In January 2026, a CPA sat down with a client for the first returns under Public Law 119-21, the One Big Beautiful Bill Act, signed July 4, 2025. The rates had not changed. Everything around them had. The 0%, 15%, and 20% long-term capital gains rates were now permanent law rather than provisions scheduled to sunset after 2025, and the client’s planning horizon went from one year to indefinite in a single statute. The meeting was not about the return in front of them. It was about the next ten.

Permanence is the headline, and it is worth stating plainly. The law made the 2017 rate structure permanent, and for 2026 the 0% rate reaches up to $49,450 of taxable income for single filers and $98,900 for joint filers, with the 15% band extending to $545,500 single and $613,700 joint before the 20% rate begins. The 3.8% net investment income tax did not change, with its thresholds still at $200,000 single and $250,000 joint. Short-term gains remain ordinary income taxed at rates from 10% up to 37%. Sonic Wallet’s investor guide to the 2025 tax law, checked against the statute and IRS guidance as of November 2, 2026, carries the thresholds and the start dates; TaxGainsCalc’s OBBBA capital gains review confirms the rate structure survived intact.

The provision that changes the most portfolios is the SALT cap. The state and local tax deduction cap rose from $10,000 to $40,000 starting in 2025, and reaches $40,400 for 2026, rising 1% annually through 2029 before returning to $10,000 in 2030. The benefit phases down for very high earners: above $500,000 of modified adjusted gross income ($505,000 in 2026), the cap shrinks toward a $10,000 floor. For a California or New York investor paying $30,000 in property tax and $25,000 in state income tax, the after-tax math of municipal bonds, property ownership, and deduction bunching all moved at once. Franklin Templeton’s June 2026 planning overview of the Act sets out the SALT schedule and the phase-out thresholds.

Two provisions change the math for founders and fund investors. The Section 1202 qualified small business stock exclusion expanded more than any other piece of the bill: the cap rose from $10 million to $15 million per issuer, the gross-asset ceiling from $50 million to $75 million, and stock acquired after July 4, 2025 earns partial exclusions on a faster tiered schedule. The Opportunity Zone program, which would have expired at the end of 2026, was made permanent with a rolling five-year deferral for gains realized after December 31, 2026, a 30% basis step-up for qualified rural opportunity funds at the five-year mark, and fresh zone designations beginning in January 2027 under a new decennial cycle. The 20% qualified business income deduction under Section 199A was also made permanent, with a new $400 minimum for taxpayers with qualifying active business income. Vesting Strategy’s OBBBA equity-compensation guide documents the QSBS and AMT changes with IRS sources.

The trap sits in the AMT. The law made the higher AMT exemptions permanent — $90,100 single and $140,200 joint for 2026 — but doubled the phaseout rate from 25 cents to 50 cents per dollar of income above the threshold. An ISO exercise that was safe in 2025 can trigger substantially more AMT in 2026, with an effective marginal AMT rate reaching 42% in the phaseout range. The estate and gift exemption also jumped to $15 million per person, permanent from 2026 and indexed for inflation. The same law that gave investors certainty on rates took it away on incentive stock options.

The law’s gift was certainty. Its price is in the fine print — and the fine print is where portfolios are won and lost this year.

The honest counterargument

Permanence is a legislative fact, not a guarantee. The SALT cap reverts to $10,000 in 2030, and a future Congress can rewrite any of it — the 2017 provisions were themselves written with a sunset, and the new law’s permanence lasts exactly as long as the next majority allows. The QSBS and Opportunity Zone benefits reward holding periods and zones that may not match the investor’s timeline, and a ten-year zone commitment is a long time to hold an illiquid position for a tax benefit. And none of it changes the enforcement problems: the IRS’s matching still runs, wash-sale coordination across accounts is still the investor’s job, and a new tax law does not make an uncoordinated portfolio coordinated.

What to do in 2026

Four practical steps, in order. First, model the SALT phase-down before bunching deductions — the $40,400 cap is generous until modified AGI crosses $505,000, and then it shrinks fast. Second, review any planned ISO exercise against the new AMT phaseout before exercising, not after. Third, revisit QSBS-eligible holdings acquired after July 4, 2025, and confirm the tiered exclusion schedule applies. Fourth, treat Opportunity Zone decisions as ten-year commitments under the rolling program, not as a deferral trick. This is general information, not tax advice — the details turn on individual circumstances, and the statute is more than nine hundred pages long.

Tax year 2026 is a planning year, not a filing year. The portfolios that adapt in January keep the benefit. The ones that adapt at filing time will find that the benefit was available all year and is gone by April.

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