Tax Trends Confronting Family Offices in 2026

Family offices are navigating a period of significant change driven by federal tax legislation, evolving Internal Revenue Service (IRS) enforcement priorities, and increasingly complex structuring considerations across jurisdictions. Legislative action has stabilized certain tax provisions, but enforcement activity and global mobility trends are influencing risk profiles for high-net-worth individuals and their investment platforms.

LEGISLATIVE DEVELOPMENTS: STABILITY WITH STRATEGIC IMPLICATIONS

Federal legislation has provided near-term certainty while introducing planning considerations.

• The One Big Beautiful Bill Act (OBBBA) extends key provisions of the Tax Cuts and Jobs Act that were set to expire, including:
• Lower individual tax rates and increased standard deductions
• A higher estate and gift tax exemption (increased to $15 million)
• Continued availability of the Section 199A deduction for qualified business income
• Business-focused changes include:
• Restoration of full bonus depreciation for certain capital investments
• Expanded deductibility of business interest expenses
• Accelerated expensing of US research and experimentation costs

Implications for Family Offices

• Estate and wealth transfer planning strategies require monitoring for future legislative shifts
• Investment structuring decisions should account for enhanced expensing and deduction opportunities
• Charitable deduction and renewable energy credit changes may affect overall tax optimization strategies

IRS LANDSCAPE: TARGETED ENFORCEMENT

Despite reduced funding and staffing, the IRS is utilizing technology and data-driven strategies in its enforcement activities.

• The administration has proposed a 12.5% reduction in IRS funding alongside a significant decline in staffing levels over the last year
• Leadership gaps persist, with overlapping roles and responsibilities across senior positions
• The IRS is increasing reliance on:
• Advanced analytics and artificial intelligence
• Coordinated, cross-divisional examinations

Enforcement Priorities

• High-net-worth individuals under the Global High Wealth (GHW) Program
• Offshore compliance and expatriation
• Use of business aircraft and employment tax issues
• Virtual currency and identified “Dirty Dozen” tax strategies

Implications for Family Offices

• Integrated, enterprise-wide visibility into structures and transactions is increasingly important
• Proactive documentation and analysis of tax positions can mitigate exposure in coordinated audits

AUDIT TRENDS: A HOLISTIC APPROACH TO HIGH-WEALTH TAXPAYERS

The IRS continues to adopt a holistic approach to examining high-net-worth individuals and their related entities.

• The GHW Program evaluates the entire financial ecosystem of the high-net-worth taxpayer, including:
• Flow-through entities
• Trusts and estates
• Cross-border holdings
• Examination teams are multidisciplinary, combining tax, valuation, and economic professionals

Implications for Family Offices

• Traditional siloed planning is less effective under integrated audit models
• Intercompany transactions, valuation positions, and cross-border flows may receive increased scrutiny
• Early engagement with advisors can help align reporting positions across structures

STRUCTURING CONSIDERATIONS: INCREASING CROSS-BORDER COMPLEXITY

Family offices continue to expand globally, driving demand for more sophisticated structuring strategies.

Outbound Investment

• Choice between corporate and flow-through structures
• Non-US inheritance and succession considerations

Inbound Investment

• Managing exposure to fixed, determinable, annual, or periodical income and effectively connected income
• Use of blockers and branch structures to mitigate US tax liabilities

Mobility and Expatriation

• Increased movement of high-net-worth individuals to lower-tax jurisdictions
• Rising importance of pre-immigration and exit tax planning

Implications for Family Offices

• Structuring decisions must integrate corporate, tax, regulatory, and potential immigration considerations
• Long-term planning should account for both tax efficiency and operational flexibility

THE ‘GREAT WEALTH MIGRATION’ AND POLICY WATCHPOINTS

Recent data indicates continued migration of wealth across US states, with significant flows from high-tax to lower-tax jurisdictions. At the same time, policymakers are considering new measures targeting ultra-high-net-worth individuals.

• Legislative proposals, including wealth tax initiatives, remain under consideration
• State-level tax differentials continue to influence residency and investment decisions

Key Takeaways for Family Offices

• Plan for stability—but expect change: Recent legislation provides continuity, but future policy shifts remain likely
• Prepare for data-driven enforcement: Data-driven IRS audits require consistent, well-documented positions across entities
• Adopt a holistic structuring approach: Tax, regulatory, and mobility considerations are increasingly interconnected
• Reassess global strategies: Cross-border investment and migration trends continue to evolve
• Engage early: Proactive planning and coordinated advisory support are critical in a more complex environment