Tax Advisory Services for High Net Worth Individuals

                                       

By: Laurie Smith

Partner, Tax

Key Takeaways

• Tax advisory for high-net-worth individuals is not primarily about filing returns accurately. It is about modeling how income, investment, estate, and charitable decisions interact across multiple years, and making choices in each dimension that reflect that full picture rather than optimizing any one piece in isolation.
• The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, introduced material changes to the high-net-worth tax environment: a $15 million per-person estate and gift tax exemption (inflation-adjusted, permanently set under current law), a new 0.5% AGI floor on itemized charitable deductions, a 35% cap on the value of itemized deductions for top-bracket taxpayers, and a SALT cap increase to $40,000 that phases back down to $10,000 for most households above $600,000 in modified adjusted gross income.
• Income sourced from business interests, investment portfolios, real estate, and liquidity events each carries different rates, different timing levers, and different interactions with estate planning objectives. Addressing each in a silo, without a view of the whole, routinely produces tax outcomes that could have been improved with earlier coordination.
• Bottom line: The highest-value tax advisory work for high-net-worth individuals happens before the transaction, before the gift, and before the return is filed. Once those decisions are made, the planning opportunity is largely spent.

High earners receive tax returns. High-net-worth individuals receive tax consequences. The distinction matters because the decisions that produce those consequences, involving business structures, estate planning transactions, charitable strategies, investment allocations, and retirement income timing, are made throughout the year, often without full visibility into how they interact. 

Strategic tax advisory for high-net-worth individuals is not an upgraded version of return preparation. It is a fundamentally different kind of engagement, one that treats each financial decision as a variable in a multi-year tax model rather than an isolated event to be reported.

What the OBBBA Changed and Why It Demands a Revised Strategy

The tax environment for high-net-worth individuals in 2026 is different from that in 2024. The OBBBA introduced several provisions that affect this audience with particular force, and the planning responses to those provisions are not intuitive.

The estate and gift tax exemption for 2026 is $15 million per individual, $30 million per married couple using portability, indexed for inflation, and permanently set under current law. This creates a significant window for wealth transfer for families whose estates approach or exceed these thresholds. 

Transferring appreciating business interests, real estate, or investment assets at today’s valuations, using applicable minority interest discounts for fractional transfers, removes future appreciation from the taxable estate at a current-law cost that may not be available under future legislation. The strategy is time-sensitive, not because the exemption is scheduled to sunset, but because asset values and political circumstances do not hold still.

The charitable deduction for itemizers now carries a 0.5% AGI floor. For an individual with $1 million in adjusted gross income, the first $5,000 in annual charitable contributions generates no deduction. This changes the math on regular giving patterns significantly, and makes donor-advised funds and donation bunching strategies considerably more attractive. It also makes Qualified Charitable Distributions from IRAs, which bypass the AGI floor entirely and reduce adjusted gross income directly rather than as an itemized deduction, more valuable for eligible individuals over 70½. The 2026 QCD limit is $111,000 per person, indexed annually for inflation.

For top-bracket taxpayers, itemized deductions are now capped at 35% of income, rather than the marginal rate of 37%. The practical effect is a two-percentage-point reduction in the tax value of every dollar of itemized deductions, including mortgage interest, state taxes, and charitable contributions. In a year with significant deductible expenses, this differential is quantifiable and should inform the timing of planning. 

SALT Planning: The Phase-Out That Catches High Earners Off Guard

The OBBBA increased the individual SALT deduction cap from $10,000 to $40,000 for tax years 2025 through 2029. For most households with modified adjusted gross income above $500,000, however, that cap phases down, reverting to the prior $10,000 cap for most earners above $600,000. High-earning individuals in New Jersey, New York, California, and other high-tax states who anticipated substantial relief from the SALT increase will find that the phase-out eliminates much of that relief at their income levels.

The planning response for those who own operating pass-through entities, including partnerships, S corporations, and qualifying LLCs, is to make a state-level Pass-Through Entity (PTE) tax election. More than 35 states have enacted PTE legislation permitting entities to pay state income tax at the entity level. When a PTE makes this election, the state tax is deducted at the entity level as a business expense, reducing the income flowing through to individual owners on Schedule K-1. Individual owners benefit from reduced gross income rather than from an itemized deduction subject to the SALT cap. This approach was expressly authorized by the IRS under Notice 2020-8 and was not restricted by the OBBBA.

The election is not universally beneficial. PTEs with owners in multiple states, owners in lower brackets, or owners in states without income taxes require careful modeling before an election is made. The benefit that accrues to a New York resident may result in no benefit or an actual cost for a co-owner who is a Florida resident.

Coordinating Capital Gains, Investment Income, and Timing

High-net-worth individuals with diversified asset bases, including concentrated stock positions, closely held business interests, investment real estate, and retirement accounts, have multiple streams of income, each taxed differently, and can often be managed through deliberate timing and structuring choices.

Long-term capital gains are taxed at 0%, 15%, or 20% depending on taxable income, with the 3.8% net investment income tax applying to the lesser of net investment income or the excess of modified AGI above applicable thresholds ($200,000 single, $250,000 married filing jointly). A realized gain that pushes the taxpayer across the NIIT threshold produces a materially different after-tax outcome than an identical gain recognized in a lower-income year. Timing realizations around income patterns, harvesting losses to offset gains, and evaluating whether installment sale treatment is appropriate for large transactions are all tools in this category.

Required minimum distributions from traditional IRAs and qualified plans add a predictable income stream that requires annual planning. Coordinating RMDs with charitable strategies, Roth conversion decisions, and years of higher or lower income from other sources determines whether the income is reported efficiently or at a higher-than-necessary effective rate. 

Why Coordination Across Advisors Determines the Outcome

The decisions that affect a high-net-worth individual’s tax position are not made exclusively by their tax advisor. Investment managers generate realized gains and losses. Estate attorneys draft trust structures that affect income attribution. Business advisors recommend entity structures that determine pass-through income treatment. Real estate decisions create depreciation, recapture exposure, and potential 1031 exchange opportunities.

When these advisors operate without a shared picture of the individual’s full tax position, the results are frequently suboptimal, not because anyone made a bad decision within their scope, but because no one was responsible for the interaction between decisions. A large charitable gift made without input from the investment manager can affect portfolio liquidity in ways no one modeled. A trust distribution made without input from the CPA can push taxable income into a higher bracket for reasons no one anticipated.

The families that manage their tax position most effectively are those whose advisors, whether under one roof or coordinated by a single relationship manager, operate from the same current financial picture.

Tax Advisory That Actually Moves the Number

The value of strategic tax advisory is measured in what you keep, not in what you filed. For high-net-worth individuals, the decisions that determine that number are made throughout the year, across multiple disciplines, and often under time pressure.

Wiss Family Office works with high-net-worth individuals and families to build proactive, multi-year tax strategies that coordinate estate planning, investment income, charitable giving, and business interests into a single, coherent picture. If your current tax relationship is primarily a compliance exercise, contact Wiss to discuss what strategic planning entails.

Investment advisory services offered through Wiss Private Client Advisors, LLC.

𝘞𝘪𝘴𝘴 𝘗𝘳𝘪𝘷𝘢𝘵𝘦 𝘊𝘭𝘪𝘦𝘯𝘵 𝘈𝘥𝘷𝘪𝘴𝘰𝘳𝘴 𝘪𝘴 𝘢𝘯 𝘚𝘌𝘊‑𝘳𝘦𝘨𝘪𝘴𝘵𝘦𝘳𝘦𝘥 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘢𝘥𝘷𝘪𝘴𝘦𝘳 𝘢𝘯𝘥 𝘢 𝘸𝘩𝘰𝘭𝘭𝘺 𝘰𝘸𝘯𝘦𝘥 𝘴𝘶𝘣𝘴𝘪𝘥𝘪𝘢𝘳𝘺 𝘰𝘧 𝘞𝘪𝘴𝘴. 𝘙𝘦𝘨𝘪𝘴𝘵𝘳𝘢𝘵𝘪𝘰𝘯 𝘥𝘰𝘦𝘴 𝘯𝘰𝘵 𝘪𝘮𝘱𝘭𝘺 𝘢 𝘤𝘦𝘳𝘵𝘢𝘪𝘯 𝘭𝘦𝘷𝘦𝘭 𝘰𝘧 𝘴𝘬𝘪𝘭𝘭 𝘰𝘳 𝘵𝘳𝘢𝘪𝘯𝘪𝘯𝘨. 𝘛𝘩𝘪𝘴 𝘤𝘰𝘯𝘵𝘦𝘯𝘵 𝘪𝘴 𝘧𝘰𝘳 𝘦𝘥𝘶𝘤𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘱𝘶𝘳𝘱𝘰𝘴𝘦𝘴 𝘰𝘯𝘭𝘺 𝘢𝘯𝘥 𝘴𝘩𝘰𝘶𝘭𝘥 𝘯𝘰𝘵 𝘣𝘦 𝘤𝘰𝘯𝘴𝘪𝘥𝘦𝘳𝘦𝘥 𝘱𝘦𝘳𝘴𝘰𝘯𝘢𝘭𝘪𝘻𝘦𝘥 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘢𝘥𝘷𝘪𝘤𝘦.

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