The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, introduces the most significant tax reforms for entrepreneurs since the 2017 Tax Cuts and Jobs Act. If you’re a founder, operator, or owner preparing to sell your business, these updates present rare opportunities to dramatically reduce your tax liability and preserve wealth across generations.
Under the new law, entrepreneurs selling Qualified Small Business Stock (QSBS) acquired after July 4, 2025, may exclude significantly more gain from federal taxation:
| Provision | Before OBBBA | After OBBBA |
|---|---|---|
| Max Exclusion | $10M or 10x basis | $15M (indexed) or 10x basis |
| Asset Cap | $50M | $50M |
| Holding Period Requirements | 5 years (100% exclusion) | 3 yrs (50%), 4 yrs (75%), 5 yrs (100%) |
Founders and early investors should evaluate their corporate structure and incorporation history to confirm QSBS eligibility. A properly executed C-corp framework could shield millions in gains from tax under the new provision.
The 20% deduction for Qualified Business Income (QBI) has been made permanent, benefiting owners of S corporations, LLCs, and sole proprietorships. This includes increased thresholds for phaseouts and expanded eligibility based on industry classification.
If you’re selling your pass-through business, careful income timing and salary allocation could optimize this deduction—and reduce the effective tax rate on final year earnings.
The Act permanently reinstates 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Entrepreneurs are using this opportunity to invest in qualified property prior to sale—reducing taxable income and increasing future cost basis for buyers.
Before pursuing any exit strategy, obtaining an objective, independent business valuation is essential. It provides a realistic assessment of your company’s worth, empowering stronger negotiations, informed decision-making, and optimized tax planning under the new OBBBA provisions.
A professional valuation identifies value drivers, potential risks, and opportunities to enhance enterprise value prior to sale—such as strategic investments qualifying for bonus depreciation or restructuring for maximum QSBS benefits.
While the OBBBA focuses on federal tax reforms, state-level taxes on capital gains from business sales can significantly impact net proceeds. Residents of certain states face additional burdens:
To mitigate these taxes, consider strategies such as changing domicile to a no-tax state like Nevada, Texas, or Florida before the sale, or utilizing trusts sited in favorable jurisdictions. Proper planning can potentially eliminate or reduce state-level taxation on gains from intangible assets, but requires establishing genuine residency and complying with state rules to avoid challenges.
For clients in high-tax and politically challenging states like Washington, Oregon, California, New York, Massachusetts, and New Jersey, relocating to states with more favorable tax environments such as Texas and Florida can significantly enhance wealth preservation during a business exit. Texas and Florida have no state income tax, meaning no state-level capital gains tax on business sales, which can save millions compared to high-tax states.
Northern Pacific assists clients in this transition by coordinating comprehensive domicile planning. This includes:
This approach not only reduces immediate tax liabilities but also positions your wealth for long-term growth in environments with lower regulatory burdens and stronger property rights protections.
The federal estate and gift tax exemption is now $15 million per person, indexed for inflation. However, state-specific regimes—particularly in Washington and Oregon—can erode post-sale wealth. For example, Washington State’s estate tax now reaches as high as 35% on estates above $9M, while Oregon imposes rates up to 16% on estates over $1M.
High-net-worth sellers should explore advanced estate planning strategies to preserve family wealth and minimize tax exposure for future generations. While irrevocable trusts can be effective for removing assets from your taxable estate, they involve relinquishing control, which may not suit everyone. Consider the following options, potentially sited in favorable jurisdictions such as Nevada and South Dakota, known for no state income taxes on trusts, strong asset protection, and perpetual or long-duration trusts:
These strategies can help mitigate state estate taxes in Washington and Oregon by shifting assets out of your estate, and may also reduce capital gains taxes on the sale itself when using structures like DAPTs. However, they require careful planning to avoid issues like incomplete gifts or recapture. Explore our Sustainable Advantage® framework for personalized guidance.
“Selling a business without an integrated tax and estate strategy often leads to unnecessary leakage. The new tax law makes smart planning more valuable than ever.”
— Northern Pacific Private Advisory Team
Our process often begins with a comprehensive, independent business valuation—a critical foundation for any successful exit. This objective analysis establishes your company’s fair market value, strengthens your negotiating position, and uncovers opportunities to maximize proceeds through targeted improvements and tax-efficient structuring.
From there, our team collaborates with your CPA, attorney, and transaction advisors to coordinate QSBS exclusions, relocation planning, multi-generational trust strategies, and post-exit wealth management. We focus on more than just the sale—we help you protect and grow what comes after, including seamless transitions to favorable jurisdictions.
Learn more about our business valuation services or explore our Sustainable Advantage® framework to identify opportunities personalized to your goals.
Northern Pacific Asset Management does not provide tax or legal advice. Please consult with your legal and tax advisors before making any changes to your assets or tax structures. All assumptions and projections are based on publicly available IRS and legislative guidance and are for general illustration only; they do not reflect your individual circumstances, investment growth risk, or the effects of any state or local taxes.
Subscribe to receive relevant news, insights, and portfolio updates—keeping you informed and in control.
