date. Foreign pensions may be restructurable. Entity elections can be made before residency begins. The window for pre-immigration planning closes the moment substantial presence is established or a green card is received.