What the OBBBA Means for Your Federal Taxes in 2026: Key Insights for Residents and Business Owners in Maryland, Virginia, and D.C.

The One Big Beautiful Bill Act (OBBBA) promises sweeping changes to the federal tax code starting in 2026. Many individual taxpayers—and particularly high-net-worth individuals, business owners, and professionals—could see significant tax reductions. But the real question is: what will this mean for you?

For residents and entrepreneurs in Maryland, Virginia, and Washington, D.C., the average savings are estimated to exceed $3,700 per taxpayer. However, just knowing the average isn't enough. Understanding how this law affects your specific type of income, business structure, or estate plan is essential.

Let's break it down.

Key Takeaways:

• The OBBBA is projected to reduce federal income tax burdens by over $3,700 per taxpayer on average beginning in 2026.

• The law applies across all states, including Maryland, Virginia, and the District of Columbia—so every taxpayer in the region stands to benefit. However, DMV residents may NOT realize these full benefits at the state and local level due to non-conformity or active decoupling.

• Business owners using pass-through entities (LLCs, S-Corps, Partnerships) may see new planning opportunities and tax efficiencies.

• Estate and succession planning may require review and adjustments to align with new tax baselines.

• Despite broad savings, implementation details could affect tax compliance and strategy—meaning early preparation is key.

Why the OBBBA Matters to DMV-Area Taxpayers and Business Owners

The D.C./Maryland/Virginia (DMV) region is home to a high concentration of government contractors, tech startups, medical professionals, real estate investors, and other business leaders. Many of these individuals use sophisticated tax strategies and business structures to mitigate liability. Any shift in the tax landscape—particularly one as comprehensive as the OBBBA—requires reevaluation.

Even those who aren't running a business should pay attention. The projected nationwide average tax cut of over $3,700 isn't just a static figure—it reflects deeper changes in tax rates, brackets, deductions, and compliance requirements.

Whether you're earning W-2 income, managing real estate holdings via an LLC, or navigating succession planning for a family business, this legislation is likely to affect you.

Breaking Down What the OBBBA Means for Individuals

Let's start with what we know: the OBBBA is expected to increase after-tax income for individual filers across all states. While every taxpayer's situation is different, here are a few plausible outcomes for individuals:

1. Lower Marginal Tax Rates Across the Board

The projected tax cuts imply reductions in federal marginal rates, especially for middle- and high-income earners. For example, a professional earning $250,000 a year may find themselves in a lower bracket than before—yielding immediate annual savings.

2. Expanded Standard Deduction or Adjusted Itemized Deductions

If the standard deduction increases, it may further reduce taxable income for most earners—especially those in high-cost-of-living areas like Bethesda or Arlington. Likewise, adjustments to itemized deduction caps (e.g., on SALT taxes or mortgage interest) could create new advantages or require recalibration of tax strategies, especially when considering some adjustments are not permanent.

3. Targeted Relief for Certain Investment Income

For high-net-worth individuals with significant investment assets, changes in capital gains treatment, Qualified Business Income (QBI) deductions, or dividend taxation could alter return projections. Tax-loss harvesting and asset location strategies may need refocusing as a result.

What This Means for LLCs, Partnerships, and S-Corps

Pass-through entities are foundational to tax-efficient entrepreneurship in the DMV. From med spas and law practices to real estate developers and tech consultants, many businesses use the LLC or S-Corp structure to minimize double taxation and retain more control.

Here's how the OBBBA might impact these entities:

Potential Expansion or Modification of QBI Deductions

If the QBI deduction is maintained or expanded under the new law, flow-through entities will retain their favorable position. However, any change in the definition of "qualified business income" or the application of wage or capital limitations could necessitate structural changes.

For example, a consulting firm operating as a PLLC in Fairfax may need to revisit how it pays its owners—balancing W-2 wages and K-1 distributions to maximize the deduction.

Greater Emphasis on Entity Classification Strategy

The OBBBA may shift the calculus on whether to elect S-Corp status or remain as a multi-member LLC. While both options retain liability benefits, the tax treatment post-2026 might favor one over the other depending on income thresholds and deductions.

Compliance Complexity

Tax savings often come with new compliance requirements. If the OBBBA tightens recordkeeping or necessitates additional reporting for pass-throughs, proactive bookkeeping and strategic planning will become even more critical to avoid penalties or missed opportunities.

Estate and Succession Planning Considerations

For families with substantial estates or those transferring businesses from one generation to the next, the OBBBA may pose both opportunities and risks.

Adjusted Tax Baselines

If estate or gift tax exemptions are affected or reset annually based on inflation under the new framework, your current estate plan might need adjustment. Customized trusts and gifting vehicles may require revisiting to lock in benefits under current rules or take advantage of favorable new ones.

Timing is Critical

The implementation of many OBBBA provisions doesn't begin until 2026. That leaves a window of time to make strategic gifts, establish trusts, or convert asset ownership structures before prices rise or deductions shift.

For example, a real estate investor owning multiple properties across Maryland and Northern Virginia may choose to transfer interests to a trust sooner rather than later—locking in current values, minimizing gains exposure, and complying with new rules.

Practical Considerations for Business Owners and Professionals

While average tax savings are welcome, business planning involves far more than watching headline figures. Here are a few takeaways for those who lead, invest in, or manage businesses in the region:

Risk Management Audit

With any change to the tax code comes increased scrutiny from the IRS. Ensuring that compensation structures, capital accounts, and tax filing processes are in order will reduce the risk of an audit or dispute.

Compliance Strategy

Proactive tax compliance is no longer optional. The OBBBA could bring new reporting obligations—whether in regard to beneficial ownership disclosures, income thresholds, or payroll classification. Work with a tax attorney to ensure your business remains in full alignment.

Capital Structure Review

If your company has outside investors or is preparing for a sale, revised tax rates could affect valuation modeling. Understanding the post-OBBBA after-tax profit environment helps inform your next capital raise or exit plan.

Example #1: Tax Planning for a Tech Entrepreneur in Arlington, VA

A founder operating a growing SaaS company structured as an S-Corp currently pays herself a $150,000 salary and takes additional distributions. Under the OBBBA, a lower overall marginal rate reduces her total tax bill. However, depending on how the QBI deduction is adjusted, it may become more advantageous to increase her W-2 salary slightly to qualify under revised limits. That subtle change could save thousands per year, but only if implemented proactively.

Example #2: Estate Planning for a Physician in Bethesda, MD

A high-net-worth physician approaching retirement has substantial assets in taxable accounts, real estate, and passive business investments. He previously established an irrevocable trust to manage the future disposition of those assets. But the upcoming changes under the OBBBA could necessitate a review of gift timing and trust structure. Waiting too long could mean missing out on today's favorable exemption thresholds.

A Unique Opportunity—But Only With the Right Planning

While an average savings of $3,700 per taxpayer is significant, averages often disguise important details. The true opportunity under the OBBBA lies in reviewing your personal and business structure in light of the new rules—and acting now while crucial flexibility still exists.

For those based in Maryland, D.C., or Virginia, the region's complex tax overlay (including state and local tax laws, which may not follow federal policy) adds another layer of complexity. What saves you money at the federal level may have state-level consequences unless properly coordinated.

Get Tailored Guidance Before 2026 Arrives

The anticipated tax law overhaul should not be met with a wait-and-see mindset. Whether you're preparing an exit from your business, reviewing a buy-sell agreement, or simply seeking greater tax efficiency, the time to act is now.

At Thienel Law, we help business owners, professionals, and high-net-worth individuals across the DMV region navigate complex legal and financial transitions with confidence.

If you're unsure how the OBBBA applies to your business or personal situation, we're here to help. Schedule a consultation with Steve Thienel to get advice tailored to your goals.