Tax Challenges for High Net Worth Individuals under Trump’s One Big Beautiful Bill
After the U.S. House of Representatives passed the initial draft of the One Big Beautiful Bill Act (OBBBA) in May 2025, the Senate spent nearly two months debating and amending it. On July 4, President Trump signed it into law.
The bill covers tax law, immigration, military, healthcare, and social security.
This article focuses on the major impacts of the OBBBA on new immigrants, controlled foreign corporations (CFCs), and high-net-worth individuals.
1% Remittance Excise Tax on Citizens and Non-Citizens
Under the OBBBA, starting January 1, 2026, a 1% excise tax will be imposed on personal remittances from the U.S. to overseas recipients (down from the originally proposed 3.5%).
The tax will be directly withheld by remittance agencies at the time of transfer, similar to withholding tax, but it is not an income tax—it targets certain goods, services, or economic activities.
Key points:
The Senate removed the original exemption for U.S. citizens—both citizens and non-citizens are subject to the 1% remittance tax.
Applies if funds are sent abroad via non-exempt means such as cash wire transfers, money orders, or prepaid cards.
Applies only to individuals, not companies.
Exemptions exist for transfers through financial institutions regulated under the Bank Secrecy Act (BSA) (e.g., U.S. banks, brokerages, U.S. branches of foreign banks).
Legislative goals: increase federal revenue from untaxed outbound remittances and strengthen tracking of international fund flows for fraud prevention and anti–money laundering. However, think tank Tax Foundation warns compliance and administrative costs may exceed revenue gains.
Since withholding agents will be liable for the tax, most will adopt a “withhold first” approach. Individuals wrongly or excessively taxed must seek refunds—yet the bill does not provide clear refund procedures, adding uncertainty and burdens for taxpayers.
GILTI Minimum Tax Threshold Raised to 14% for U.S. Companies’ Overseas Income
Under OBBBA, U.S. shareholders of CFCs will face increased U.S. tax burdens on overseas operating income unless the CFC already faces an effective foreign tax rate of at least 14%.
Changes:
The Section 250 deduction for GILTI is reduced from 50% to 40%, raising the effective U.S. tax rate from 10.5% to 12.6%.
The Foreign Tax Credit (FTC) limit rises from 80% to 90%. CFCs taxed abroad at 14%+ will owe no additional GILTI tax in the U.S.
The 10% Qualified Business Asset Investment (QBAI) exemption is eliminated, increasing the tax cost for U.S. companies operating manufacturing facilities abroad.
FDII Rate Raised to ~14%
Foreign-Derived Intangible Income (FDII)—introduced in 2017 to encourage keeping intangible assets in the U.S.—originally faced a preferential rate of 13.125%.
The OBBBA increases this to roughly 14% by cutting the Section 250 deduction from 37.5% to 33.34%.
FDII works alongside GILTI as a “carrot and stick” approach—rewarding keeping IP in the U.S. while penalizing shifting profits to low-tax jurisdictions.
BEAT Tax Rate Set at 10.5% for Large Multinationals
The Base Erosion and Anti-Abuse Tax (BEAT), created in 2017, applies to multinationals with $500M+ annual revenue and significant deductible payments to foreign affiliates.
Originally set to rise from 10% to 12.5% in 2026, the OBBBA locks it at 10.5% permanently, avoiding future increases for large corporations.
Changes Affecting Middle-to-High-Income and High-Net-Worth Individuals
State and Local Tax (SALT) Deduction: Starting 2025, households earning under $500K can deduct up to $40K in state taxes (up from $10K). Income above $500K is subject to a 30% limitation on deductions above that threshold, meaning those earning $600K+ remain under the $10K cap. From 2026–2029, the $40K limit will rise by 1% annually.
The pass-through entity tax (PTET) workaround remains allowed.
Estate, Gift, and GST Taxes:
Starting Jan. 1, 2026, the unified exemption rises permanently to $15M per person ($30M for couples), increasing 2% annually thereafter.
The 40% rate on amounts above the exemption remains unchanged.
For non-resident aliens, the exemption remains $60K—with no adjustment for inflation—maintaining the severe U.S. estate tax exposure on U.S.-situs assets.
Implications:
The changes further protect ultra-high-net-worth U.S. families while tightening the tax noose on foreign property owners in the U.S.
Trump’s “golden card” immigration policy exempts foreign-source income from U.S. income tax but offers no relief from U.S. estate or gift taxes—creating a “tax-free illusion” for foreign investors in U.S. real estate.
